There is just so much fraud revealed in this story yet not one word of anyone receiving even a token slap on the wrist.
This is really a beautifully done article. A great example that shows layers of complexity with a fairly simple and typical situation.
But once the losses in a pool reach a certain point, even the AAA debt is affected and suffers ratings downgrades. The fund managers who hold AAA debt don’t want that to happen, for obvious reasons.
Multiply that by trillions. Now, Nicole knows that I love her, but a couple of other small mentionables:
More than two years would pass before the investors in the Milbank deal finally took their losses so that everyone could move on. In April 2011, Milbank sold the buildings to a new landlord at a price more than 25 percent lower than its original 2006 purchase price. Counting liens, fines, and the like to close out the sale, Milbank’s senior lenders probably lost about 26 percent of their original investment, observers estimate. Deutsche Bank got nothing on its junior debt (except for its original underwriting fees).Two years is nothing. It can take two years to evict somebody in a foreclosure (well, much longer, so it seems, these days). And a 26% loss, when hot-spot US real-estate dropped 50%? I'd say the came out too good for the idiots that they were.
Go figure.
Of course, it also has been turned into mile upon mile of crime-ridden slums by unruly hordes of America's intractable domestic and imported Third Worlders. No mystery as to how and why this marvelous place, once home to NYC's better working classes, would become a target for developers ... honest and otherwise.
The trick for a developer of course is how to get all those damn poor (and dangerous), largely state-supported people out of the potentially profitable property.
The old American New York State now begins at Poughkeepsie.