S&P Just Rated A Bundle Of Subprime Mortgages Higher Than The U.S.

[LetTimmySmoke]

Source: Business Insider / Bloomberg

Remember when Standard & Poors gave triple-A ratings to subprime mortgages that would eventually go bad and nearly bring down the entire economy?

It's happening again.

Bloomberg reports:

S&P is poised to provide AAA grades to 59 percent of Springleaf Mortgage Loan Trust 2011-1, a set of bonds tied to $497 million lent to homeowners with below-average credit scores and almost no equity in their properties.

This tone-deaf move comes weeks after S&P downgraded U.S. debt. While it makes sense that corporate bonds may be safer than sovereigns, we can't figure out how subprime mortgages are triple-A.




Read more: http://www.businessinsider.com/sp-just-rated-a-bundle-of-subprime-mortgages-higher-than-the-us-2011-8

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Read More: http://www.bloomberg.com/news/2011-08-31/subprime-mortgage-bonds-getting-aaa-rating-s-p-denies-to-u-s-treasuries.html?cmpid=bit

Artificial intelligence is no match for natural stupidity.

[plumbob]

1. And of course, crooks cannot help being crooked.

Time to make ratings companies liable for loss when their high-rated packages go back.

That might back 'em up a notch or two.

[Demeter]

2. That's...Unbelieveable

Book 'em, Danno.

[Yo_Mama]

12. Not really

You notice that they are not rating the whole package - just some of the tranches.

The worst that happens is that all the loans default, and are sold for what they can get out of them. If 59% of the original pool is rated high, that means that they anticipate losses of over 20%, probably.

If S&P were rating "tranched" US debt, I'm quite sure that they would not anticipate losses of over 40% on US debt.

You can't compare apples to oranges this way - the Bloomberg article is just stupid.

[7wo7rees]

3. Is anybody fucking home?

[deadinsider]

4. Why would they stop this shit?

No one will do anything about it.

I'd take a slap on the wrist but they'll probably get a back rub.

[Devil_Fish]

8. and then a happy ending. NT

[4_TN_TITANS]

14. LOL......

You people kill me!



Mr. President, welcome to the board meeting. Did you bring your knee pads, sir?

:rofl:

[Downwinder]

5. Where do I place a bet that there is a default within 30 years?

[valerief]

6. Well, the most important thing in the world is for rich people to get richer, so it makes perfect

sense. Vile, yes, but making rich people richer drives everything in the world.

[JDPriestly]

7. The S&P's ratings are worthless.

[Fuddnik]

9. Especially since they won a court ruling saying it's just free speech.

They're not really required to reflect reality or be anything near accurate.

It's just opinion.

[Occulus]

16. Link to that or tell us you're joking.

Seriously. I missed that, somehow.

[Javaman]

10. Welcome to the bubble.

it's just like the old bubble.

[leveymg]

11. Bubble to rubble in no-time flat, and then back for another bailout. S&P rating too good to fall.

And, round and round it goes.

[No Elephants]

15. Why not? If they succeed, they make $$. If they fail, government gives them our $$.

Taxpayers are now the insurers of mega-corporations, only the corporations don't pay us any insurance premiums.

It's the plutonomy, baby!

FDR and Eleanor are spinning in their graves.

[Odin2005]

18. Moral Hazard. They profit no matter what they do.

[Daphne08]

13. I knew they'd be back at it. Disgusting!

[Odin2005]

17. All the ratings agencies should be shut down for fraud.

[reformist2]

19. Bond rating agencies are too easy to "capture" (aka bribe), but bonds do need to be rated.

What's the solution?