Standard Operating Procedure: Create more bogus paper on top of piles of old bogus paper and you contribute to the illusion that any of it is real. The “business model” still leaves out the basic fallacy: that most loans were never actually securitized into the trusts that are claiming them. Hence the at the base of this pyramid, is an MBS issued by an entity without any assets in cash, property or loans.
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The actual goal here is to spread the risk so wide that the impact is reduced when it is finally conceded that the original MBS had no value and every successor synthetic derivative is just as worthless as the one before it.
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