Paid cash in, counted and weighed. Bank now disputes figure.
Discussion
Piersman2 said:
When the bank phoned I'd have asked them what they would do if I'd just been in a few hours earlier, had withdrawn £5000 and then counted it at home to find it £60 light. Would the bank be happy enough to hand me the 'missing' £60 if I went back in?
We all know the answer here (sidicks excepted
) - it would be 'No'.
So then I'd have asked the person form the bank why I should be expected to do anything differently.
If they could come up with some cogent argument to that I 'might' hand over the £60. But they couldn't, so I wouldn't.
As with any retail outlet, they'd cash-up the till in order to investigate. Should they find a discrepancy in your favour, I'd expect them to reimburse you - as any reputable retail outlet would.We all know the answer here (sidicks excepted
) - it would be 'No'.So then I'd have asked the person form the bank why I should be expected to do anything differently.
If they could come up with some cogent argument to that I 'might' hand over the £60. But they couldn't, so I wouldn't.
With reference to counting machines - there are 2 kinds available, the ones which work a bit like a car shuffler and those which use weight to verify bundles of notes. Surprised a bank uses the latter, as we always had the weighing machines in the cash office of the shops I've worked in.
Trabi601 said:
Piersman2 said:
When the bank phoned I'd have asked them what they would do if I'd just been in a few hours earlier, had withdrawn £5000 and then counted it at home to find it £60 light. Would the bank be happy enough to hand me the 'missing' £60 if I went back in?
We all know the answer here (sidicks excepted) - it would be 'No'.
So then I'd have asked the person form the bank why I should be expected to do anything differently.
If they could come up with some cogent argument to that I 'might' hand over the £60. But they couldn't, so I wouldn't.
As with any retail outlet, they'd cash-up the till in order to investigate. Should they find a discrepancy in your favour, I'd expect them to reimburse you - as any reputable retail outlet would.We all know the answer here (sidicks excepted
) - it would be 'No'.So then I'd have asked the person form the bank why I should be expected to do anything differently.
If they could come up with some cogent argument to that I 'might' hand over the £60. But they couldn't, so I wouldn't.
With reference to counting machines - there are 2 kinds available, the ones which work a bit like a car shuffler and those which use weight to verify bundles of notes. Surprised a bank uses the latter, as we always had the weighing machines in the cash office of the shops I've worked in.
supercommuter said:
Why don't you reply in a helpful way to educate people instead of being condescending and acting like a know it all. You have not really educated anyone, just came across like you secretly know something we all don't. Well done.
People that ask genuine questions receive helpful answers.People that post purely to incite an argument, on a topic that they clearly don't understand receive a more aggressive and less helpful response! Maybe you should be criticing the poster of the initial comments that incited the reply:
Yipper said:
Given almost the entire UK banking system has spent the past ~40 years cheating and lying through its teeth to get fat on consumer and business deceit, banks are not really in a good position to take the moral high ground. From PPI to CDOs to hidden overdraft charges, the banking system does little more than glide from one ripoff to the next.
I'm not sure why you think that was a helpful or constructive post?!Edited by sidicks on Monday 20th February 16:02
As one who has no intimate knowledge of the minutiae of the banking system I googled CDO's and found the following fairly simple explanation.
As a layman,after reading this article,I see three reasons for the banking collapse....
1) Greed
2) Incompetence
3) A combination of the above.
It has been suggested that borrowers were implicit in the gbc,in some degree that's true,however that also points to a degree of incompetence by the lenders.
The whole sordid saga reminds me of the geezers on the high street that show you a lot of goodies worth £100 and then sell you a paper bag,contents undisclosed,containing a lot of s
te inferring that you're getting a bargain.
BREAKING DOWN 'Collateralized Debt Obligation - CDO'
As many as five parties are involved in constructing CDOs:
Securities firms, who approve the selection of collateral, structure the notes into tranches and sell them to investors;
CDO managers, who select the collateral and often manage the CDO portfolios;
Rating agencies, who assess the CDOs and assign them credit ratings;
Financial guarantors, who promise to reimburse investors for any losses on the CDO tranches in exchange for premium payments; and
Investors such as pension funds and hedge funds.
The earliest CDOs were constructed by Drexel Burnham Lambert – the home of former “junk bond king” Michael Milken – in 1987 by assembling portfolios of junk bonds issued by different companies. Securities firms subsequently launched CDOs for a number of other assets with predictable income streams, such as automobile loans, student loans, credit card receivables and even aircraft leases. However, CDOs remained a niche product until 2003-04, when the U.S. housing boom led the parties involved in CDO issuance to turn their attention to non-prime mortgage-backed securities as a new source of collateral for CDOs.
CDOs subsequently exploded in popularity, with CDO sales rising almost 10-fold from $30 billion in 2003 to $225 billion in 2006. But their subsequent implosion, triggered by the U.S. housing correction, saw CDOs become one of the worst-performing instruments in the broad market meltdown of 2007-09. The bursting of the CDO bubble inflicted losses running into hundreds of billions on some of the biggest financial institutions, resulting in them either going bankrupt or being bailed out through government intervention, and contributing to escalation of the global financial crisis during this period.
As a layman,after reading this article,I see three reasons for the banking collapse....
1) Greed
2) Incompetence
3) A combination of the above.
It has been suggested that borrowers were implicit in the gbc,in some degree that's true,however that also points to a degree of incompetence by the lenders.
The whole sordid saga reminds me of the geezers on the high street that show you a lot of goodies worth £100 and then sell you a paper bag,contents undisclosed,containing a lot of s
te inferring that you're getting a bargain.BREAKING DOWN 'Collateralized Debt Obligation - CDO'
As many as five parties are involved in constructing CDOs:
Securities firms, who approve the selection of collateral, structure the notes into tranches and sell them to investors;
CDO managers, who select the collateral and often manage the CDO portfolios;
Rating agencies, who assess the CDOs and assign them credit ratings;
Financial guarantors, who promise to reimburse investors for any losses on the CDO tranches in exchange for premium payments; and
Investors such as pension funds and hedge funds.
The earliest CDOs were constructed by Drexel Burnham Lambert – the home of former “junk bond king” Michael Milken – in 1987 by assembling portfolios of junk bonds issued by different companies. Securities firms subsequently launched CDOs for a number of other assets with predictable income streams, such as automobile loans, student loans, credit card receivables and even aircraft leases. However, CDOs remained a niche product until 2003-04, when the U.S. housing boom led the parties involved in CDO issuance to turn their attention to non-prime mortgage-backed securities as a new source of collateral for CDOs.
CDOs subsequently exploded in popularity, with CDO sales rising almost 10-fold from $30 billion in 2003 to $225 billion in 2006. But their subsequent implosion, triggered by the U.S. housing correction, saw CDOs become one of the worst-performing instruments in the broad market meltdown of 2007-09. The bursting of the CDO bubble inflicted losses running into hundreds of billions on some of the biggest financial institutions, resulting in them either going bankrupt or being bailed out through government intervention, and contributing to escalation of the global financial crisis during this period.
I once physically paid a cheque into my Bank account, as in visited the bank and gave a person the Cheque, Cheque was in joint names but account was in sole name. Money was credited to my account, a few days later the Cheque came back to me in the post and they said they could not take it as it needed to be paid into a joint account. Took the Cheque to another bank that we had a joint account with and paid it in.
Full amount for the Cheque was still showing in first bank a week later so we cleared it out and closed the account, second bank also showed the Cheque as being credited. Happy days, to be fair I was a skint ex squaddie at the time and I put the money to good use in paying for some IT courses and funding my future career. That was 15 years ago and I still stay 100 yards clear of any branch of bank 1 just incase.
Full amount for the Cheque was still showing in first bank a week later so we cleared it out and closed the account, second bank also showed the Cheque as being credited. Happy days, to be fair I was a skint ex squaddie at the time and I put the money to good use in paying for some IT courses and funding my future career. That was 15 years ago and I still stay 100 yards clear of any branch of bank 1 just incase.
avinalarf said:
As one who has no intimate knowledge of the minutiae of the banking system I googled CDO's and found the following fairly simple explanation.
As a layman,after reading this article,I see three reasons for the banking collapse....
1) Greed
2) Incompetence
3) A combination of the above.
It has been suggested that borrowers were implicit in the gbc,in some degree that's true,however that also points to a degree of incompetence by the lenders.
The whole sordid saga reminds me of the geezers on the high street that show you a lot of goodies worth £100 and then sell you a paper bag,contents undisclosed,containing a lot of ste inferring that you're getting a bargain.
BREAKING DOWN 'Collateralized Debt Obligation - CDO'
As many as five parties are involved in constructing CDOs:
Securities firms, who approve the selection of collateral, structure the notes into tranches and sell them to investors;
CDO managers, who select the collateral and often manage the CDO portfolios;
Rating agencies, who assess the CDOs and assign them credit ratings;
Financial guarantors, who promise to reimburse investors for any losses on the CDO tranches in exchange for premium payments; and
Investors such as pension funds and hedge funds.
The earliest CDOs were constructed by Drexel Burnham Lambert – the home of former “junk bond king” Michael Milken – in 1987 by assembling portfolios of junk bonds issued by different companies. Securities firms subsequently launched CDOs for a number of other assets with predictable income streams, such as automobile loans, student loans, credit card receivables and even aircraft leases. However, CDOs remained a niche product until 2003-04, when the U.S. housing boom led the parties involved in CDO issuance to turn their attention to non-prime mortgage-backed securities as a new source of collateral for CDOs.
CDOs subsequently exploded in popularity, with CDO sales rising almost 10-fold from $30 billion in 2003 to $225 billion in 2006. But their subsequent implosion, triggered by the U.S. housing correction, saw CDOs become one of the worst-performing instruments in the broad market meltdown of 2007-09. The bursting of the CDO bubble inflicted losses running into hundreds of billions on some of the biggest financial institutions, resulting in them either going bankrupt or being bailed out through government intervention, and contributing to escalation of the global financial crisis during this period.
The information provided does not tally with your conclusions.As a layman,after reading this article,I see three reasons for the banking collapse....
1) Greed
2) Incompetence
3) A combination of the above.
It has been suggested that borrowers were implicit in the gbc,in some degree that's true,however that also points to a degree of incompetence by the lenders.
The whole sordid saga reminds me of the geezers on the high street that show you a lot of goodies worth £100 and then sell you a paper bag,contents undisclosed,containing a lot of s
te inferring that you're getting a bargain.BREAKING DOWN 'Collateralized Debt Obligation - CDO'
As many as five parties are involved in constructing CDOs:
Securities firms, who approve the selection of collateral, structure the notes into tranches and sell them to investors;
CDO managers, who select the collateral and often manage the CDO portfolios;
Rating agencies, who assess the CDOs and assign them credit ratings;
Financial guarantors, who promise to reimburse investors for any losses on the CDO tranches in exchange for premium payments; and
Investors such as pension funds and hedge funds.
The earliest CDOs were constructed by Drexel Burnham Lambert – the home of former “junk bond king” Michael Milken – in 1987 by assembling portfolios of junk bonds issued by different companies. Securities firms subsequently launched CDOs for a number of other assets with predictable income streams, such as automobile loans, student loans, credit card receivables and even aircraft leases. However, CDOs remained a niche product until 2003-04, when the U.S. housing boom led the parties involved in CDO issuance to turn their attention to non-prime mortgage-backed securities as a new source of collateral for CDOs.
CDOs subsequently exploded in popularity, with CDO sales rising almost 10-fold from $30 billion in 2003 to $225 billion in 2006. But their subsequent implosion, triggered by the U.S. housing correction, saw CDOs become one of the worst-performing instruments in the broad market meltdown of 2007-09. The bursting of the CDO bubble inflicted losses running into hundreds of billions on some of the biggest financial institutions, resulting in them either going bankrupt or being bailed out through government intervention, and contributing to escalation of the global financial crisis during this period.
sidicks said:
The information provided does not tally with your conclusions.
I welcome your comments..I quote.....
( CDOs subsequently exploded in popularity, with CDO sales rising almost 10-fold from $30 billion in 2003 to $225 billion in 2006. But their subsequent implosion, triggered by the U.S. housing correction, saw CDOs become one of the worst-performing instruments in the broad market meltdown of 2007-09.)
I thought that banks in the USA gave mortgages on properties to people that proved incapable of servicing the debt and then parcelled up these "bad"debts in CDO's .
Then, when it was realised that the CDO's were toxic,the market panicked and this precipitated the meltdown.
If this is the case,albeit an oversimplification, my comments stand up.
I am not suggesting all bankers were complicit in the crisis,and certainly not the many others not involved in that area of banking,but surely some bankers must have been aware of the risks and took advantage regardless of the outcome.
I also understand that it suited other parties and governments to turn a blind eye to the impending "bubble"that broke so devastatingly.
I assume you are in the banking industry and that your knowledge allows you a deeper understanding of what is probably a complex subject.
However to the layman the old maxim applies "if it looks and smells rotten....it is rotten".
BTW sidicks you've spelt" receive" incorrectly....... naughty step for you.
avinalarf said:
I welcome your comments..
I quote.....
( CDOs subsequently exploded in popularity, with CDO sales rising almost 10-fold from $30 billion in 2003 to $225 billion in 2006. But their subsequent implosion, triggered by the U.S. housing correction, saw CDOs become one of the worst-performing instruments in the broad market meltdown of 2007-09.)
I thought that banks in the USA gave mortgages on properties to people that proved incapable of servicing the debt and then parcelled up these "bad"debts in CDO's .
In the US banks were forced to issue mortgage to 'sub-prime' borrowers.I quote.....
( CDOs subsequently exploded in popularity, with CDO sales rising almost 10-fold from $30 billion in 2003 to $225 billion in 2006. But their subsequent implosion, triggered by the U.S. housing correction, saw CDOs become one of the worst-performing instruments in the broad market meltdown of 2007-09.)
I thought that banks in the USA gave mortgages on properties to people that proved incapable of servicing the debt and then parcelled up these "bad"debts in CDO's .
These risks were packaged up in CDOs to be sold to other investors.
The inclusion of sub-prime mortgages was expected to provide some diversification benefits, even though they had high default risk.
avinalarf said:
Then, when it was realised that the CDO's were toxic,the market panicked and this precipitated the meltdown.
The Point of a CDO is that the risk is tranched - rather than all investors having an equal exposure, some investors take the riskiest piece (and get the highest yields) and some investors take the lowest risk, receiving significant subordination from other investors, but for a low yield.That is why you can, quite reasonably, achieve a AAA rating for the senior tranche even where the underlying assets are higher risk.
The key is in understanding the pattern of defaults that are likely on the portfolio and hence what the level of protection ("subordination") there needs to be to justify the AAA rating.
A key part of that is the expected default rate (which wasn't necessarily underestimated) and the correlation between the underlying mortgages (which is where the main issues arose).
All other things being equal a higher correlation, but the same overall expected default rate would lead to a need for the AAA risk to have greater protection.
In the stressed conditions, as correlation rose, the value of the AAA tranche become reduced even though in many cases the actual default levels were not that much higher than expectations.
In Europe, many AAA tranches took significant mark-to-market hits due to uncertainty and due to forced sellers (who were leveraged) but actual loses were minimal and all of these assets actually paid back the coupons and principle redemptions expected, thus justifying their rating.
Edited by sidicks on Monday 20th February 16:19
avinalarf said:
sidicks said:
The information provided does not tally with your conclusions.
I assume you are in the banking industry and that your knowledge allows you a deeper understanding of what is probably a complex subject.However to the layman the old maxim applies "if it looks and smells rotten....it is rotten".
See if this helps with your understanding:
Why did the popping of the housing bubble bring the financial system—rather than just the housing sector of the economy—to its knees? The answer lies in two methods by which banks had evaded regulatory capital requirements. First, they had temporarily placed assets—such as securitized mortgages—in off‐balance‐sheet entities, so that they did not have to hold significant capital buffers against them. Second, the capital regulations also allowed banks to reduce the amount of capital they held against assets that remained on their balance sheets—if those assets took the form of AAA‐rated tranches of securitized mortgages. Thus, by repackaging mortgages into mortgage‐backed securities, whether held on or off their balance sheets, banks reduced the amount of capital required against their loans, increasing their ability to make loans many‐fold. The principal effect of this regulatory arbitrage, however, was to concentrate the risk of mortgage defaults in the banks and render them insolvent when the housing bubble popped.
drainbrain said:
You're wrong about 'incompetence'. Unless you were saying that bankers suddenly became incompetent (which isn't likely). You're primary conclusion is of course the right one. Greed. Greed with a capital 'G'.
See if this helps with your understanding:
Why did the popping of the housing bubble bring the financial system—rather than just the housing sector of the economy—to its knees? The answer lies in two methods by which banks had evaded regulatory capital requirements. First, they had temporarily placed assets—such as securitized mortgages—in off?balance?sheet entities, so that they did not have to hold significant capital buffers against them. Second, the capital regulations also allowed banks to reduce the amount of capital they held against assets that remained on their balance sheets—if those assets took the form of AAA?rated tranches of securitized mortgages. Thus, by repackaging mortgages into mortgage?backed securities, whether held on or off their balance sheets, banks reduced the amount of capital required against their loans, increasing their ability to make loans many?fold. The principal effect of this regulatory arbitrage, however, was to concentrate the risk of mortgage defaults in the banks and render them insolvent when the housing bubble popped.
Except in the UK, this was a Liquidity crisis not a credit crisis, so your assertions are incorrect.See if this helps with your understanding:
Why did the popping of the housing bubble bring the financial system—rather than just the housing sector of the economy—to its knees? The answer lies in two methods by which banks had evaded regulatory capital requirements. First, they had temporarily placed assets—such as securitized mortgages—in off?balance?sheet entities, so that they did not have to hold significant capital buffers against them. Second, the capital regulations also allowed banks to reduce the amount of capital they held against assets that remained on their balance sheets—if those assets took the form of AAA?rated tranches of securitized mortgages. Thus, by repackaging mortgages into mortgage?backed securities, whether held on or off their balance sheets, banks reduced the amount of capital required against their loans, increasing their ability to make loans many?fold. The principal effect of this regulatory arbitrage, however, was to concentrate the risk of mortgage defaults in the banks and render them insolvent when the housing bubble popped.
And getting the risk off the balance sheet means you aren't exposed to that risk!!
Edited by sidicks on Monday 20th February 16:35
sidicks said:
Except in the UK, this was a Liquidity crisis not a credit crisis, so your assertions are incorrect.
Also missed off the bit about sub-prime mortgages in the US (which the government, via interest rates and federal institutions like Freddie and Fannie had a big role). I think some people watch the Big Short and think it's ALL the fault of blokes in pin-stripes snorting coke off hookers in a dealing room, when everyone was in on the game from greedy investors to complacent vote-grabbing politicians.Anyway, about this £60 ..
sidicks said:
drainbrain said:
You're wrong about 'incompetence'. Unless you were saying that bankers suddenly became incompetent (which isn't likely). You're primary conclusion is of course the right one. Greed. Greed with a capital 'G'.
See if this helps with your understanding:
Why did the popping of the housing bubble bring the financial system—rather than just the housing sector of the economy—to its knees? The answer lies in two methods by which banks had evaded regulatory capital requirements. First, they had temporarily placed assets—such as securitized mortgages—in off?balance?sheet entities, so that they did not have to hold significant capital buffers against them. Second, the capital regulations also allowed banks to reduce the amount of capital they held against assets that remained on their balance sheets—if those assets took the form of AAA?rated tranches of securitized mortgages. Thus, by repackaging mortgages into mortgage?backed securities, whether held on or off their balance sheets, banks reduced the amount of capital required against their loans, increasing their ability to make loans many?fold. The principal effect of this regulatory arbitrage, however, was to concentrate the risk of mortgage defaults in the banks and render them insolvent when the housing bubble popped.
Except in the UK, this was a Liquidity crisis not a credit crisis, so your assertions are incorrect.See if this helps with your understanding:
Why did the popping of the housing bubble bring the financial system—rather than just the housing sector of the economy—to its knees? The answer lies in two methods by which banks had evaded regulatory capital requirements. First, they had temporarily placed assets—such as securitized mortgages—in off?balance?sheet entities, so that they did not have to hold significant capital buffers against them. Second, the capital regulations also allowed banks to reduce the amount of capital they held against assets that remained on their balance sheets—if those assets took the form of AAA?rated tranches of securitized mortgages. Thus, by repackaging mortgages into mortgage?backed securities, whether held on or off their balance sheets, banks reduced the amount of capital required against their loans, increasing their ability to make loans many?fold. The principal effect of this regulatory arbitrage, however, was to concentrate the risk of mortgage defaults in the banks and render them insolvent when the housing bubble popped.
And getting the risk off the balance sheet means you aren't exposed to that risk!!
Edited by sidicks on Monday 20th February 16:35
But what do they know compared to a know-all pension salesman on an internet chatroom, eh?
Matthew Richardson is a New York University, US, professor, the Charles E. Simon Professor of Applied Economics in the Finance Department at the Leonard N. Stern School of Business. He is also the Sidney Homer Director of the Salomon Center and a Research Associate of the National Bureau of Economic Research.
Viral V. Acharya (born 1 March 1974) is an Indian economist who has been appointed as Deputy Governor of Reserve Bank of India (RBI). He also serves as a member of the advisory council of the RBI Academy and is a member of the Academic Council of the National Institute of Securities Markets (NISM), Securities and Exchange Board of India (SEBI) since 2014. As of 20 January 2017, he is serving a three-year term as a Deputy Governor of the Reserve Bank of India.[1]
Acharya obtained his Bachelor of Technology in Computer Science and Engineering at the Indian Institute of Technology, Mumbai in 1995.[3][4] In 2001, he obtained his PhD in Finance at the New York University Stern School of Business (NYU Stern).[3][4]
After obtaining his PhD, Acharya worked at the London Business School (LBS) from 2001 to 2008.[3][4][5] Between 2007 and 2009, he was the Academic Director of the Coller Institute of Private Equity at the LBS.[3][4][5] In 2008, he received a Houblon-Norman Senior Fellowship at the Bank of England.[4][6][7] Since 2008, he is attached to the New York University Stern School of Business (NYU Stern), where he held the C.V. Starr Professor of Economics chair.[3][4]
drainbrain said:
O I forgot to include the source of my post. It's an abstract from a published thesis they jointly produced entitled "Causes of the Financial Crisis"
You may have read it (in fact you've probably just googled the title), that doesn't meant you understand the conclusions.drainbrain said:
But what do they know compared to a know-all pension salesman on an internet chatroom, eh?
I'm not a pension salesman, so that's something else you're wrong about.drainbrain said:
Matthew Richardson is a New York University, US, professor, the Charles E. Simon Professor of Applied Economics in the Finance Department at the Leonard N. Stern School of Business. He is also the Sidney Homer Director of the Salomon Center and a Research Associate of the National Bureau of Economic Research.
Viral V. Acharya (born 1 March 1974) is an Indian economist who has been appointed as Deputy Governor of Reserve Bank of India (RBI). He also serves as a member of the advisory council of the RBI Academy and is a member of the Academic Council of the National Institute of Securities Markets (NISM), Securities and Exchange Board of India (SEBI) since 2014. As of 20 January 2017, he is serving a three-year term as a Deputy Governor of the Reserve Bank of India.[1]
Acharya obtained his Bachelor of Technology in Computer Science and Engineering at the Indian Institute of Technology, Mumbai in 1995.[3][4] In 2001, he obtained his PhD in Finance at the New York University Stern School of Business (NYU Stern).[3][4]
After obtaining his PhD, Acharya worked at the London Business School (LBS) from 2001 to 2008.[3][4][5] Between 2007 and 2009, he was the Academic Director of the Coller Institute of Private Equity at the LBS.[3][4][5] In 2008, he received a Houblon-Norman Senior Fellowship at the Bank of England.[4][6][7] Since 2008, he is attached to the New York University Stern School of Business (NYU Stern), where he held the C.V. Starr Professor of Economics chair.[3][4]
What was the actual default rate on European AAA MBS securities?Viral V. Acharya (born 1 March 1974) is an Indian economist who has been appointed as Deputy Governor of Reserve Bank of India (RBI). He also serves as a member of the advisory council of the RBI Academy and is a member of the Academic Council of the National Institute of Securities Markets (NISM), Securities and Exchange Board of India (SEBI) since 2014. As of 20 January 2017, he is serving a three-year term as a Deputy Governor of the Reserve Bank of India.[1]
Acharya obtained his Bachelor of Technology in Computer Science and Engineering at the Indian Institute of Technology, Mumbai in 1995.[3][4] In 2001, he obtained his PhD in Finance at the New York University Stern School of Business (NYU Stern).[3][4]
After obtaining his PhD, Acharya worked at the London Business School (LBS) from 2001 to 2008.[3][4][5] Between 2007 and 2009, he was the Academic Director of the Coller Institute of Private Equity at the LBS.[3][4][5] In 2008, he received a Houblon-Norman Senior Fellowship at the Bank of England.[4][6][7] Since 2008, he is attached to the New York University Stern School of Business (NYU Stern), where he held the C.V. Starr Professor of Economics chair.[3][4]
Edited by sidicks on Monday 20th February 16:52
)sidicks said:
What was the actual default rate on European AAA MBS securities?
Europe’s ABS market is liquid, has a growing pension fund investor base and attractive valuations relative to markets such as corporate bonds and loans. Default rates on European ABS have also been very low both pre and post-financial crisis, and far below those in the US market, as the European Commission highlighted in September 2015. It noted: “AAA-rated US securitisation instruments backed by residential mortgages (RMBS) reached default rates of 16% (subprime) and 3% (prime). By contrast, default rates of EU RMBS never rose above 0.1%.avinalarf said:
Europe’s ABS market is liquid, has a growing pension fund investor base and attractive valuations relative to markets such as corporate bonds and loans. Default rates on European ABS have also been very low both pre and post-financial crisis, and far below those in the US market, as the European Commission highlighted in September 2015. It noted: “AAA-rated US securitisation instruments backed by residential mortgages (RMBS) reached default rates of 16% (subprime) and 3% (prime). By contrast, default rates of EU RMBS never rose above 0.1%.
Exactly!And subordination on AAA tracnches would have been anywhere between 20% and 50%, depending on the underlying.
So defaults on European MBS was clearly not the main issue for UK banks!
What (I Think) Sid is trying to say is that the very top quality of loans didn't default, so the system really worked. Bit like saying well, the Titanic's propellor has been found and in perfect nick. So it certainly wasn't anything to do with the Titanic or its operation that caused it to sink. What Steely Dan call Pretzel Logic.
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