Wednesday, March 26, 2008

How Did a Few Bad Mortgages Humble Wall Street?


That was the topic this morning of a persentation I gave to a retired group of seniors interested in investments. Their name is the $ums in Retirement. A great group of guys in Walnut Creek that are retired but actively involved in improving and maintaining their financial health. I really enjoyed talking to them. I promised to post this slide which was orignally a full page article in the New York Times. It shows how mortgages were packaged and sold. If you read this and then my previous posting on Shadow banking you will have better understanding of how a few bad loans could humble Wall Street. To clearly read this graphic just click on it and it will appear full size in a seperate window. Pay careful attention how the BBB rated mortgages in step 3 are miraculously turned into AAA rated securities in step 4. Happy reading!