The way it works is that insurers and banks that hold battered securities on their books have Wall Street firms separate the good from the bad. The good mortgages are bundled together and create a security designed to get a higher rating. The weaker securities get low ratings.
That was precisely the long, hard work everyone wanted to avoid. And that might well, in many cases, prove impossible, since links to the original mortgages re-re-repackaged may have disappeared.
Mighty Wall Street wizardry indeed.
Plus, theres the whole "who holds the paper" issue. Everything was sliced and diced so opaquely exactly to obscure the fact that a lot of the ratings were bs. Now they have to unwind it, they may find it hard. If I was in a default mortgage right now, I'd try and play "show me the paper", cos I reckoon it's a reasonable bet they can't. How can you lose ? It's a 30% chance you keep the house debt free when you were going to lose it anyway. keep to the Fen Causeway
