4 ms·
MBS crisis wasn't because of a "recall" or even because of the excessive bad loans. What really killed the system was that there were side bets worth magnitude
by zeusk 10y ago
MBS crisis wasn't because of a "recall" or even because of the excessive bad loans.
What really killed the system was that there were side bets worth magnitudes more than the MBS securities themselves that the market would keep going up because no-one really looked into the crap going under those bonds and how risky they really were.
- pjmorris 10y agoI should've said 'credit default swaps'. OTOH, is it fair to say that the CDS prompted an excess of mortgages? And I do think there's room for viewing the extraordinary actions the Fed took as a recall, e.g. MBS purchases during QE 1, 2, 3....