Banks are getting back into the business of building mortgage bonds

Re:Banks are getting back into the business of building mort... by Timothycquinn on Monday September 16, 2019 @08:43AM (#20983454)

You are correct that the ratings system is fundamental to the breakdown of these systems. I don't believe we really fixed those corruption issues. I'm looking forward to seeing some analysts of the ratings from independents vs S&P etc.

We also cannot downplay the significance of speculation systems themselves. There needs to be more burdens put on such financial mechanisms to prevent them from getting out of hand like in 2008.

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Re:Banks are getting back into the business of building mort... by cm2187 on Monday September 16, 2019 @09:45AM (#20983917)

The problem is that investors do not want to pay for independant research, particularly a rating where it would require the agency to do a lot of due dilligence on a transaction rather than simply rely on audited financial statements as they usually do for a regular company.

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Re:Banks are getting back into the business of building mort... by xchaotic on Monday September 16, 2019 @11:28AM (#20985018)

well if they paid more, it could take out any profitability from a product where real returns after fees are already very low

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Re:Banks are getting back into the business of building mort... by cm2187 on Monday September 16, 2019 @11:30AM (#20985037)

Agree. Which is why the issuer is currently paying for it. But with the obvious potential conflict of interest.

Plus these are securities, and all market participants should have access to the same public information. It is a problem to have half the investors in the dark about the transaction if they couldn't pay for a private rating (which in turn would negatively affect pricing).

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