Professional Documents
Culture Documents
Parshwadeep
PARTNERS IN
CRIME
Customers FED Mortgage
Investo
Brokersrs
Documents Documents
Subprime Mortgage
Customer Loan Broker Loan + BANK(Lender)
Premium
Documents Documents
Subprime Mortgage
Customer Loan Broker Loan + BANK(Lender)
Premium
Documents Loan +
converted to Premium
Securities(MBS/A
Principal + interest BS)
payable over long term
Investment
SIV Bank
Off balance
sheet entity
CDO
The investment banks will package
these with other securities and slice
them into different categories of CDO
Securities(
MBS)
CDO
Certification
Credit Rating agencies(CRA) would
certify these securities
Documents Documents
Subprime Mortgage
Customer Loan Broker Loan + BANK(Lender)
Premium
Documents Loan +
converted to Premium
Securities(MBS/A
Principal + interest BS)
payable over long term
CDO Investment
ti ng SIV Bank
Ra Off balance
ium sheet entity
CRA rem
P
Investors
Investment bank Structured Investment
Vehicle(SIV) will sell CDOs to the Investors
across the globeMortgage Documents
Documents
Subprime
Customer Loan Broker Loan + BANK(Lender)
Premium
Principal + Documents Loan +
interest converted to Premium
payable over Securities(MBS/A
BS)
long term
Loan + Investment
Investors Premium Bank
SIV
Off balance
Premium
CDO
Rating
sheet entity
CRA
Insured
Documents Documents
Subprime Mortgage
Customer Loan Broker Loan + BANK(Lender)
Premium
Principal + Documents Loan +
interest converted to Premium
payable Securities(MBS/A
over long BS)
term Loan + Investment
Investors Premium Bank
SIV
Off balance
Premium
CDO
Rating
Insurance
sheet entity
Premium
Insurer CRA
Other linkages
Mortgage
Broker Bank
Investment
Bank
Insurer CRA
Mistakes
Wrong belief of housing prices always going up
High leveraging
Housing
market nose
Sub prime borrower
Investors
Investment
Banks
Nationaliz Bankrupt
ed
Credit Rating
Agencies
Insurers
Saved by
government
funding
Global Equity
Markets
Lose 45% of
wealth
Money market
Confidence in
Market
Someone got
lucky!
Alternate
investment
saw a surge
LEARNING
THINK BEFORE YOU ACT
THANK YOU