Posted on 09/09/2007 6:40:26 PM PDT by Flavius
WASHINGTON (AP) -- Could the housing market's woes spread to bonds held in mutual funds by millions of ordinary investors?
Some experts -- and hedge fund investors who have made big bets that the mortgage crisis will worsen -- are saying that's exactly what will happen. Some bond funds that invest in riskier short-term debt already have been whacked by soaring default rates on bonds backed by subprime loans made to borrowers with weak credit.
ADVERTISEMENT Critics charge that Standard & Poor's, Moody's Investors Service and Fitch Ratings routinely give triple-A ratings -- the safest rating there is -- to far too many mortgage-backed bonds backed by subprime home loans.
"The rating agencies just completely missed the boat in their methodology for rating these things," said Janet Tavakoli, president of Tavakoli Structured Finance, a Chicago consulting firm.
About 80 percent of debt in bonds backed by subprime loans is rated triple-A, the same rating on virtually risk-free U.S. Treasury bonds, experts say.
(Excerpt) Read more at biz.yahoo.com ...
Okay, this this should be an interesting week ahead.
Holy RICO statutes, Batman, talk about taking a risk! The ratings agencies have been skating along that razor's edge on quite a few of the new financial "tools" for a long time now. It is about time someone got them back to basics.
yes i have a feeling this oops will go back to be fixed by the collective backs of the almighty “consumers”
Where are all these empty houses?
The Housing Bubble.....
Coming Soon to a Mutual Fund near you!!!!
In the markets that didn’t see much price appreciation in the last 5 years. Here in Indianapolis, foreclosure sales account for 20% of home sales.
Thanks for nothing, Maestro.
Looks like Hedge Funds have met their demise. I’m set
bump for later.
Looks like the money-grubbing roulette wheel ain’t gonna be stopping on the right numbers...
Don’t worry - those scum that package, sell and speculate on these “financial instruments” aren’t going to get hurt.
bond?...james bond.
alright lois, ill do it!
im not worried its even printed in magazines 2 weeks old
they are all after debt bonds now
they are laughing at little people as they have always done and will continue to
main thing is for the active consumers to keep those credit cards churning
Prime mortgage bonds are not the only types of bonds out there. For instance, Senior secured Bonds. And when the Feds are cutting the rates, they usually continue cutting rates for a long time. And bonds do very well in the declining interest rates environment.
i am just enjoying the money printing exercises
its stimulating
And not to mention that taking advantage of economic crisis is extremely profitable. Heck, even Warren Buffet has been buying banks during the sub prime crisis...
Next week will be more interesting. That’s when the Fed meets.
I believe this is the main factor contributing to the recent liquidity dry spell in commercial paper. If debt buyers lose confidence in debt ratings, they may simply stop buying, in relative terms.
its a pretty interesting disaster for anyone watching this stuff
the ultimate end of theatrics will be litanies how the consumer has returned to charging their plastics
and before we know it there will be stellar reports on buoyant holiday shopping gluttony
and all will be well in green eggs and ham world
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