06-05-2008, 09:30 AM
Evan, look into the mortgage industry in the past 5 years. It grew so fast that they were taking non college grads or college grads with non business/math backgrounds e.g. music majors and the like.
Those guys irresponsibly gave out loans or falsified income statements. They knowingly generated a bad product which received AAA bond status from their accomplices.
If I invest a 1 trillions bucks in a AAA security, I expect that due diligence was paid by the financial institutions. No one expects guaranteed returns but a AAA rating means something. but in teh case of MBS, the AAA ratings were at best erroneous, at worst, fraudulent.
What I'm telling you is that you're assuming that this is normal market cycles and what I'm telling you is that its not. Business does not include violating good business practices or securities regulation.
Normal risk does not include fraud. That's why we have laws governing these things.
Those guys irresponsibly gave out loans or falsified income statements. They knowingly generated a bad product which received AAA bond status from their accomplices.
If I invest a 1 trillions bucks in a AAA security, I expect that due diligence was paid by the financial institutions. No one expects guaranteed returns but a AAA rating means something. but in teh case of MBS, the AAA ratings were at best erroneous, at worst, fraudulent.
What I'm telling you is that you're assuming that this is normal market cycles and what I'm telling you is that its not. Business does not include violating good business practices or securities regulation.
Normal risk does not include fraud. That's why we have laws governing these things.
Two feet.