3 ms·
You have to wonder what the buyers where thinking. One problem was that the rating agencies (paid by the companies creating the products, BTW), rated the stuff
by nas 18y ago
You have to wonder what the buyers where thinking. One problem was that the rating agencies (paid by the companies creating the products, BTW), rated the stuff AAA.
- chollida1 18y ago> You have to wonder what the buyers where thinking. One problem was that the rating agencies (paid by the companies creating the products, BTW), rated the stuff AAA. The biggest reason why this "stuff" was rated AAA was that banks backed them fully, ie if they defaulted then the bank would step in and make the investors whole again. Hence the CMO's got the rating of the bank that provided them. The thinking was that some mortgages would go bad but certainly not a large percentage of them.