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Countrywide (and other loan issuers) tanked because they were keeping the risky tranches. It was the AAA tranches they sold. That takes all the risks of the und

Countrywide (and other loan issuers) tanked because they were keeping the risky tranches. It was the AAA tranches they sold. That takes all the risks of the underlying loan portfolio and amplifies it. And you didn't answer the question. How many would be fooled by a simple, individual, AAA rated NINJA loan? The question is meaningless. Individual loans aren't rated (at least not on the same C-AAA scale that bond-like instruments are). Portfolios of loans are, as are securitized loans. People were "fooled" by portfolios of loans in the exact same way they were fooled by securitized loans - they chose optimistic parameters for the nightmare scenarios. That's not complexity, that's just guessing wrong about one or two simple numbers.

leereeves 10y ago
Countrywide tanked because they kept the risky tranches for shareholders, not for the people operating the company, who pocketed millions. And when the SEC sued, the CEO agreed to repay investors "$45 million in disgorgement of ill-gotten gains", but reportedly, because of an indemnification agreement, Countrywide the corporation (actually the corporation's new owner BofA) was forced to pay $20 million of that as well. Hard to see that as anything but a scheme to "mislead investors". https://www.sec.gov/news/press/2010/2010-197.htm https://www.sec.gov/news/press/2010/2010-197.htm