roy mckoi

Insights from a Derivatives Salesman

Most derivative problems this crisis arose as a result of rating agency mistakes. Some of which were truly asinine. Examples: Canadian Liquidity and the rating agency DBRS permission of illiquid leveraged super senior derivatives into conduits; AIG's incredible half trillion of CDS on CDOs; the monoline business model; Mezz ABS CDOs with CDO tranches inside; etc. The rest of the derivative problems are minimal compared to the rating agency issues.....