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Subprime ABS Securitizations Are Back As Absolute Worst Of The Credit Bubble Returns

Tyler Durden's picture




 

Back in 2007, at the peak of the credit and housing bubble, Wall Street knew very well the securitization (and every other) party was ending, which is why the internal names used for most of the Collateralized Debt Obligations - securitized products designed to provide a last dash trace of yield in a market in which all the upside had already been taken out - sold to less sophisticated, primarily European, investors were as follows: "Subprime Meltdown," "Hitman," "Nuclear Holocaust," "Mike Tyson's Punchout," and, naturally, "Shitbag."

Yet even in the last days of the bubble, Wall Street had a certain integrity - it sold securitized products collateralized by houses, which as S&P, and certainly Moody's, will attest were expected to never drop in price again. But one thing that was hardly ever sold even in the peak days of the 2007 credit bubble were securitizations based on personal-loans, the reason being even back then everyone's memory was still fresh with the recollection that it was precisely personal-loan securitization that was at the core of the previous, and in some ways worse, credit bubble - that of the late 1990s, which resulted with the bankruptcy of Conseco Finance. Well, in a few short days, those stalwarts of suicidal financial innovation Fortress and AIG, are about to unleash on the market (or at least those who invest other people's money in the absolutely worst possible trash to preserve their Wall Street careers while chasing a few basis points of yield) the second coming of the very worst of the last two credit bubbles.

WSJ has the details:

The $604 million issue from consumer lender Springleaf Financial, the former American General Finance, will bundle together about $662 million of loans secured by assets such as cars, boats, furniture and jewelry into ABS, according to a term sheet. Some loans have no collateral.

 

Personal loans haven't been a part of the mainstream ABS market since securitizations from Conseco Finance Corp. in the late 1990s, according to Michael Dean, co-head of Fitch Ratings' ABS group. That market dried up as the recession hit and, under the weight of bad subprime loans, Conseco filed for bankruptcy in 2002.

 

Springleaf's issue comes as prices on traditional issues backed by auto loans, credit cards and student loans have soared as investors pile into debt with extra yield over Treasurys. As those yields fall, ABS investors have been giving unusual assets that were previously shunned a second look.

The quality of the "assets" behind this securitization is simply and utterly atrocious.

The 190,627 loans in the Springleaf deal have an average FICO credit score of 602, in line with many subprime auto ABS. But the average coupon of 25% on Springleaf's personal loans is above that on even "deep subprime" auto loans, probably because there is no collateral for 10% of the issue, an analyst said.

 

The "A" rated slice of the debt may yield near 2.5%, or 2 percentage points over an interest-rate benchmark, according to price talk circulated to investors. Similarly-rated but slightly longer-term debt within Santander's issue sold at a 1.775% yield.

In other words, unlike mortgage-backed, where there should be at least in principal some liquidation value of the underlying asset, here there is essentially no collateral, and what collateral is behind these personal loans is absolutely worthless. Sure enough, a rational voice or two will emerge warning that investing in this bag of dogshit will lead to tears...

By some measures, the quality of personal loans is similar to those subprime auto loans that have been drawing increased concern from investors. Demand for ABS and competition from new, private equity-backed lenders are causing standards to ease from the tight conditions that followed the financial crisis.

 

Some investors, including Thomas Ho, a director at MetLife, say they won't buy subprime auto ABS from certain issuers because the bonds don't yield enough over top-quality names. But deals still sell briskly across the spectrum, with the latest from Santander Consumer USA selling at a record low aggregate yield.

 

"That investors are scavenging around for yield isn't a good sign because it puts people in position to take risks they don't understand," said Clifford Rossi, an executive-in-residence a the University of Maryland business school and former chief risk officer for Citigroup's consumer lending group.

... but most won't care: after all it is not their money. It is "someone else's money" that will ultimately be lost. All that matters for the investors is to collect a year of yield at which point it is not only saionara, but the worthless bag of crap will become someone else's unrecoverable problem.

Sure enough, demand is already frothy:

 Dealers led by Citigroup Inc. announced the deal less than a week after 5,500 investment professionals gathered for the American Securitization Forum's annual meeting, where investors focused more on finding the assets than on expectations for modest erosion in credit quality, said strategists at Bank of America Merrill Lynch.

 

Spokesmen for AIG and Citigroup declined to comment on the issue, which is offered only to large institutional investors. A Fortress spokesman didn't have an immediate comment.

 

"On the heels of the conference and a search for yield...it makes sense that less-frequent issuers and collateral types are hitting the market," said Brian Loo, a portfolio manager at TCW.

And with that, Bernanke's job here is done: he has managed to reflate not only the housing and credit bubbles to epic proportions, but has thrown in the tech bubble for good measure, where companies like AMZN and ZNGA trade higher the worse their results are.

How anyone can possibly doubt how this all ends, is a mystery. But like last time, and the time before, and the time before that, as long as the music is playing those whose bonuses are dependent on finding the last trace of yield, regardless of how it is derived in his centrally-planned market, must all dance.

And after this latest bubble pops, it is "well-known" that the selling will be fair and orderly, with a buyer matching every seller. Or maybe not.

 

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Tue, 02/05/2013 - 18:09 | 3217832 Glass Seagull
Glass Seagull's picture

 

 

Securitization...machine...hungry...for...moar....moar...moar...

Tue, 02/05/2013 - 18:35 | 3217845 true brain
true brain's picture

Securitization is how big banks plan for exiting and shifting risks onto the pension funds, government, or you six packs rednecks.

when shtf, they'll have unloaded it on off on you or bernanke, which really means you.

But it's different this time. Obummer and Eric Assholder will prosecute any wrong doing. So go back to sleep, nothing to see here.

Wed, 02/06/2013 - 00:27 | 3218983 CheapBastard
CheapBastard's picture

Long Vaseline and KY.

Tue, 02/05/2013 - 18:09 | 3217833 reader2010
reader2010's picture

B U L L I S H !

Tue, 02/05/2013 - 18:14 | 3217851 Say What Again
Say What Again's picture

B... B...  B... BULLISH

.....

ES to 1550 by next week

INDU to 14500 by next week

 

Dear Grandma & Grandpa,

Please loan me some moar money, cause I'm gonna get rich in the market.  When I do I'll buy you a condo in FL.

 

Tue, 02/05/2013 - 18:35 | 3217925 CPL
CPL's picture

If you keep it in gold.

 

You get to buy Florida.

Tue, 02/05/2013 - 18:12 | 3217842 Irelevant
Irelevant's picture

FED will buy anything I guess... if not, Abe sure will.

Tue, 02/05/2013 - 18:19 | 3217872 Neethgie
Neethgie's picture

Zynga should release a flash game listing all household items, shares, bonds ect. users have to guess what abe wont buy.

Tue, 02/05/2013 - 19:09 | 3218048 Yen Cross
Yen Cross's picture

Abe needs his own show on the "History Channel", right after " Pawn Stars".

Tue, 02/05/2013 - 20:48 | 3218337 AUD
AUD's picture

They'll also clear payment in anything, no matter the quality. Thus simply and utterly atrocious quality "assets" are magically made 'money good'.

It's alchemy. Gods they are.

Tue, 02/05/2013 - 18:12 | 3217846 Joe Davola
Joe Davola's picture

Calling all underfunded state sponsored pension plans, step right up and save your governor's ass!

Tue, 02/05/2013 - 18:15 | 3217852 Gromit
Gromit's picture

I attended the CMSA annual conference in Miami Beach January 2007. I remember a CDO cubed presentation, basically a way to package the worst of the worst and receive a  AAA rating on an unreasonably large "super senior" tranche.

I chatted with some of the salesman attendees, basically asking them how they thought it would end.

Various responses......distilled down to "used to make 60 K, last year I made 600K, and you are asking me to criticize such a wonderful system?"

Tue, 02/05/2013 - 18:15 | 3217853 Neethgie
Neethgie's picture

im totally buying into this, these things are always great.. until they aren't

Tue, 02/05/2013 - 18:15 | 3217854 blindman
blindman's picture

it is just like a derivative of printing so it must have value.
what was that definition of insanity?
it is a way of life .

Tue, 02/05/2013 - 20:09 | 3218242 blindman
blindman's picture

Mad TV - Randy Newman Sings Songs About Star Wars
http://www.youtube.com/watch?v=DqNG_SrSa4o
.

Tue, 02/05/2013 - 20:30 | 3218295 blindman
blindman's picture

Randy Newman - It's money that I love
http://www.youtube.com/watch?v=rQ_4ss9v7Z4
.
the comment section is always refreshing too.
.
Randy Newman - Texas Girl at the Funeral of Her Father
http://www.youtube.com/watch?v=8jnI-NjyB5c

Here I am lost in the wind
'Round in circles sailing
Like a ship that never comes in
Sailin' by myself

Sing a sad song for a good man
Sing a sad song for me
A sad song for the sailor
A thousand miles from the sea

Here I am alone on the plain
Sun's going down
It's starting to rain
Papa we'll go sailing

Tue, 02/05/2013 - 18:19 | 3217857 Shell Game
Shell Game's picture

'... but most won't care: after all it is not their money. It is "someone else's money" that will ultimately be lost.'

LongSoupLine, please bring it home, this thread needs some too...

 

Tue, 02/05/2013 - 18:15 | 3217858 Dr. Engali
Dr. Engali's picture

Unbelievable! We really are a nation of retards. I'm glad we have the Bernank to buy them back at par when these fuckers go to zero!

Tue, 02/05/2013 - 20:57 | 3218364 long-shorty
long-shorty's picture

Your comment is unfair to people with legitimate disabilities.

Tue, 02/05/2013 - 21:19 | 3218406 secret_sam
secret_sam's picture

The pendulum swings back.  At the moment, it's the borrowers who are geniuses and the "investors" who are retards.

For a long time, it was the other way 'round.  Put your faith in cycles.

Tue, 02/05/2013 - 18:16 | 3217859 NoWayJose
NoWayJose's picture

Hey, the banks are using their own real money for this, instead they are using make believe free Fed money that gets created out of thin air.  It's only appropriate that this phantom money be used to buy phantom investment products.  The only 'real' thing you need is taxpayer backing in case you actually lose money.

Tue, 02/05/2013 - 18:18 | 3217870 tradewithdave
tradewithdave's picture

With the price of a new Toyota falling it makes the old Toyotas worth more because their initial cost was more. People make their car payments no matter what happens, especially when their car becomes their house.

Tue, 02/05/2013 - 18:30 | 3217912 Conman
Conman's picture

Do they? is htat why the car repo business is booming?

Tue, 02/05/2013 - 18:50 | 3217968 CPL
CPL's picture

Yeah, eventually the car makers go bust holding all the repoed inventory and the tow and go's have no pay master.

 

I often wonder how much stuff is sitting in there and how much of it is scraped and how much is resold as is.  There has to be something that tracks it?  

Anyone know how to track shadow inventory in the repo after market trade?  A Theory.

If repo's increase over a quarter, how are the returned vehicles that the car maker acts as the credit lender.  Assuming clients opt for a lease or insane personal car loan rate.  

Wouldn't that depreciation of the asset hold the same value of cash lost equivalent on the loan over the term?  Either in retail or cost.

In turn would this not also open the door to a similar robot-signing show and dance?

Tue, 02/05/2013 - 22:50 | 3218660 klockwerks
klockwerks's picture

I smelled repos in the air when big brother had GM buy Ally Financial. I would like to know where and how you can pick up a nice repo say 50 cents on the dollar. I knew we would be seeing a boatload of them coming online but aren't most picked up at auction and avg joe never gets a crack at them. Just wondering like you how do you get a list with prices etc. Still driving my 03 Durango but can't last forever

Tue, 02/05/2013 - 23:25 | 3218789 CPL
CPL's picture

That's what I'm trying to figure out.  What is the number of repo's vechiles total because the repos go back on half value, unlike the removal of mark to market on a house.  Does the auto dealer get to suspend mark to market until they are sold.

There should be shit loads on these things falling off lots for pennies on the dollar, but there isn't.  Of course the same auto makers would end up in the poor house fast because you could get a repo with okay miles and practically new, partially paid for by someone else plus the curb depreciation.

Yet, haven't seen one blowout sale of repos.  Don't even care of the colour.  Cheap will do me to.

Wed, 02/06/2013 - 11:08 | 3219932 JP McManus
JP McManus's picture

Most larger banks, credit unions, and servicers of securitized paper typically auction off repossessed collateral within 30 - 60 days.  Is the 50 cents on the dollar number you're talking about the collateral value at auction to the amount remaining on the loan?

Wed, 02/06/2013 - 03:33 | 3219222 goldenbuddha454
goldenbuddha454's picture

You can thank the WH for the unintended consequences of "Cash-for-Clunkers" for that.  When you take millions of vehicles out of the system which are perfectly fine and driveable and crush them, that created an immediate shortage of supply and drove the used car prices sky-high overnight for the small independent dealers and general public that feed off of those trade-ins at the Franchise Dealerships.  Supply is still lacking from that BS.  Just another govt. boondoggle that has led to countless closings of small, independent car dealerships throughout the U.S. 

Tue, 02/05/2013 - 18:20 | 3217875 fonzannoon
fonzannoon's picture

How do we short these things? Let's all get in early this time.

Tue, 02/05/2013 - 18:56 | 3217992 CPL
CPL's picture

Okay.  If you feel like throwing money away.

TZA.

If you need more brake pads. to a short that will stay down.

GM

 

This will be an instant replay.  The market tanks and the pension eggs are all cracked open in unison.  So you make DAMN sure you aren't trading through a 401k or an RRSP because once they take it, what's your WILL BE theirs.  Don't mistake the massive cash withdrawls over the past month as anything but knowledge of other things happening.  

Trade only through your direct accounts if you must.  But be plenty forewarned, you might not get a chance to spend it.

Tue, 02/05/2013 - 18:58 | 3218010 fonzannoon
fonzannoon's picture

Thanks but I want to bet directly on the shit products themselves. Not on the market. I'm sure I get the same access as GS right?

Tue, 02/05/2013 - 19:07 | 3218042 Whiteshadowmovement
Whiteshadowmovement's picture

Yup just spoke to Blankfein and apparently theyre good with that but only if you do your own mark to market...

Tue, 02/05/2013 - 18:22 | 3217884 Big Ben
Big Ben's picture

Consider that a US Treasury note is an unsecured loan to a big, dangerous dude with an attic full of debt and a printing press in his basement.

Tue, 02/05/2013 - 18:25 | 3217892 waterhorse
waterhorse's picture

ABS?  A Bagga Shit?  Oh Asset-Backed...but not really.  I think I'll go with the first definition.

Tue, 02/05/2013 - 18:57 | 3217996 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

ABS?  A Bagga Shit?  Oh Asset-Backed...but not really.  I think I'll go with the first definition.

The first definition is indeed the accurate call. From TFA:

Sure enough, a rational voice or two will emerge warning that investing in this bag of dogshit will lead to tears...

"You guys are gonna end up pissing off someone pretty bad with your pranks."

...but most won't care: after all it is not their money. It is "someone else's money" that will ultimately be lost.

"Hey, I'm just carrying the bag to the house and putting it on the doorstep. You guys take it from there."

All that matters for the investors is to collect a year of yield at which point it is not only saionara, but the worthless bag of crap will become someone else's unrecoverable problem.

"OK, light the bag and get it burning good. When I ring the doorbell, run and hide behind those bushes."

And after this latest bubble pops, it is "well-known" that the selling will be fair and orderly, with a buyer matching every seller. Or maybe not.

"When the guy comes to the door, he'll see the burning bag, prompty retrieve his recently inspected and charged fire extinguisher from the kitchen, and calmly put out the fire. Or he'll stomp it out immediately and not realize it was full of dog shit untli he's tracking it across his carpet."

Wed, 02/06/2013 - 00:10 | 3218933 Curiously_Crazy
Curiously_Crazy's picture

You've got them both correct.

It's Asset Backed Shit. The backing itself is the Bagga Shit. Except some of the bags don't even contain the shit.

Tue, 02/05/2013 - 18:28 | 3217905 Poor Grogman
Poor Grogman's picture

Exciting opportunities once again, time to sell PMs before the price goes back to 280 usd/ oz (hat tip kitco) and load the boat with obscure weapons of financial destruction.

The market has been incredibly slow to respond to ZIRP but now that it has, it's time to release the animal spirits...

Oh did I mention, money on the sidelines, or mum and dad investors, or wealth effect...

S/

Tue, 02/05/2013 - 18:29 | 3217910 Groundhog Day
Groundhog Day's picture

wait Metlife, the company which carries other peoples life insuarance and annuity contracts is actually considering this garbage but not from certain carriers? WTF  They shouldnt be buying any subprome abs. Now i know how they can guarantee all those ridiculous riders of 4 and 5% on their annuity contracts. Does anyone know how Life insurance contracts will play put in the final stage of this epic clusterfuck?

Tue, 02/05/2013 - 18:36 | 3217919 Dr. Engali
Dr. Engali's picture

Why shouldn't they be buying them? Metlife will collect a coupon then as soon as they go bad Ben will scoop them up at par. It's a great system if you're connected. When you're "too big to fail" you get all the perks.

Tue, 02/05/2013 - 18:46 | 3217952 D-2
D-2's picture

Groan. My company's 401k plan has one and only one money market fund, naturally run by MetLife. I got out of the stock funds  when the bubble first burst. Now what can I do, cuz this don't look good to me.

Tue, 02/05/2013 - 22:06 | 3217972 Dr. Engali
Dr. Engali's picture

I would be very concerned. Met has stopped the flow of new money into some of their old existing contracts. On others they stopped paying commissions to discourage brokers from directing money into those contracts. Met has made quite a few blunders in their variable contracts, and if I wasn't in a rush I'd give you a few more examples. If it were me though, I'd look for alternatives. But hey, they may be deemed a systematic risk and "too big to fail" so you may be okay.

Tue, 02/05/2013 - 18:57 | 3218002 slightlyskeptical
slightlyskeptical's picture

If you are met life see if they have an option for a variable annuity. Put it 100% in small caps. Market does well, you win. Market sucks you have the guaranteed rate. I wouldn't really do that but it has to be better than cash.

Tue, 02/05/2013 - 19:03 | 3218020 fonzannoon
fonzannoon's picture

What about the part where Met can't pay the guarantees because they are choking on guarantees made 5 years ago? That would be my concern. I think that is what Doc is alluding to.

a 401k in a Variable annuity....gotta love that. Hey lets wrap some useless benefits around your retirement plan, give you a rolling surrender charge and charge you 3% plus. My advice would be to ask your benefit's department to define the term "fiduciary" to you.

I wonder when Reggie Middleton will take a peek at this future wreck?

Tue, 02/05/2013 - 19:09 | 3218049 Dr. Engali
Dr. Engali's picture

Shit Met is 4pts. With just the living benefit.

Tue, 02/05/2013 - 19:08 | 3218035 Dr. Engali
Dr. Engali's picture

No you don't have a guaranteed rate. You have a living benefit guarantee that you can take an income stream off of later. Plus Met has some of the highest internal costs in the business. A total piece of shit product.

Tue, 02/05/2013 - 19:16 | 3218078 fonzannoon
fonzannoon's picture

LOL I was being nice. The poor guy seems like he is stuck with it.

Be sure to ask the young whippersnapper who runs around signing everyone up about Doc's thoughts. Then ask him if his compensation is directly tied to selling proprietery products. Watch for the squirm movement and how he looks down and to the left when he answers you.

Then go talk to Marge in HR. She on the other hand will go tell you to go fk yourself without much concern.

Tue, 02/05/2013 - 20:11 | 3218232 CPL
CPL's picture

That is an awful idea.  You lose your shirt in the inflation in a quarter now.  What the hell is that?   Hide in the bank...as if.  If you haven't figured out that regardless of the scheme that you will not be entitled to what you paid in.  Ever.  That's the 411.

There's even a rider attached to the budget for employers into paying for ROTH IRA's to keep the lie running for maybe an extra day.  Think those are untouchable?  401k's or IRA's?  Says who?

Nobody now.  That's the situation.

Tue, 02/05/2013 - 21:24 | 3218416 secret_sam
secret_sam's picture

The only reason to want to invest in 401Ks or IRAs these days is for the tax relief, but you're making a deal with the devil.  Do what you must, but don't expect it to work out to your benefit in the long run.

I suppose there could possibly still be some employers matching funds.  That does add to the difficulty of the decision, I guess, but hell, do you really believe a dollar today is not worth a LOT MORE than $0.97 next year?

Wed, 02/06/2013 - 00:19 | 3218952 CPL
CPL's picture

They weren't ever built but for one thing.  Stash money out of the money supply to hedge inflation, they are a net minus to ALL investments because of the penalities they carry and the fact you don't manage the money.  It's an illusion.

Once something happens to the market the Fed will announce it's tapped out and crack open every piggy bank.  Or whatever the excuse will be.  Mark my words, nobody but those that decided to take the hit early win this one, even if at some assinine taxrate and penalities.  I believe that after the law is there, because the will certainly is, it will all be wrung dry.  While draining the civil servant coffers and government employment offered IRA's.

Have some cash on the side for a bit of protection.  Silver/Gold.  Actually having goods now that are cheap (food, light bulbs, TP, anything you can store) to last you for a while is better.  What is happening in argentina isn't that far from happening the western hemisphere.  What's $20 buy you for groceries now?  Not a lot.  Think the truth is posted anywhere anymore?  Only time you get the truth is shopping for basics, and ten bucks more on a gallon of milk should just about do it. 

Just hedge a bit better, the US is getting lined up for something, have a couple of guesses but nothing concrete.  The 'tax' savings isn't a savings if you aren't getting that cash back ever and at the same time earing less than real inflation in an easy credit world.

Wed, 02/06/2013 - 00:31 | 3218990 Curiously_Crazy
Curiously_Crazy's picture

OT but I've a question about 401k's

How difficult is it for you guys to access it over there? I've been looking into getting my superannuation out for some time now and I can tell you it's an absolute nightmare down here in Oz.

Along with the tax hit and all the paperwork, I have to prove financial hardship to even get a cent. Talk about fucked up. I mean it's *my money* and it pisses me off no end I've got to jump through hoops to get it.

Tue, 02/05/2013 - 19:17 | 3218089 fonzannoon
fonzannoon's picture

"Does anyone know how Life insurance contracts will play put in the final stage of this epic clusterfuck?"

No f'n way they make it to the final stage. Your unbridled optomism is scary.

Tue, 02/05/2013 - 18:31 | 3217913 ShrNfr
ShrNfr's picture

Nothing new here. they did the same stuff in the early 1990s, mostly to Japanese insurance companies.

Tue, 02/05/2013 - 18:38 | 3217933 IridiumRebel
IridiumRebel's picture

OT/

 

I strolled over to HuffPo to take on some libs over the drone thing. Conclusion? This country is fucked. I have never seen such idiocy. I think i will never go there again. You cannot argue with a monkey. 

Tue, 02/05/2013 - 18:42 | 3217939 Dr. Engali
Dr. Engali's picture

Monkey? I didn't realized that the Huffpo nuts had reach that rung of the evolutionary ladder.

Tue, 02/05/2013 - 18:47 | 3217958 IridiumRebel
IridiumRebel's picture

Doc, my 13 mo. old could have had a more meaningful convo. The dude had 2120 "fans". Fans of what? I have never been more worried about my country and it seems like the shit is accelerating and what makes it worse is the fact that we have schmucks like this guy. When we lose our freedom of speech, at least that cocksucker will be silenced. Some libs were scared, but it was lost in the Obama dicksuckers.

Tue, 02/05/2013 - 19:13 | 3218013 Dr. Engali
Dr. Engali's picture

The problem is it's not people like him who will be silenced. It's people like you me who think for ourselves. If that were Bush bombing Americans with drones they would be screaming bloody murder. The hypocrisy is sickening.

Tue, 02/05/2013 - 19:04 | 3218033 Shell Game
Shell Game's picture

The horror is widespread. At RP's encouragement I, and many others of the liberty movement, became precinct PCOs. Within the legislative district it's like working beside dung flinging monkeys. They have no interest in flash mob style sign waving activism, no interest in finding issues that bring people together, etc.. Their only interest is one big shin-dig dinner that raises money for the GOP establishment.  I don't know why I'm even trying to work amongst them, they are lost. 

 

Tue, 02/05/2013 - 21:41 | 3218450 Totentänzerlied
Totentänzerlied's picture

"I have never been more worried about my country"

Stop worrying about "your country" which is and always has been an abstract concept shoved down your throat by bloodthirsty collectivists of 100 different varieties. Don't buy into the populist cult of victimhood, where everything is always exclusively the fault of one or two small, secret, die-hard group of absolutely evil enemies-of-the-people. This is Totalitarianism 101. Reality is so much more mundane, subtle, complex, and, yes, disturbing.

Tue, 02/05/2013 - 22:04 | 3218499 Manipuflation
Manipuflation's picture

IR Rebel, the next time you go rogue you should have someone with you.  I have an account over at Puff puke and I occasionally like to go over there and irritate them.  Well at least more than I probably irritate people here.  Post the thread you were on and I will go check it out because that is another more feminine fight club over there.  Meanwhile, I will go clear my browser.  I don't much care for that website to be honest.  In fact, I haven't logged in there in for months.

h/t

Tue, 02/05/2013 - 22:15 | 3218525 tip e. canoe
tip e. canoe's picture

he's probably being paid to post there.

gotta keep the front line libs standing upright.

chin up people, it's a recovery!

Tue, 02/05/2013 - 23:54 | 3218679 Manipuflation
Manipuflation's picture

I could't find him over there so you might be correct.  As long as I went in, I left this nugget on the gun control board.  It is actually posted...for the moment.

Manipuflation:

"Incorrect, no more gun control is supported.  Since I am already here, I should ask how many of you bought gold and silver several years back?  Anyone?"

It's a neverending supply of fools over there I tell you...

http://www.huffingtonpost.com/2013/02/05/gun-control-bill_n_2624644.html?utm_hp_ref=politics

Edit:  Oops.

"This comment is pending approval and won't be displayed until it is approved."

Tue, 02/05/2013 - 20:09 | 3218243 goldenbuddha454
goldenbuddha454's picture

Yahoo is identical to huffpo in that respect.  Don't  go there.  You'll be hopelessly discouraged with the dumb and dumber population that dwell there.  A conversation with a bowl of oatmeal is more enlightening.

Tue, 02/05/2013 - 18:39 | 3217934 Dr. Engali
Dr. Engali's picture

So will S&P give them a triple AAA rating? That is my question.

Tue, 02/05/2013 - 19:17 | 3218091 W74
W74's picture

They'll do what they're told to do.

Tue, 02/05/2013 - 18:41 | 3217937 world_debt_slave
world_debt_slave's picture

endorsed by Linda Green

Tue, 02/05/2013 - 18:42 | 3217942 Anonymouse
Anonymouse's picture

"On the heels of the conference and a search for yield..."

People don't talk about it much, but that is precisely the reason for the growth in the CDO market in the early '00s, and why the bubble burst.

The Greenspan Fed reduced interest rates to ridiculously low levels. 

Insurance companies became the primary market for CDOs.

Why?  Because rates had been engineered so low by the Fed, they could not otherwise construct portfolios with sufficient return to meet their actuarial needs.

So they took on additional risk to hit their bogeys.

That reduced the price of risk, which encouraged further development in the CDO market, further cheapening risk, etc.

The whole bubble and the crisis we are in was caused by Greenspan, with his torch carried now by Bernanke, who is pouring on more gasoline.

The search for yield is the primary cause of the whole thing, and it will be again.

Tue, 02/05/2013 - 18:43 | 3217945 Manipuflation
Manipuflation's picture

So these are AAAA++++ rated securities then?

Tue, 02/05/2013 - 18:58 | 3218008 Bunga Bunga
Bunga Bunga's picture

They could obtain such ratings simply on ebay: "Great buyer, smooth transaction, AAAAAA+++++++++++" sure that helps.

Tue, 02/05/2013 - 21:47 | 3218460 Manipuflation
Manipuflation's picture

LOL.  Then sometime later in the reviews from the buyer:  "These cocksuckers lied to me again and I bought it again because I am a fucking idiot."  Then even moar later another review from the secondary buyer:  "Hey thanks, these are awesome and I didn't even get a discount.  Thanks, Ben."

 

Yes, these fuckers are prime at A+ x 10100,000,000,000

Tue, 02/05/2013 - 18:51 | 3217970 John McCloy
John McCloy's picture

Why is everyone getting so worked up?
The Dodd-GoFrank Ourselves Bill was passed...certainly this was regulated or is it like every other " regulation" and there are 28 year delays until they go into effect like Basel and mark-to-market ( which is on its 4th year of vacation)?
I'm just trying to figure out how they are going to spin the blame of this collapse when the Fed has been so heavily involved and the same practices arrived us at a compounded problem..any guesses?
Hurricanes? Terrorism? Evil Republicans according to CBS, CNN, MSNBC, NBC and CNN or Liberal Santa Clauses Dems according to Fox..
Either way..better get ready to pay up again U.S. Taxpayer because nobody is going to jail this time either..

Tue, 02/05/2013 - 19:03 | 3218026 max2205
max2205's picture

I'll take a couple of CDOs on those

Tue, 02/05/2013 - 18:54 | 3217984 buzzsaw99
buzzsaw99's picture

So ABS without the Assets, which means they aren't Backed by anything and thus have no Security. Can you say Misnomer Bitchez?

Tue, 02/05/2013 - 19:14 | 3218070 Michelle
Michelle's picture

Them ain't assets, them liabilities and collateral or not don't change that fact. Bozos.

Tue, 02/05/2013 - 19:16 | 3218080 W74
W74's picture

My buddy Dane is a repo man (also a skiptracer).  He charges a pretty penny, but is good at what he does.  It costs money to get your assetts back from deadbeats.

Tue, 02/05/2013 - 19:15 | 3218073 W74
W74's picture

Indeed.  Was thinking the same thing, but no way I could've made it sound as funny as you said it just now.

Tue, 02/05/2013 - 19:03 | 3217986 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Believe it or not, I actually did some due diligence work on this transaction.  Get this - one of the loans is collateralized with an Herbalife distributor's business inventory and personally guaranteed by the proprietor, who on his loan app touted the fact that he had once earned a million dollar bonus as a solid indicator of high likelihood that the business would succeed and the loan would be paid as agreed.

Which reminds me of an old joke.  Q: What is the primary difference between the breadwinner's bonus and his penis? A: The wife will gladly blow the bonus anytime.

Tue, 02/05/2013 - 19:11 | 3218059 W74
W74's picture

Aren't auto loans by their very definition sub-prime?  Who gets a loan for something as cheap as a car?  Just buy it and don't worry about the damn monthly drain. Granted, I'm speaking from a sane person's point of view in normal times.

 

Oh, and for those who's credit is so shot that they can't even get an auto loan...well you can lease an Escalade for over $1,000/mo. 

http://youtu.be/mjN_ALX1CN4?t=53s

Or $76K to buy.  Any takers?  It is a nice looking Cadillac though. Pffffft.

Tue, 02/05/2013 - 21:29 | 3218425 secret_sam
secret_sam's picture

Most 'Merkin wage-earners can't pay cash for a new car, tho.  Can 15% of the population sustain the domestic auto market?  Guess maybe we'll be finding out after another subprime collapse.

Wed, 02/06/2013 - 01:58 | 3219113 you can't fix stupid
you can't fix stupid's picture

0% loans?

Tue, 02/05/2013 - 19:18 | 3218092 Gloomy Gus
Gloomy Gus's picture

How about some asset backed securities that use virtual assets, such as the items that you can win in World of Warcraft ?  That would be cool...

Wed, 02/06/2013 - 04:24 | 3218953 MeelionDollerBogus
MeelionDollerBogus's picture

winning! I’ll call it the Warcraft Transaction Fund, WTF, and get it NASDAQ’d right away.

Sheer genius.

EDIT: make that ticker WTFQ

Tue, 02/05/2013 - 19:22 | 3218099 Whiner
Whiner's picture

Reflation, Bitchezes! Everyone step back one mile and get into subteranean environments.

Tue, 02/05/2013 - 19:23 | 3218106 Meat Hammer
Meat Hammer's picture

I saw my Obama-loving neighbor's car getting repo'd early this morning.  I put down my coffee to enjoy a golf-clap in his honor. 

Wed, 02/06/2013 - 00:24 | 3218973 MeelionDollerBogus
MeelionDollerBogus's picture

+1 – that’s what Hopium & (no spare) Change tastes like, bitchez

Tue, 02/05/2013 - 19:39 | 3218159 monopoly
monopoly's picture

When the music stops I have no worries. I am already in my chair. So obvious, so certain, and yet they still dance.

Tue, 02/05/2013 - 23:06 | 3218160 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Looks like we are about to see a shit ton of personal loans go bellys up because of this wonderful economy. QEH is around the corner to scrub these turds off the banks books and provide them with more fungible cash they can gamble with. Why stimulate the economy by paying repo people to secure the underlying assets when Uncle Ben will cover the cash value.

Tue, 02/05/2013 - 19:48 | 3218188 goldenbuddha454
goldenbuddha454's picture

This is like going to a no-returns restaurant where you order the special of the day, they bring you out  a shit sandwich, you say "I ordered the special" they say "that is the special" , you say "Well, I need a to go box, my dog will eat it". 

Tue, 02/05/2013 - 19:59 | 3218214 pragmatic hobo
pragmatic hobo's picture

I wonder who's buying 'em ...

Tue, 02/05/2013 - 20:13 | 3218250 ebworthen
ebworthen's picture

Just wait, the Harpies and Vampires of Wall Street will figure out how to securitize student loan debt, sell it to anyone and everyone, and when it all goes belly up charge it to the U.S. Taxpayer at large.

The fact that securitization is even allowed after 2008 is all you need to know; nothing has changed.

Tue, 02/05/2013 - 20:45 | 3218328 blindman
blindman's picture

no need to wait, done.
Securitizing student loan debt
http://www.reuters.com/article/2007/08/28/idUSN2723050420070828
Tue Aug 28, 2007 12:18am EDT
By Kevin Drawbaugh
"...If ABS returns falter, investors might channel capital to other sectors and away from the pool available for loans, potentially putting the squeeze on students, said Richard Lee Colvin, director of the Hechinger Institute on Education and the Media at Columbia University's Teachers College.

Securitization of student loans has made credit available to borrowers who might otherwise have been denied it.

"Securitization has created opportunity and made it possible for students to go to college," Colvin said.

But institutional investors in student loan ABS include pension funds, many in Europe, who seek to maximize returns and have little regard for whether they are supporting students.

"The big question to ask is whether we want the capital available to pay for college to be at the mercy of market forces on Wall Street and worldwide," Colvin said.
" ...
.
http://studentloansstudentloans.info/
slabs
"..The Real Truth About the Securitized Default Student Loan

According to the Federal Register, student loans are securitized which means that student loans were sold or are pooled with other student loans endorsed into a trust. These trusts are called asset backed securities.

Asset Backed Securities collateralized by student loans (“SLABS”) comprise one of the four (along with home equity loans, auto loans and credit card receivables) core asset classes financed through asset-backed securitizations and are a benchmark subsector for most floating rate indices.
" ...

Tue, 02/05/2013 - 21:50 | 3218466 ebworthen
ebworthen's picture

Thanks, I should have known.

Maybe I forgot I heard it so I could withstand the insanity a little longer.

Tue, 02/05/2013 - 22:04 | 3218497 blindman
blindman's picture

the whole thing is so creepy you would never think of it.
it has been going on for many years and i just heard about it
a few months ago from a radio program myself. get the government
backing part. the federal government supporting life crushing
inflation once again. making outsourcing and illegal immigration
unavoidable facts of decline and collapse. between the federal
reserve and the federal government it is surprising that anyone
can survive on this continent anymore, they certainly know how
to snatch defeat out of the jaws of victory and spoil a good
wet dream. money, sheesh !
this was one of those securitisations that they wanted under
the radar and slept in the shadow of all the other financial
horse shit frauds.

Tue, 02/05/2013 - 23:31 | 3218810 Yes_Questions
Yes_Questions's picture

 

Securitization of student loans has made credit available to borrowers who might otherwise have been denied it.

I wonder how many SLABS have loans decoupled from government guarantees or documentable ownership of the note itself.

 

Could be a new strategic default event, essentially making the loans just like any other unsecured debt..

Tue, 02/05/2013 - 20:50 | 3218345 blindman
blindman's picture

they hate us for our securities.
http://www.economywatch.com/finance/high-finance/slabs-student-loan-asse...
SLABS: Student Loan Asset Backed Securities
By: EconomyWatch Content Date: 29 January 2010

Tue, 02/05/2013 - 21:13 | 3218397 blindman
blindman's picture

Wall Street Money Never Sleeps - The Advice!
http://www.youtube.com/watch?v=sBEfCsPuidc

Tue, 02/05/2013 - 23:17 | 3218764 Yes_Questions
Yes_Questions's picture

 

 

Asset Backed with unsecured consumer credit?

Someone is still asleep believing the American Dream.  Is there a new bond rating agency out there jealous or wrist slaps?

 

Or is new ABS inspired lender friendly Bankruptcy Legislation on its way?

Holy shitty deal of 602s!

 

Tue, 02/05/2013 - 23:29 | 3218803 Blano
Blano's picture

"But the AVERAGE coupon of 25% on Springleaf's personal loans".......

Holy crap!!!  This country is so screwed.

Wed, 02/06/2013 - 01:49 | 3219104 resurger
resurger's picture

+5
Extra Bullish Tyler

Wed, 02/06/2013 - 06:23 | 3219308 Sechel
Sechel's picture

This is something that requires seasoning, Let someone else buy it and wait six months and watch how the pool performs. Even the assets are seasoned, they could have been cherry picked to make them "look better" than they hare which is hard to believe with a 20% wac.

Wed, 02/06/2013 - 06:37 | 3219310 IMA5U
IMA5U's picture

Party on Wayne!

Wed, 02/06/2013 - 10:20 | 3219727 shovelhead
shovelhead's picture

I'm gonna get a plantation so I can maximize my return on my investment of indentured servants.

With some good luck, I could own a pole dancers silicone titties.

These ABS's come with titles , right?

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