From July CNN: Merrill and Others Knew they were selling junk at Triple AAA ratings

securities consultant says Merrill Lynch knew or should have known the securities they brought to market where overrated (From her website: “She wrote the first letter the SEC posted in February 2007 in response to its proposed rules for the credit rating agencies; she made the case that the NRSRO designation for the rating agencies should be revoked for structured financial products.”):
http://money.cnn.com/video/#/video/news/2008/07/31/news.073108.tavoli.cnnmoney
“I misspoke earlier in the interview. I meant to say recent mortgage lending is the largest Ponzi scheme (not “one of the largest”) in the history of the financial markets. The mortgage lending business model is not viable (see also the simplified illustration on the home page of this site). Money from new investors partially funds the obligations to old investors. High dividends suggested a very healthy business model, but the mortgage loans were unsound creating an unsound business model.

One Response

  1. The ratings are correct in the above entry but the ponzi scheme reference is actually from this video:
    http://www.cbsnews.com/video/watch/?id=3134273n

    Dan Edstrom
    dmedstrom@hotmail.com

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