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

To: John Koligman who wrote (192567)	3/22/2009 11:44:35 PM
From: jmiller099	Respond to of 306849

If you can, search this thread for the dominos post. That is also a clarifying moment.

To: John Koligman who wrote (192567)	3/23/2009 10:12:59 AM
From: bentway	Read Replies (2) \| Respond to of 306849

"Secondly, Cassano was selling so-called "naked" CDS deals. In a "naked" CDS, neither party actually holds the underlying loan. In other words, Bank B not only sells CDS protection to Bank A for its mortgage on the Pope — it turns around and sells protection to Bank C for the very same mortgage. This could go on ad nauseam: You could have Banks D through Z also betting on Bank A's mortgage. Unlike traditional insurance, Cassano was offering investors an opportunity to bet that someone else's house would burn down, or take out a term life policy on the guy with AIDS down the street. It was no different from gambling, the Wall Street version of a bunch of frat brothers betting on Jay Feely to make a field goal. Cassano was taking book for every bank that bet short on the housing market, but he didn't have the cash to pay off if the kick went wide." Obviously, these should be illegal, and no doubt will be in the future. The question is, WHY are we paying these off NOW? Because a "deal is a deal"? Autoworkers had a deal, and we forced them to CHANGE the deal.