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Fannie and Freddie were forced to buy hundreds of billions of "highly rated" Wall Street mortgage backed "assets," and they are now Wall Street's ongoing mortgage dumping grounds.
What was evident was that Brooklyn-bridge backed assets were sold and resold to many thousands of buyers, although the buyers did not know at the time that they were buying it.
Out of the approximately $20 billion CDOs Goldman protected directly with AIG, Goldman had structured and created $6 billion CDOs named "Abacus," against which it bought protection from AIG. (Abacus CDOs were backed by credit derivatives referencing value destroying mortgage backed assets, and some had hidden features that disadvantaged investors).
By selling the mortgage backed assets it acquires -- even at staggering losses -- the government will be able to buy even more resulting is a virtually limitless financial exposure on the part of taxpayers). Any proposal must protect middle income and working families from bearing the burden of this bailout.
Similar(56)
The big help has come from selling asset-backed securities, bunches of loans backed by assets like car loans.
Issuing entities include sovereign and municipal governments, government agencies, corporations and special purpose vehicles (SPVs) backed by assets such as mortgages, auto loans or credit card receivables (called asset backed-securities).
And some loans are backed by assets or unusual guarantees.
Almost all of Tyco's debt is unsecured -- not backed by assets.
Commercial paper backed by assets led the fall as buyers fled debt linked to subprime mortgages.
That means that any new bonds will not be backed by assets, analysts said.
They can go to pawn shops, which might charge 100% annual interest on loans backed by assets.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com