This is old news....The report actually puts the date at 2004....but for those who missed it...this recounts how the big five investment banks came up with those sub prime mortgage dirivitives....and blew up the world economic system....Heys guys was the chinese food good?
The dateline Bloomberg article was December 17,2007
"Representatives of five of Wall Street's dominant investment banks gathered around a blonde wood conference table on a February night almost three years ago. Their talks over take-out Chinese food led to the perfect formula for a U.S. housing collapse."
"The host was Greg Lippmann, then 36, a fast-talking Deutsche Bank AG trader who aspired to make mortgage securities as big a cash cow for Wall Street as the $12 trillion corporate credit market.
His allies included 34-year-old Rajiv Kamilla, a trader at Goldman Sachs Group Inc. with a background in nuclear physics, and 32-year-old Todd Kushman, who led a contingent from Bear Stearns Cos. Representatives from Citigroup Inc. and JPMorgan Chase & Co. were also invited. Almost 50 traders and lawyers showed up for the first meeting at Deutsche Bank's Wall Street office to help set the trading rules and design the new product.
``To tell you the truth, it's not very glamorous,'' Lippmann says. ``Just a bunch of guys eating Chinese discussing legal arcana.''
"The new standardized contracts they created would allow firms to protect themselves from the risks of subprime mortgages, enable speculators to bet against the U.S. housing market, and help meet demand from institutional investors for the high yields of loans to homeowners with poor credit."
As the group nailed down the details, the International Swaps and Derivatives Association, which sets trading terms for dealers, arranged conference calls including more of Wall Street.
To this point, some of the biggest mortgage underwriters -- Lehman Brothers, Merrill, Bank of America Corp. and Morgan Stanley -- hadn't been included in the negotiations. These firms heard about the talks and demanded to be let in.
Those meetings of the ``group of five,'' as the traders called themselves, became a turning point in the history of Wall Street and the global economy."
I remember reading this story....and finally found it again on the web. Reading it in December 2007...I found it pretty incredible....and now to see the economic carnage worldwide it is indeed surreal.
The major thing is we bailed the Investment banks out....all except Leahman Bros. I still think let these bastards "blow up".
Also I would think Congress should talk to this bunch....A fly on the wall...especially betting against the US housing market and selling this crap as AAA investments....get the shackles ready.....
Bloomberg Link
Subprime Securities Market Began as `Group of 5' Over Chinese