It’s About Time
It’s about time the powers that be recognize who is really to blame for the mortgage crisis. Andrew Cuomo, who by the way I am no fan of, is sending out Wall Street subpoenas.
Finally reality is setting in with the realization that a mere middleman in the mortgage process, simply cannot be the primary cause of the mortgage meltdown.
I’ve maintained that real bad guys are the risk management departments and credit ratings agencies. Seems like Cuomo agrees.
Marketwatch provides coverage of this newsworthy event.
The office of New York Attorney General Andrew Cuomo has sent subpoenas to request information from severalWall Street firms, including Merrill Lynch & Co. (MER) , Bear Stearns Cos. (BSC) and Deutsche Bank AG (DB) , The Wall Street Journal reported, citing people familiar with the matter.
Prosecutors in a broader investigation of the mortgage business are looking into how well the banks examined the quality of mortgages before packaging them into products sold to investors, the report said. The probe also focuses on how the debt was pooled into securities, including banks’ arrangements with credit-rating firms, the newspaper reported.
Ratings companies are also under pressure after asset-backed securities that were rated investment grade plunged in value as a result of the turmoil on credit and mortgage markets.
Banks and lenders often package pools of mortgages, create securities from them and sell them to other investors, rather than keeping them on the balance sheet.
A step in the right direction as it shows an understanding of what really happened to the mortgage backed securities market. As you know, without securitization, there is no mortgage industry.
The people charged with fixing the issue should be focusing on fixing the debt markets, like right now. If they do, we have a shot at limiting future economic damage caused by this mortgage and real estate meltdown. I know, I’m asking for too much.