Monday, December 28, 2009

Good Business...

...sell crummy securities back by really crummy mortgages to your clients and then bet against the same securities to make sure it is just the clients that take the fall!

On the one had this just makes sense - the firms need to manage risk while individual investors are often looking for exactly the high risk-reward investments. On the other hand it just feels slimy.

What strikes me is how they didn't even get close to covering their losses, so either they didn't think it would get so bad, they could find enough people to cover the other side of the hedge, or they worried it would look suspicious and erode their very profitable securities businesses.

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