As the mortgage market grew frothy in 2006 — leading to a housing bubble that nearly brought down the banking system two years later — ratings agencies charged with assessing risk in mortgage pools dismissed conclusive evidence that many of the loans were dubious, according to testimony given last week to the Financial Crisis Inquiry Commission.
The commission, a bipartisan Congressional panel, has been holding hearings on the origins of the financial crisis. D. Keith Johnson, a former president of Clayton Holdings, a company that analyzed mortgage pools for the Wall Street firms that sold them, told the commission on Thursday that almost half the mortgages Clayton sampled from the beginning of 2006 through June 2007 failed to meet crucial quality benchmarks that banks had promised to investors.
Yet, Clayton found, Wall Street was placing many of the troubled loans into bundles known as mortgage securities.
Mr. Johnson said he took this data to officials at Standard & Poor’s, Fitch Ratings and to the executive team at Moody’s Investors Service.
“We went to the ratings agencies and said, ‘Wouldn’t this information be great for you to have as you assign tranche levels of risk?’ ” Mr. Johnson testified last week. But none of the agencies took him up on his offer, he said, indicating that it was against their business interests to be too critical of Wall Street.
“If any one of them would have adopted it,” he testified, “they would have lost market share.”
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Heads should be rolling, all over the place.
Pay close attention to this one folks. One of the people who enhanced this boondoggle was Barney Frank, a Democrat bonehead I have long despised. First he was “for” a wonderful idea and now that his seat is in danger he is “against” but the truth is this.
Barney Frank was a prime mover in an idea that almost bankrupted the world and I note a fool who helped create the problem has been allowed to remain place in order to solve it by Obama.
The Tea Party needs to target this man and take him out.
The US has a new choice to replace him — a marine. A profession Barney would never have tried for — not in his wildest dreams. In my view Barney is everything that is wrong about Democrats at the present time and as an aside — Bill Clinton has made a huge mistake by supporting him — but then of course we know why that is also.
Bill Clinton is also a huge part of the US meltdown as he encouraged Barney’s stupidity and he’s just covering his ass because Barney can tell tales. Bob Woodword should write a new book about the malfeasance of these buttheads. It will be another best seller.
To my US friends — support Sean Bielat. You won’t be sorry.
Time for Barney to go.
I think we should fear stupidity in our politicians in power more than fear any evil intent or corruption: The former is much more prevalent and damaging than the latter. LOL !