My friend in America sent me this explanation on why the banks and stockbrokers have so much money in sub-prime assets.
1. The originating banks were not allowed to hold their own products.
2. They buy each other’s products and used them to increase the value of their earnings.
3. The products are quite complex; no one could figure out how to value them
4. Each separate mortgage has a different set of rules regarding a change in interest rates.
5. Most of the mortgages originate from brokers whose only interest is to earn a mortgage fee.
6. The lenders do not carry out due diligence; they package the loans and pass the risk to the investors.
7. There is a complex set of events which finally lead to this crisis
He told this old story. A buyer got a rotten Herring and complained about it to the broker who sold it to him. The broker said. "Oh that was a trading Herring not an eating Herring.”
- ► 2019 (1600)
- ► 2018 (1406)
- ► 2017 (1258)
- ► 2016 (828)
- ► 2015 (691)
- ► 2014 (144)
- ► 2013 (501)
- ► 2012 (1269)
- ► 2011 (1873)
- ► 2010 (2369)
- ► 2009 (1654)
- ► 2008 (2104)
12/16 - 12/23
- Different Types of Investment Funds
- A marketing tool
- Agent to source for quotes
- Invest for the long term
- Family Insurance
- Invest in Bonds
- Happy Holidays
- Top up your relatives CPF accounts
- How to make your CPF money work HARDER
- A new way to publish a book
- Reverse Mortgage
- Book on Logic Quiz
- Swan Lake at the Esplanade
- Investing in each other's products
- Term with critical illness cover
- Big writeoffs for sub-prime losses
- Horrified by shark attacks?
- Insurance agents who look after your interest
- Charges of an Investment Linked Plan (ILP)
- Innovative, animated, e-greeting card
- Living policy actively promoted in the past
- ILP and Unit Trust
- Promoting Swan Lake
- Visitors to my blog
- Buy Term Insurance Directly
- Pay less for your motor insurance
- Swan Lake - tell your friends
- Critical Illness Policy for $250,000
- Sudoku Workshop at Bishan
- SuperSIV Bailout Fund
- Flexi Link and CPF policies
- Logic Quiz A-8
- Taxi service in Singapore
- Light buses in Hong Kong
- CEO uses public transport
- How much to insure for critical illness?
- Money Market Fund
- Invest the year-end bonus
- Swan Lake - the story
- Investing in volatile market conditions
- Swan Lake, 20 - 23 December, Esplanade
- Renewal of motor insurance
- Forward Pricing of Unit Trust
- Buy Motor Insurance Directly
- Buy Term Insurance Directly
- Investment-linked plan with high distribution cost...
- NTUC Income's Money Market Fund
- Government Bonds
- Search my blog
- Logic Quiz A-7
- Logic Quizzes at my website
- Answers to 6J16, 6A19
- Good chance to win the Sudoku Challenge
- Bid and Offer prices of Unit Trust
- Sudoku Challenge 6 and 13 January 2008
- Sudoku (Logic9) workshop
- How long does it take to solve a Logic Quiz?
- Lower the cost of insurance
- Types of Liability
- Corporate governance and risk management
- Answer to J17, A17
- Use credit card to buy shares?
- Logic Quiz 6A-19
- Logic Quiz 6J-17
- ▼ 12/16 - 12/23 (65)
- ► 2006 (696)
- ► 2005 (159)