The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: bentway who wrote (111164)	3/18/2008 7:10:14 AM
From: butschi2	Read Replies (1) of 306849

Mortgages at BSC wouldnt have posed a problem, FED would have let BSC down, but BSC is counterparty to $14 trillion in nominal value of derivatives! Most (2/3) of the derivatives are in the OTC market. Look at the SEC-Filings of big banks/brokers, most have exposure of >$20 bio. in not with enough margin secured OTC derivatives, perhaps some brokers would have lost around $1 - $5 billion on BSC alone without a hiccup in the pricing of derivatives. This would have killed many counterparties and TRUST in the derivatives market. Derivatives prices would have been killed due to forced selling/rush to the exit by counterparties and BSC. Leverage with debt, RMBS,CDO,CDS,CDO2,... or derivatives is the problem, not losses on the morgages themselves. On leveraged consumers with 100% financing on to high house values you cant build/make other leveraged bets(RMBS,CDO,CDS,MI...) without substantial risk.

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