Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (91369)	10/4/2007 10:23:59 PM
From: ChanceIs	Respond to of 306849

>>>what would be the crime they are alleging here? Stupidity and greed is not a crime.<<< I am a lay lawyer at best, so what you get from my view is worth what you are paying. First I find the matter fascinating. Absolutely fascinating. I read deeply into the matter back in June. Bear Stearns and much of the press - in its naive tendency, ignorance or flat out maliciousness - began to attack the hedge funds, alleging that they were about the business of harassing Bear Stearns because BS wasn't foreclosing poor, ignorant ARM borrowers at a sufficiently rapid pace. Upon further examination, it came to light that the hedge funds were completely indifferent to the rate of foreclosure activity. Their interest was the market value of the mortgage backed securities. The hedge funds had bought puts against BS' portfolio, believing - quite rightly - that they were filled with junk. The ultimate owner of the MBS would be concerned about the rate of foreclosure, not the hedge funds. In fact, it was to the hedgefunds' advantage that foreclosure was delayed - the loans decrease in value for every day J6P stays in his heavily leveraged house w/o paying - and as the neighborhood home prices tanked. The hedge funds wanted to collect on their puts, plain and simple. They wanted the portfolios marked-to-market vice marked-to-model . BS persisted with the mark-to-model approach. Perhaps deep in the contract language, mark-to-model is specified. However one must ask, what are the inputs to the model. It seems very apparent that BS was taking bad loans out of the MBS portfolio and putting good loans in. BS apparently figured that it would cost them less by getting some bad loans out of the portfolios - which it passively serviced at arm's length in a fiduciary capacity - and writing them off against their regular balance sheet, than paying off the MBS puts which they had sold to the hedge funds. Shell games!?!?! Intentionally misrepresenting the MBS portfolio!?!?! How do you spell..... F R A U D???????????? It is likely that this is a new type of fraud, but the bottom line is intent to deceive. Is misleading those evil, avaricious hedge funds in this fashion explicitly on the criminal books??? Probably not. But..... The hedge funds live in New Canaan and BS lives in the Big Apple, a few miles west and in a different state. Deals made over the interstate telephone lines with intentionally misleading information!?!?!?! Sounds like a federal wire fraud issue to me. Usually I have little sympathy for the hedge funds, but in this case I think that BS needs to wear some sack cloth and ashes. Besides, the hedge funds are new kids on the block. Those investment banks have been smelling up the place since before the Civil War and have perfected their art. When I heard Merrill-Lynch was swapping barges with Enron to boost Enron's profits while simultaneously selling little old ladies Enron stock, the scales fell from my eyes. I will enjoy watching this.