tag:blogger.com,1999:blog-10635442.post7906280742363814713..comments2023-10-21T03:07:18.017-05:00Comments on Enclave: Cities Got Suckered by Predatory Banks, TooS-townMikehttp://www.blogger.com/profile/05948307051485318061noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-10635442.post-3237802822205534782009-04-08T21:24:00.000-05:002009-04-08T21:24:00.000-05:00This is not a "perfect storm." This is a storm of ...This is not a "perfect storm." This is a storm of our making through a combination of lax enforcement, indifferent regulators, ineffective and out-of-date-law.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-10635442.post-42228549253419765262009-04-08T19:08:00.000-05:002009-04-08T19:08:00.000-05:00there is general agreement that the catastrophe th...<I>there is general agreement that the catastrophe that happened in 2008 was a perfect storm</I><BR/><BR/>Which leaves you to explain how Regions-Morgan Keegan investment funds lost over 60% of their par value in <I>2007</I>.<BR/><BR/><A HREF="http://www.slcg.com/pdf/workingpapers/Regions%20Morgan%20Keegan%20and%20the%20Abuse%20of%20Structured%20Finance%20-%20Third%20Draft.pdf" REL="nofollow">And I quote:</A><BR/><BR/>"Investors in six Regions Morgan Keegan (“RMK”) bond funds lost $2 billion in 2007. This paper explains how extraordinary and undisclosed risks<BR/>allowed these funds to generate higher returns than their competitors for many years but ultimately caused the funds’ collapse in 2007.<BR/><BR/>The investors’ <B>losses were not the result of a “flight to quality” or a “mortgage meltdown.”</B> Diversified portfolios of high yield bonds and mortgage-backed securities did not suffer significant losses as the RMK funds suffered massive losses. The RMK funds collapsed because they held concentrated holdings of low-priority tranches in structured finance deals backed by risky assets."<BR/><BR/>RTWT. It's instructive.<BR/><BR/>And keep in mind that a lot of Bass Berry & Sims alumni hold powerful positions in state government. Bob Cooper, the state attorney general, is a former BB&S partner, e.g.Andy Axelhttps://www.blogger.com/profile/13067797034223846786noreply@blogger.comtag:blogger.com,1999:blog-10635442.post-35734890648290891252009-04-08T11:47:00.000-05:002009-04-08T11:47:00.000-05:00don't agree entirely with the idea that Morgan Kee...don't agree entirely with the idea that Morgan Keegan was "snookering" or "hoodwinking" or "okeydoking" anyone. there is general agreement that the catastrophe that happened in 2008 was a perfect storm, the likelihood of which was somewhere around 0.0000001%.<BR/><BR/>the real problem was that once the systemic failure started, it was hard to stop it. CDS, MBS, CDOs, etc., were all so complicated that people didn't react to the overleveraging quickly enough. there was also a belief (proven wrong now) that if you spurred growth (which Lewisburg and Mount Juliet did), you were basically "fireproof" and could make money even in a down market. as it turned out, this was a huge gamble. lewisburg and mt juliet leaders knew it. they knew that they were making a bet. they thought they could win the bet. they lost.<BR/><BR/>welcome to the post-Friedman world.<BR/><BR/>Arthur Laffer, by the way, is a total idiot.benintnnoreply@blogger.com