Post by jeffolie on Aug 7, 2007 18:40:43 GMT -6
Beware vulgar language ahead...
... we now have Fitch saying that they basically made it all up when they came up with their "ratings criteria" for mortgage backed securities! YOU GOT THAT RIGHT - THE WHOLE FUCKING THING WAS PULLED OUT OF THEIR ASS!
"Change in DTI Ratio: Back-end DTI ratio data is generally more available than front-end data in the data files provided by mortgage issuers. Therefore Fitch has modified ResiLogic to utilize back-end DTI. However, Fitch continues to be concerned by the prevalence of missing DTI data. Fitch will use a default assumption for missing subprime DTI of 50%."
Read that. Then read it AGAIN. Then think about it for 20 or so seconds, and it should all sink in.
THEY ARE CONCERNED?! CONCERNED!
Not quite clear? Let me explain it:
They said that a lot of files have no DTI data provided to FITCH whatsoever. Therefore, Fitch has no fucking idea what your DEBT TO INCOME RATIO IS! How the hell are you going to figure out what the odds of a default are IF YOU DON'T KNOW HOW MUCH MONEY IS AVAILABLE TO SERVICE THE DEBT?!
"Stated" income loans make an even bigger mockery of these supposed ratios, BECAUSE THE "I" IS FICTIONAL! So even WITH the "not provided" DTI, the computations are worthless!
And here's the punchline - FITCH RATED BONDS WHILE KNOWING THAT THE DATA WAS MISSING, BUT THEY RATED 'EM ANYWAY!
Guys, this is HUGE fucking news. HUGE! It is a raw admission that one of the major rating agencies has quite literally pulled bond ratings out of their ass, in that when they didn't have data to support that rating THEY MADE SOMETHING UP! And now, when they find out that these ratings were total horseshit, NOW they go back and "fix" their model BUT THEY WILL STILL TAKE A FILE WITH MISSING DATA OR ONE IN WHICH FICTIONAL INFORMATION IS PROVIDED AND GIVE IT A RATING!
(Thanks to Calculated Risk for the ping on this - I would have likely missed it.)
I am sitting here STUNNED by this. Just stunned.
How prevalent is this crap through the entire debt market?
Let me ask this "impolite" question - is this really just a residential mortgage issue, or is this crap spread through ALL areas of the credit markets? Have the issuers been making things up out of thin air for ALL of the debt they've been rating? How the hell are we supposed to know?!
I suppose I should apologize for the salty language but NOW we are starting to see exactly how many cockroaches are running around the debt markets! And to add to it, we just found a huge goddamn termite infestation in the house too, and it showed up when one of the outside walls collapsed!
This shit must stop. The Regulators - yes, the government - NEEDS TO STEP IN AND STOP IT RIGHT NOW.
The GSE's need to be PROHIBITED from buying stated paper, and any file with MISSING DTI numbers MUST BE REFUSED by the rating agencies. If the lenders won't do it on their own volition then the government needs to step in RIGHT HERE AND NOW and force the issue.
This is unbelievable. We knew that the ratings agencies had not accounted for the possibility of home prices falling, but now we find out that this isn't even half of the problem. The other half is that ratings agencies literally made shit up when they didn't have the data to support their decisions!
Yeah, I'm pissed off and the language in here is more than a bit salty, but look - now we find out that this whole thing was a house of cards and it wasn't just bad assumptions in computer models, it was the PURE INVENTION of data that didn't exist!
In short these ratings mean absolutely nothing at all! If this has infested the rest of the credit markets then we are in for a shitstorm of unbelievable proportion, because the "animal spirits" of Wall Street have no check and balance whatsoever.
Leverage ratios? THEY MEAN NOTHING IF YOU ARE INVENTING THE "INCOME", "EARNINGS" OR "EQUITY" FIGURES THAT GO INTO THE COMPUTATIONS!
I have no idea if this has expanded beyond mortgage-backed bonds, but gee, now we find out that this has been going on for five goddamn years? Just now? How come this hasn't been disclosed before now? So long as the loans were performing then making things up is ok, right? It cuts down the workload, makes everyone's life easier, nobody has to say "no", we all get paid, everyone's happy! Dow 365,000! Yeah, everyone has AAA credit! Life is good and nobody will ever default on a loan again, no matter how levered they are or whether they have any income or assets at all!
GRRRRRRRRRRRRR.
And heh, guess what? I'm not the only one who gets it! The mainstream media is catching on!
"The complete lack of foresight by the regulators and the overwhelming greediness by the players put the markets in the position they are in. I am now starting to believe that the credit bubble may go down in history as the worst bubble we have ever seen...credit on steroids created by Easy Al. (Insert your own Barry Bonds joke here.)"
You think?
market-ticker.denninger.net/
In this corrupt real world of lax regulation and disclaimers, probably nothing will happen to the rating agencies. I am too jaded to be surprised . I am not personally invested in complex financial instruments to be motivated to do anything but watch the big boys portfolios go down the toilet.
... we now have Fitch saying that they basically made it all up when they came up with their "ratings criteria" for mortgage backed securities! YOU GOT THAT RIGHT - THE WHOLE FUCKING THING WAS PULLED OUT OF THEIR ASS!
"Change in DTI Ratio: Back-end DTI ratio data is generally more available than front-end data in the data files provided by mortgage issuers. Therefore Fitch has modified ResiLogic to utilize back-end DTI. However, Fitch continues to be concerned by the prevalence of missing DTI data. Fitch will use a default assumption for missing subprime DTI of 50%."
Read that. Then read it AGAIN. Then think about it for 20 or so seconds, and it should all sink in.
THEY ARE CONCERNED?! CONCERNED!
Not quite clear? Let me explain it:
They said that a lot of files have no DTI data provided to FITCH whatsoever. Therefore, Fitch has no fucking idea what your DEBT TO INCOME RATIO IS! How the hell are you going to figure out what the odds of a default are IF YOU DON'T KNOW HOW MUCH MONEY IS AVAILABLE TO SERVICE THE DEBT?!
"Stated" income loans make an even bigger mockery of these supposed ratios, BECAUSE THE "I" IS FICTIONAL! So even WITH the "not provided" DTI, the computations are worthless!
And here's the punchline - FITCH RATED BONDS WHILE KNOWING THAT THE DATA WAS MISSING, BUT THEY RATED 'EM ANYWAY!
Guys, this is HUGE fucking news. HUGE! It is a raw admission that one of the major rating agencies has quite literally pulled bond ratings out of their ass, in that when they didn't have data to support that rating THEY MADE SOMETHING UP! And now, when they find out that these ratings were total horseshit, NOW they go back and "fix" their model BUT THEY WILL STILL TAKE A FILE WITH MISSING DATA OR ONE IN WHICH FICTIONAL INFORMATION IS PROVIDED AND GIVE IT A RATING!
(Thanks to Calculated Risk for the ping on this - I would have likely missed it.)
I am sitting here STUNNED by this. Just stunned.
How prevalent is this crap through the entire debt market?
Let me ask this "impolite" question - is this really just a residential mortgage issue, or is this crap spread through ALL areas of the credit markets? Have the issuers been making things up out of thin air for ALL of the debt they've been rating? How the hell are we supposed to know?!
I suppose I should apologize for the salty language but NOW we are starting to see exactly how many cockroaches are running around the debt markets! And to add to it, we just found a huge goddamn termite infestation in the house too, and it showed up when one of the outside walls collapsed!
This shit must stop. The Regulators - yes, the government - NEEDS TO STEP IN AND STOP IT RIGHT NOW.
The GSE's need to be PROHIBITED from buying stated paper, and any file with MISSING DTI numbers MUST BE REFUSED by the rating agencies. If the lenders won't do it on their own volition then the government needs to step in RIGHT HERE AND NOW and force the issue.
This is unbelievable. We knew that the ratings agencies had not accounted for the possibility of home prices falling, but now we find out that this isn't even half of the problem. The other half is that ratings agencies literally made shit up when they didn't have the data to support their decisions!
Yeah, I'm pissed off and the language in here is more than a bit salty, but look - now we find out that this whole thing was a house of cards and it wasn't just bad assumptions in computer models, it was the PURE INVENTION of data that didn't exist!
In short these ratings mean absolutely nothing at all! If this has infested the rest of the credit markets then we are in for a shitstorm of unbelievable proportion, because the "animal spirits" of Wall Street have no check and balance whatsoever.
Leverage ratios? THEY MEAN NOTHING IF YOU ARE INVENTING THE "INCOME", "EARNINGS" OR "EQUITY" FIGURES THAT GO INTO THE COMPUTATIONS!
I have no idea if this has expanded beyond mortgage-backed bonds, but gee, now we find out that this has been going on for five goddamn years? Just now? How come this hasn't been disclosed before now? So long as the loans were performing then making things up is ok, right? It cuts down the workload, makes everyone's life easier, nobody has to say "no", we all get paid, everyone's happy! Dow 365,000! Yeah, everyone has AAA credit! Life is good and nobody will ever default on a loan again, no matter how levered they are or whether they have any income or assets at all!
GRRRRRRRRRRRRR.
And heh, guess what? I'm not the only one who gets it! The mainstream media is catching on!
"The complete lack of foresight by the regulators and the overwhelming greediness by the players put the markets in the position they are in. I am now starting to believe that the credit bubble may go down in history as the worst bubble we have ever seen...credit on steroids created by Easy Al. (Insert your own Barry Bonds joke here.)"
You think?
market-ticker.denninger.net/
In this corrupt real world of lax regulation and disclaimers, probably nothing will happen to the rating agencies. I am too jaded to be surprised . I am not personally invested in complex financial instruments to be motivated to do anything but watch the big boys portfolios go down the toilet.