MutantCapitalism

Shedding Some Light on the Department of Justice's CDS 'Markit' Investigation

The malfeasance of Markit owners extends well beyond the Sherman Act deep into netherworlds of financial engineering and market manipulation.
In 2006 Markit rolled out the ABX.HE Index, a vehicle for subprime CDS that went far beyond commonly accepted risk management
with participants at times utilizing 100x leverage.
www.forbes.com/2007/08...
It is no surprise that Markit's ABX.HE index was the creation of Wall Street traders, employed by Markit's owners, major Wall Street investment banks.
www.bloomberg.com/apps...
What may come as a surprise to some is the extent of complicity between Markit owners and subsidiary mortgage servicing units which these investment banks rushed to acquire in recent years. It is epidemic mortgage servicing fraud that not only fed Markit's ABX CDS frenzy, mortgage servicing fraud and insider knowledge of it rigged these bets. To give an idea of how widespread mortgage servicing fraud is, the following 2 FTC settlements involved only 2
well known mortgage servicers and yet the combined victim classes exceeded 367,000 victims.
www.ftc.gov/os/caselis...
FTC v. Fairbanks/SelectPortfo...
www.ftc.gov/os/caselis...
FTC v. EMC/Bear Stearns
There were no fire walls between trading desks and subsidiary servicers who fabricated bogus defaults, "credit events" that subprime shorters could cash in CDS bets on. Just as mortgage REITs comprising ABX series were selected every 6 months in informal meetings with a Goldman Sachs' managing director, they were also targeted for mortgage servicing fraud.
DOJ needs to look at REITs that fed Markit's ABX beast, tracing them back to servicers' loan files where they will see servicer manufactured defaults, then find out who, higher up in this food chain gave servicers their orders and who placed all the CDS bets rigged with this insider knowledge. (Well, I think we know who did that.)
There is no doubt Markit has become a cartel tightly controlled by its Wall St. owners but it goes so much deeper. DOJ needs to investigate criminality behind thes bets on Markit indices.