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Morgan Stanley Plans to Turn Downgraded Loan CDO Into AAA Bonds

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posted on Jul, 9 2009 @ 09:42 AM
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Morgan Stanley Plans to Turn Downgraded Loan CDO Into AAA Bonds


www.bloomberg.com

July 8 (Bloomberg) -- Morgan Stanley plans to repackage a downgraded collateralized debt obligation backed by leveraged loans into new securities with AAA ratings in the first transaction of its kind, said two people familiar with the sale.

Morgan Stanley is selling $87.1 million of securities that it expects to receive top AAA ratings and $42.9 million of notes graded Baa2, the second-lowest investment grade by Moody’s Investors Service, according to marketing documents obtained by Bloomberg News. The bonds were created from Greywolf CLO I Ltd., a CDO arranged in January 2007 by Goldman
(visit the link for the full news article)




posted on Jul, 9 2009 @ 09:42 AM
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Just months after being bailed out by the public purse the banks are trying to fleece the public again by packaging lousy loans into treble a rated bonds, how can they honestly expect or be allowed to continue with this practice given the way in which they have destroyed our countries economies? given the way that they have and continue to fleece us it would have been cheaper and better for the public to have allowed these lousy companies to fail and recover what little we could from any assets left over at the end.

www.bloomberg.com
(visit the link for the full news article)



posted on Jul, 9 2009 @ 10:08 AM
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Oh joy! More criminal activity that will go unpunished. It seems as though the banks are out of tricks. But not before they can screw the people one more time.


Just what we need.



posted on Jul, 9 2009 @ 10:15 AM
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You know why? because during the housing boom it was profitable so profitable that now they wanted back, they want back all that corrupted and dirty deals that they only know when it comes to doing business.

They are so corrupted that they forgot how to do honest business anymore.




posted on Jul, 9 2009 @ 10:46 AM
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...and what type of assets do CDO's consist of? (Collateral)



Structured finance securities (mortgage-backed securities, home equity asset-backed securities, commercial mortgage-backed securities)
(...)
Commercial real estate mortgage debt (including whole loans, B notes, and Mezzanine debt)


Collateralized Debt Obligation

Check the recall terms on these CDO's. I would not be surprised a lot of people find themselves in foreclosure in the near future, despite paying faithfully for their mortgages every month.



posted on Jul, 9 2009 @ 11:03 AM
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I forgot, some recommended reading if you are interested in finance.



Again, a zombie loan is a loan to an institution which is unable to pay its obligations. Because, after the loan, the zombie's equity (assets minus liabilities) is exactly as negative as it was before the loan, no loan can restore the true warmth of life to the dead flesh of a zombie. Moreover, since a loan to a zombie cannot trade at par (someone has to take the haircut), the lender has lost money as soon as the loan is made.

So who would make a zombie loan? The answer is simple: only another zombie. But why would even a zombie loan money to a zombie?

Fool! The dead are beyond reason. This is what makes them zombies. Zombie finance is a money-losing proposition; zombies are money-losing institutions. The symmetry is striking and perfect. Of course zombies lend to zombies. This is one of the best ways to lose money.


Unqualified Reservations: America: zombie nation

This should make you laugh out loud a couple of times. The underlying material is dead serious though.

[edit on 9-7-2009 by Truth4hire]



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