husker, as bullish as I am long term about gold and gold miners, I dont think you should buy more than 25% of any position right now.
the fed isnt going to just idly stand and watch the gold price go up everyday without eventually handing it at least a 10% correction.
and corrections certainly can be more than 10%.
buy 25% now, wait a month and buy next 25%, and the 25% each of the following two months.
we've had a big move here recently in this sector.
LONG TERM (at least 2 years) it wont really matter what you pay this week for physical gold or gold mining shares for all us invested in this sector are going to make alot of money.
however, there are going to be many corrections during this bull market and be prepared for more than usual volatility in this sector vs. the overall stock market.
:money8:
the fed isnt going to just idly stand and watch the gold price go up everyday without eventually handing it at least a 10% correction.
and corrections certainly can be more than 10%.
buy 25% now, wait a month and buy next 25%, and the 25% each of the following two months.
we've had a big move here recently in this sector.
LONG TERM (at least 2 years) it wont really matter what you pay this week for physical gold or gold mining shares for all us invested in this sector are going to make alot of money.
however, there are going to be many corrections during this bull market and be prepared for more than usual volatility in this sector vs. the overall stock market.
:money8:
china might feel some longer term economic impacts from mother nature....plus the timing bad in that chinese new year is Feb 7th
only up 1.2% so far tonight after the 7.19% fall yesterday not really strongly following the US lead
------------------------------------------------
Snow slams China; half million stranded at train station
BEIJING, China (CNN) -- Chinese workers and army soldiers were racing to sweep snow-covered highways and unclog railway routes for millions of travelers trapped by cold weather.
More than 67 million people have been affected by the weather and economic losses are expected to reach as much as $3 billion, Chinese officials say.
Blizzards have snapped power lines and destroyed houses and farmland, prompting fears of food and energy shortages. Twenty-four people have died and some 827,000 people have been evacuated in 14 different provinces, the Ministry of Civil Affairs said Monday.
In the past week, the snowstorms have hit the provinces in central, eastern and southern China -- places that are used to mild winters, not extreme wintry blasts.
"We've never seen such a cold weather lasting for such long a time," said Tang Shan, a man in his 70s in Changsha, the capital of Hunan province. "The last time we had one here was over 50 years ago, and not this bad."
The snow and sleet have paralyzed roads, railways and airports, leaving tens of millions of travelers marooned, officials say. Many of them are bound for home ahead of the traditional Lunar New Year, also known as the Spring Festival, which falls on February 7. Video Watch how the snowstorms have resulted in transit chaos »
For several days before and after that day, an estimated 178 million Chinese will travel by train, and 22 million more by plane, officials say. Millions more will take long-haul vans and buses.
The Lunar New Year travel is China's busiest travel period of the year. But the cold snap is hampering travel plans. Railway and highway routes have been brought to a standstill, several regional airports have been closed and many provinces have imposed power "brownouts" to conserve energy.
On Hunan's major highways, more than 60,000 bus riders were stranded because of icy roads.
In the southern city of Guangzhou, as many as 500,000 train passengers were stranded the past few days when a power failure in neighboring Hunan province crippled the regular train services, local officials said. About 100,000 passengers packed the square in front of the train station while others found shelter in schools and other public buildings while waiting for their trains
Even the local stock market seems affected by the nasty weather. The Shanghai composite index dropped by more than 7 percent on Monday, dragged in part by investors' concerns over the damage caused by the foul winter weather. Worst hit were transport and power stocks.
Chinese premier Wen Jiabao has ordered urgent measures to unclog the transport jam and ensure a steady supply of food and energy.
"Let us mobilize urgently and work as one to wage this tough battle against the disaster," he said in an emergency meeting. "Let's ensure that the people enjoy a joyful and auspicious Spring Festival."
But more miserable weather is expected. China's weather bureau Monday issued a rare "red alert," warning of more severe snowstorms in the coming days. If so, the number of stranded travelers will surely swell.
Tang Shan, the retired official in Hunan, is staying put instead of joining the holiday exodus. Even so, he finds the frigid weather a big nuisance.
"Hospitals now treat children who caught colds and old people who sprained bones after slipping and falling," he says. "Even just walking in the icy street is perilous."
only up 1.2% so far tonight after the 7.19% fall yesterday not really strongly following the US lead
------------------------------------------------
Snow slams China; half million stranded at train station
BEIJING, China (CNN) -- Chinese workers and army soldiers were racing to sweep snow-covered highways and unclog railway routes for millions of travelers trapped by cold weather.
More than 67 million people have been affected by the weather and economic losses are expected to reach as much as $3 billion, Chinese officials say.
Blizzards have snapped power lines and destroyed houses and farmland, prompting fears of food and energy shortages. Twenty-four people have died and some 827,000 people have been evacuated in 14 different provinces, the Ministry of Civil Affairs said Monday.
In the past week, the snowstorms have hit the provinces in central, eastern and southern China -- places that are used to mild winters, not extreme wintry blasts.
"We've never seen such a cold weather lasting for such long a time," said Tang Shan, a man in his 70s in Changsha, the capital of Hunan province. "The last time we had one here was over 50 years ago, and not this bad."
The snow and sleet have paralyzed roads, railways and airports, leaving tens of millions of travelers marooned, officials say. Many of them are bound for home ahead of the traditional Lunar New Year, also known as the Spring Festival, which falls on February 7. Video Watch how the snowstorms have resulted in transit chaos »
For several days before and after that day, an estimated 178 million Chinese will travel by train, and 22 million more by plane, officials say. Millions more will take long-haul vans and buses.
The Lunar New Year travel is China's busiest travel period of the year. But the cold snap is hampering travel plans. Railway and highway routes have been brought to a standstill, several regional airports have been closed and many provinces have imposed power "brownouts" to conserve energy.
On Hunan's major highways, more than 60,000 bus riders were stranded because of icy roads.
In the southern city of Guangzhou, as many as 500,000 train passengers were stranded the past few days when a power failure in neighboring Hunan province crippled the regular train services, local officials said. About 100,000 passengers packed the square in front of the train station while others found shelter in schools and other public buildings while waiting for their trains
Even the local stock market seems affected by the nasty weather. The Shanghai composite index dropped by more than 7 percent on Monday, dragged in part by investors' concerns over the damage caused by the foul winter weather. Worst hit were transport and power stocks.
Chinese premier Wen Jiabao has ordered urgent measures to unclog the transport jam and ensure a steady supply of food and energy.
"Let us mobilize urgently and work as one to wage this tough battle against the disaster," he said in an emergency meeting. "Let's ensure that the people enjoy a joyful and auspicious Spring Festival."
But more miserable weather is expected. China's weather bureau Monday issued a rare "red alert," warning of more severe snowstorms in the coming days. If so, the number of stranded travelers will surely swell.
Tang Shan, the retired official in Hunan, is staying put instead of joining the holiday exodus. Even so, he finds the frigid weather a big nuisance.
"Hospitals now treat children who caught colds and old people who sprained bones after slipping and falling," he says. "Even just walking in the icy street is perilous."
china's infrastruture really being put to the test right now....weather supposed to remain bad for a few more days
and its hitting right when everybody moving around for chinese new year
--------------------------------------------------------------
Blizzards Strand Thousands in China
By WILLIAM FOREMAN – 1 hour ago
GUANGZHOU, China (AP) — At least 25 people were killed as a bus plunged off an icy roadway in China Tuesday, the latest casualties in a surge of severe winter weather that has disrupted the country's busiest holiday travel season and stranded hundreds of thousands of Chinese.
About 500,000 people — most migrant workers — were stuck in the southern city of Guangzhou, railway officials said. Heavy snowfall in provinces to the north had cut off parts of the busy railway line that starts in the city and ends in Beijing.
The crash brought the known death toll in the last two weeks to about 50. Xinhua News Agency said the bus veered off the road, plunging some 40 yards into a valley in mountainous Guizhou province at 7:40 a.m.
The new agency said that in addition to the 25 deaths there were also 13 people injured, accounting for all 38 aboard. Two passengers were hospitalized in critical condition, while injuries to the 11 others were less serious.
The government, scrambling Monday to prevent riots among the crowds that have swelled daily since the storms began Jan. 10, offered temporary shelter in schools and convention centers. Hundreds of police and soldiers were posted around the train station.
Frustrated in their efforts to return home, migrant travelers created small camps of suitcases in the mud outside the train station, scattering chicken bones and cigarette butts.
Li Moming, a construction worker among those stuck in Guangzhou, wore a mud-splattered pinstriped suit for a homecoming that might not happen. He spent the night on the street in a cold drizzle. The train to his village in central Henan province, 20 hours away, was canceled. He might have to spend the holiday at his work site instead.
"What can you do?" he said. "It's the weather. It's nobody's fault. You can't control the weather."
Chinese New Year begins Feb. 7 — when the train station will start to sell tickets again, radio reports said. State-run newspapers ran headlines urging the migrants not to travel. But for many migrants, the New Year — China's most festive holiday — is the only chance for months to visit their families, and they stay away for weeks.
One young mother who would give only her surname, Yang, spent the night on the street in front of the station with her 7-month-old daughter. She said she would probably have to cancel her holiday visit with her family and return to her small apartment near her factory.
Many workers were stoic, accustomed to the huge crowds, discomforts and long delays that are common for China's poor. But others fought among themselves while trying to board long-delayed trains during the busiest travel season of the year.
The great effort put into managing the Guangzhou crowd did not surprise Susan Shirk, whose recent book, "China: Fragile Superpower," discusses how domestic unrest poses a serious threat to the communist regime.
"When large numbers of people are upset about the same problem at the same time, there is a risk of large-scale collective action that could threaten Communist Party rule," said Shirk. "Will the travelers blame the weather or the government?"
A new round of blizzards threatened central Chinese provinces Monday, putting more pressure on already strained transport, communications and power grids. The weather has already affected 67 million people.
The storms, which have killed 24 people since they began, have already caused economic losses of $2.5 billion, the Civil Affairs Ministry said. The storms snapped power lines for trains in neighboring Hunan province — a midpoint for the busy rail line that runs from Guangzhou to Beijing.
The government pledged Monday to increase the output of gasoline, coal and power to ease shortages amid the severe winter weather, which has forced rationing in some areas, the Xinhua News Agency said.
The announcement came as coal prices hit a record high Monday and heavy snows blocked deliveries to power plants. The government was already struggling to ease shortages of pork, grain and other food items that have set off a sharp rise in inflation.
On Friday, the Cabinet ordered local authorities to ensure adequate food supplies to keep prices stable ahead of the New Year.
and its hitting right when everybody moving around for chinese new year
--------------------------------------------------------------
Blizzards Strand Thousands in China
By WILLIAM FOREMAN – 1 hour ago
GUANGZHOU, China (AP) — At least 25 people were killed as a bus plunged off an icy roadway in China Tuesday, the latest casualties in a surge of severe winter weather that has disrupted the country's busiest holiday travel season and stranded hundreds of thousands of Chinese.
About 500,000 people — most migrant workers — were stuck in the southern city of Guangzhou, railway officials said. Heavy snowfall in provinces to the north had cut off parts of the busy railway line that starts in the city and ends in Beijing.
The crash brought the known death toll in the last two weeks to about 50. Xinhua News Agency said the bus veered off the road, plunging some 40 yards into a valley in mountainous Guizhou province at 7:40 a.m.
The new agency said that in addition to the 25 deaths there were also 13 people injured, accounting for all 38 aboard. Two passengers were hospitalized in critical condition, while injuries to the 11 others were less serious.
The government, scrambling Monday to prevent riots among the crowds that have swelled daily since the storms began Jan. 10, offered temporary shelter in schools and convention centers. Hundreds of police and soldiers were posted around the train station.
Frustrated in their efforts to return home, migrant travelers created small camps of suitcases in the mud outside the train station, scattering chicken bones and cigarette butts.
Li Moming, a construction worker among those stuck in Guangzhou, wore a mud-splattered pinstriped suit for a homecoming that might not happen. He spent the night on the street in a cold drizzle. The train to his village in central Henan province, 20 hours away, was canceled. He might have to spend the holiday at his work site instead.
"What can you do?" he said. "It's the weather. It's nobody's fault. You can't control the weather."
Chinese New Year begins Feb. 7 — when the train station will start to sell tickets again, radio reports said. State-run newspapers ran headlines urging the migrants not to travel. But for many migrants, the New Year — China's most festive holiday — is the only chance for months to visit their families, and they stay away for weeks.
One young mother who would give only her surname, Yang, spent the night on the street in front of the station with her 7-month-old daughter. She said she would probably have to cancel her holiday visit with her family and return to her small apartment near her factory.
Many workers were stoic, accustomed to the huge crowds, discomforts and long delays that are common for China's poor. But others fought among themselves while trying to board long-delayed trains during the busiest travel season of the year.
The great effort put into managing the Guangzhou crowd did not surprise Susan Shirk, whose recent book, "China: Fragile Superpower," discusses how domestic unrest poses a serious threat to the communist regime.
"When large numbers of people are upset about the same problem at the same time, there is a risk of large-scale collective action that could threaten Communist Party rule," said Shirk. "Will the travelers blame the weather or the government?"
A new round of blizzards threatened central Chinese provinces Monday, putting more pressure on already strained transport, communications and power grids. The weather has already affected 67 million people.
The storms, which have killed 24 people since they began, have already caused economic losses of $2.5 billion, the Civil Affairs Ministry said. The storms snapped power lines for trains in neighboring Hunan province — a midpoint for the busy rail line that runs from Guangzhou to Beijing.
The government pledged Monday to increase the output of gasoline, coal and power to ease shortages amid the severe winter weather, which has forced rationing in some areas, the Xinhua News Agency said.
The announcement came as coal prices hit a record high Monday and heavy snows blocked deliveries to power plants. The government was already struggling to ease shortages of pork, grain and other food items that have set off a sharp rise in inflation.
On Friday, the Cabinet ordered local authorities to ensure adequate food supplies to keep prices stable ahead of the New Year.
Exactly true...the gov stopped pub M3 over two years ago because they did not want people to know how much $ they were printing. Instead they give u bullcrap numbers on core inflation which do not include everyday necessities like food, energy, housing and various misc expenses..its all a fraud to lie and deceive u...like everything else:shocked:
Housing bubble by design
"50-80% of $1Trillion in sub-prime is non-compliant"
hno:
Clayton Holdings, a company that analyzed thousands of mortgage loans for investment banks, said in a statement on Saturday, that it had "entered into a cooperation agreement" with the office of Attorney General Andrew Cuomo and would tell what it knows about how Wall Street sold mortgage investments despite warnings from Clayton that the underlying home loans did not meet quality standards.
http://www.nytimes.com/2008/01/27/busine....
A company that analyzed the quality of thousands of home loans for investment banks has agreed to provide evidence to New York state prosecutors that the banks had detailed information about the risks posed by ill-fated subprime mortgages.
Investigators are looking at whether that information, which could have prevented the collapse of securities backed by those loans, was deliberately withheld from investors.
Clayton Holdings, a company based in Connecticut that vetted home loans for many investment banks, has agreed to provide important documents and the testimony of its officials to the New York attorney general, Andrew M. Cuomo, in exchange for immunity from civil and criminal prosecution in the state.
The agreement, which was confirmed by Mr. Cuomo’s office and Clayton, forwards an investigation by the attorney general into the question of whether the investment banks held back information they should have provided in the disclosures that accompanied the huge packages of loans they offered as securities.
In these disclosures, underwriters typically said that loans that did not meet even lowered lending standards, called exceptions, accounted for a “significant” or “substantial” portion of the loans contained in the securities, but they offered little hard, statistical information that Clayton promised prosecutors it would provide as evidence.
Investment rating firms like Moody’s and Fitch have said that they were deprived of this information before they gave the securities the top rating, triple-A.
Mr. Cuomo has not accused any investment house of a transgression, but he has identified the disclosures of exceptions to the lending standards as the main line of his investigation.
“At the heart of the subprime meltdown is the inability to get information,” said Howard Glaser, a mortgage industry consultant who used to work for Mr. Cuomo when he was secretary of housing and urban development.
About a quarter of all subprime mortgages are in default, which has resulted in billions of dollars in losses for buyers of securities backed by these mortgages. Many of these loans were made with low teaser rates that would later increase.
Critics of these practices say many of these mortgages should never have been made because borrowers could not repay them.
Investment banks, for their part, have said they provided adequate disclosures, and they even kept some of the securities on their books. They have taken more than $100 billion in write-downs as a result.
Mr. Cuomo has already obtained some evidence through subpoenas. But Clayton, which in industry terminology conducts due diligence for the investment banks, could help him identify salient details in its reports.
“The cooperation of compliance officers or due diligence firms is the best cooperation you can get,” said Tamar Frankel, a professor of securities law at Boston University.
In a statement on Saturday, Clayton’s chairman and chief executive, Frank P. Filipps, acknowledged the agreement and said, “We have complied with a subpoena to produce due diligence reports on various pools of loans that we had reviewed for clients and on loans that had exceptions to lenders/seller guidelines and were eventually purchased” by securities issuers. “This information that we provided to the attorney general is the same information that we provided to our clients.”
Without an immunity deal, officials at Clayton could have refused to testify under their right to protect themselves against self-incrimination.
There is no evidence that Clayton did anything wrong, but securing immunity provides legal certainty for the company and its officers. The company is in a difficult position, because its cooperation might hurt its clients, the investment banks.
Clayton, a publicly held company and the nation’s largest provider of mortgage due diligence services to investment banks, communicated daily with bankers putting together mortgage securities.
As part of the deal, Clayton has told the prosecutors that starting in 2005, it saw a significant deterioration of lending standards and a parallel jump in lending exceptions. In an another sign that the industry was becoming less careful, some investment banks directed Clayton to halve the sample of loans it evaluated in each portfolio, a person familiar with the investigation said.
The mortgage business boomed from 2002 to 2006, generating lucrative fees for mortgage brokers, lenders, credit rating firms, investment banks and many investors. Investment banks began buying billions of dollars of more risky loans made to borrowers with blemished, or subprime, credit histories and packaging them into securities that paid high interest.
Among the biggest investment banks in the mortgage business are Lehman Brothers, the Royal Bank of Scotland, Bear Stearns, Morgan Stanley and Merrill Lynch. None of them have been accused of wrongdoing in Mr. Cuomo’s investigation.
It is unclear how many lending exceptions are contained in the $1 trillion subprime mortgage market, but industry participants cite figures ranging from about 50 percent to 80 percent for some loan portfolios they examined.
The investigation is likely to hinge on whether the reports produced by Clayton included material information, which the issuers of securities must provide to investors under law. Securities fraud cases often turn on courts’ interpretation of materiality.
Investment banks hired companies like Clayton to evaluate a sample, say 20 percent, of the loans. The review was supposed to determine whether the loans complied with the law and met the lending standards that the mortgage companies said they were using. Loans that did not were classified as exceptions.
As demand for the loans surged, mortgage companies were in a strong enough position to stipulate that investment banks have Clayton and other consultants look at fewer loans. The lenders wanted the due diligence to find fewer exceptions, which were sold at a discount, the person familiar with the investigation said.
The investment banks then pooled the mortgages into securities, often by blending loans from different lenders. Information on those mixed pools was then delivered to the rating agencies, which assigned the securities a score. Pension funds and other big investors bought them because they had triple-A ratings.
But investment banks did not give the rating agencies their due diligence reports, and it appears that the agencies did not demand them, people familiar with Mr. Cuomo’s investigation said.
In January 2007, Clayton briefed at least one credit rating agency about the exception reports it was producing, the person involved in the agreement said, but the credit firm did not ask to see the reports.
Last week, the chief executive of Moody’s Investors Service pointed the finger at investment banks. The executive, Raymond W. McDaniel Jr., said in reference to the information the company received, “Both the completeness and veracity was deteriorating.”
Chris Atkins, a spokesman for Standard & Poor’s, said the firm was not responsible for verifying information provided to it by the issuers of securities. It is customary for rating agencies to accept the information they are provided by issuers of securities.
In November, Fitch Ratings published a detailed review of 45 loans in an effort to identify what went wrong as mortgages were turned into securities. It found extensive inaccuracies and fraud. The firm noted that many of the problems would have been easy to identify by looking at loan applications, appraisals and credit reports — but it appears that such review was either never done or ignored. Fitch now says that it will no longer rate subprime mortgage securities unless it is provided access to loan files.
The Clayton agreement is the latest development in Mr. Cuomo’s efforts to uncover abuses in the mortgage business. In November, he sued a subsidiary of First American, a real estate services company, accusing it of inflating appraisals in an effort to secure business from Washington Mutual, the nation’s largest thrift.
"50-80% of $1Trillion in sub-prime is non-compliant"
hno:Clayton Holdings, a company that analyzed thousands of mortgage loans for investment banks, said in a statement on Saturday, that it had "entered into a cooperation agreement" with the office of Attorney General Andrew Cuomo and would tell what it knows about how Wall Street sold mortgage investments despite warnings from Clayton that the underlying home loans did not meet quality standards.
http://www.nytimes.com/2008/01/27/busine....
A company that analyzed the quality of thousands of home loans for investment banks has agreed to provide evidence to New York state prosecutors that the banks had detailed information about the risks posed by ill-fated subprime mortgages.
Investigators are looking at whether that information, which could have prevented the collapse of securities backed by those loans, was deliberately withheld from investors.
Clayton Holdings, a company based in Connecticut that vetted home loans for many investment banks, has agreed to provide important documents and the testimony of its officials to the New York attorney general, Andrew M. Cuomo, in exchange for immunity from civil and criminal prosecution in the state.
The agreement, which was confirmed by Mr. Cuomo’s office and Clayton, forwards an investigation by the attorney general into the question of whether the investment banks held back information they should have provided in the disclosures that accompanied the huge packages of loans they offered as securities.
In these disclosures, underwriters typically said that loans that did not meet even lowered lending standards, called exceptions, accounted for a “significant” or “substantial” portion of the loans contained in the securities, but they offered little hard, statistical information that Clayton promised prosecutors it would provide as evidence.
Investment rating firms like Moody’s and Fitch have said that they were deprived of this information before they gave the securities the top rating, triple-A.
Mr. Cuomo has not accused any investment house of a transgression, but he has identified the disclosures of exceptions to the lending standards as the main line of his investigation.
“At the heart of the subprime meltdown is the inability to get information,” said Howard Glaser, a mortgage industry consultant who used to work for Mr. Cuomo when he was secretary of housing and urban development.
About a quarter of all subprime mortgages are in default, which has resulted in billions of dollars in losses for buyers of securities backed by these mortgages. Many of these loans were made with low teaser rates that would later increase.
Critics of these practices say many of these mortgages should never have been made because borrowers could not repay them.
Investment banks, for their part, have said they provided adequate disclosures, and they even kept some of the securities on their books. They have taken more than $100 billion in write-downs as a result.
Mr. Cuomo has already obtained some evidence through subpoenas. But Clayton, which in industry terminology conducts due diligence for the investment banks, could help him identify salient details in its reports.
“The cooperation of compliance officers or due diligence firms is the best cooperation you can get,” said Tamar Frankel, a professor of securities law at Boston University.
In a statement on Saturday, Clayton’s chairman and chief executive, Frank P. Filipps, acknowledged the agreement and said, “We have complied with a subpoena to produce due diligence reports on various pools of loans that we had reviewed for clients and on loans that had exceptions to lenders/seller guidelines and were eventually purchased” by securities issuers. “This information that we provided to the attorney general is the same information that we provided to our clients.”
Without an immunity deal, officials at Clayton could have refused to testify under their right to protect themselves against self-incrimination.
There is no evidence that Clayton did anything wrong, but securing immunity provides legal certainty for the company and its officers. The company is in a difficult position, because its cooperation might hurt its clients, the investment banks.
Clayton, a publicly held company and the nation’s largest provider of mortgage due diligence services to investment banks, communicated daily with bankers putting together mortgage securities.
As part of the deal, Clayton has told the prosecutors that starting in 2005, it saw a significant deterioration of lending standards and a parallel jump in lending exceptions. In an another sign that the industry was becoming less careful, some investment banks directed Clayton to halve the sample of loans it evaluated in each portfolio, a person familiar with the investigation said.
The mortgage business boomed from 2002 to 2006, generating lucrative fees for mortgage brokers, lenders, credit rating firms, investment banks and many investors. Investment banks began buying billions of dollars of more risky loans made to borrowers with blemished, or subprime, credit histories and packaging them into securities that paid high interest.
Among the biggest investment banks in the mortgage business are Lehman Brothers, the Royal Bank of Scotland, Bear Stearns, Morgan Stanley and Merrill Lynch. None of them have been accused of wrongdoing in Mr. Cuomo’s investigation.
It is unclear how many lending exceptions are contained in the $1 trillion subprime mortgage market, but industry participants cite figures ranging from about 50 percent to 80 percent for some loan portfolios they examined.
The investigation is likely to hinge on whether the reports produced by Clayton included material information, which the issuers of securities must provide to investors under law. Securities fraud cases often turn on courts’ interpretation of materiality.
Investment banks hired companies like Clayton to evaluate a sample, say 20 percent, of the loans. The review was supposed to determine whether the loans complied with the law and met the lending standards that the mortgage companies said they were using. Loans that did not were classified as exceptions.
As demand for the loans surged, mortgage companies were in a strong enough position to stipulate that investment banks have Clayton and other consultants look at fewer loans. The lenders wanted the due diligence to find fewer exceptions, which were sold at a discount, the person familiar with the investigation said.
The investment banks then pooled the mortgages into securities, often by blending loans from different lenders. Information on those mixed pools was then delivered to the rating agencies, which assigned the securities a score. Pension funds and other big investors bought them because they had triple-A ratings.
But investment banks did not give the rating agencies their due diligence reports, and it appears that the agencies did not demand them, people familiar with Mr. Cuomo’s investigation said.
In January 2007, Clayton briefed at least one credit rating agency about the exception reports it was producing, the person involved in the agreement said, but the credit firm did not ask to see the reports.
Last week, the chief executive of Moody’s Investors Service pointed the finger at investment banks. The executive, Raymond W. McDaniel Jr., said in reference to the information the company received, “Both the completeness and veracity was deteriorating.”
Chris Atkins, a spokesman for Standard & Poor’s, said the firm was not responsible for verifying information provided to it by the issuers of securities. It is customary for rating agencies to accept the information they are provided by issuers of securities.
In November, Fitch Ratings published a detailed review of 45 loans in an effort to identify what went wrong as mortgages were turned into securities. It found extensive inaccuracies and fraud. The firm noted that many of the problems would have been easy to identify by looking at loan applications, appraisals and credit reports — but it appears that such review was either never done or ignored. Fitch now says that it will no longer rate subprime mortgage securities unless it is provided access to loan files.
The Clayton agreement is the latest development in Mr. Cuomo’s efforts to uncover abuses in the mortgage business. In November, he sued a subsidiary of First American, a real estate services company, accusing it of inflating appraisals in an effort to secure business from Washington Mutual, the nation’s largest thrift.
arty:
"4 horseman" continue to be weak, people starting to shift from risk and high valuations to more conservative longs during this bear shake time (well that in combo with mortgage stuff, financials, and homies going bear shake crazy)
amzn, goog, rimm, aapl all down again
amzn, goog, rimm, aapl all down again
i'm bored pre fed action always sucks balls markets might as well close for a day and a half prior to fed meeting
not sure we'll make it to my target of 1400 S&P on this bear shake as i'm thinking ben won't be give um what they want
so what you guys think 25 bp or 50 bp or more?
think the markets want AT LEAST 50 bp but something in me thinks ben will only give um 25 bp
not sure we'll make it to my target of 1400 S&P on this bear shake as i'm thinking ben won't be give um what they want
so what you guys think 25 bp or 50 bp or more?
think the markets want AT LEAST 50 bp but something in me thinks ben will only give um 25 bp
Alternatively, you could buy a decent property, sit in it, drink beer and spectate as they ride the roller coaster.
:drink:
Someone like myself from around 1980 would have just got his cash back a few months ago with gold...less 25 years worth of inflation...
Woofy just needs to talk gold up 'cos he's up to his nostrils in the stuff.
At the end of the day the most sensible thing to do is diversify your portfolio.
