Economy
Related: About this forumSubprime Trading Is Back With a Different Name After Blowing Up the Economy 7 Years Ago
http://readersupportednews.org/news-section2/318-66/28298-subprime-trading-is-back-with-a-different-name-after-blowing-up-the-economy-7-years-agoThe business of bundling riskier U.S. mortgages into bonds without government backing is gearing up for a comeback. Just dont call it subprime.
Hedge fund Seer Capital Management, money manager Angel Oak Capital and Sydney-based bank Macquarie Group Ltd. are among firms buying up loans to borrowers who cant qualify for conventional mortgages because of issues such as low credit scores, foreclosures or hard-to-document income. They each plan to pool the mortgages into securities of varying risk and sell some to investors this year. JPMorgan Chase & Co. analysts predict as much as $5 billion of deals could get done, while Nomura Holdings Inc. forecasts $1 billion to $2 billion.
Investment firms are looking to revive the market without repeating the mistakes that fueled the U.S. housing crisis last decade, which blew up the global economy. This time, they will retain the riskiest stakes in the deals, unlike how Wall Street banks and other issuers shifted most of the dangers before the crisis. Seer Capital and Angel Oak prefer the term nonprime for lending that flirts with practices that used to be employed for debt known as subprime or Alt-A.
While subprime is a dirty word these days, what everyone is seeing is the credit box has shrunk so much that theres a lot of good potential borrowers out there not being served, said John Hsu, the head of capital markets at Angel Oak. The Atlanta-based firm expects to have enough loans for a deal next quarter in which it retains about 20 percent to 33 percent, he said.
Reopening this corner of the bond market may lower consumer costs and expand riskier lending, aiding the housing recovery. The most dangerous slices created from the securitization of loans are also the highest-yielding, offering companies from private-equity firms to real estate investment trusts a way to increase returns as global central banks suppress interest rates to foster economic growth.
OverseaVisitor
(296 posts)Well someone had to bail them out for the bad debt.
Of course it need to be big enough to cause a big Kaboom.
Good Luck to us all.......
Enthusiast
(50,983 posts)How could anyone think this is a good idea?
Will they once again try to blame it on poor people this time around?
This is what happens when Wall Street criminals are not held accountable.
This is why I cannot vote for Bankster apologists from either party.
Occupy, have you heard about this shit?
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bluedigger
(17,087 posts)Hoppy
(3,595 posts)7962
(11,841 posts)"No income no job no assets"
Hoppy
(3,595 posts)Its got a hot tubby thing and me and my buds (I think that's what they call dudes now), we can hang out with Jackie D and a few doobies. Don't tell nobody but Billy B just cooked up some stuff in his trailer. We'll have him make up some more for my housewarming party.
My Charley Davidson next poker run will end up at my place.
All, y'all are gonna be invited.