And yet the PMs of these holdings have to project for all of these factors. The Auditors have to sign off on the reasonableness of the reserve projections on the book I run so they ARE in fact, by proxy, signing off on those assumptions.. Do you run a book of MBS? Doesn't sound like it to me.
So really what you're ham handedly attempting to do is give the gov't the excuse of 'crisis oh no crisis' as a cover for them putting unprecedentedly large loss provisions on their holdings because of a TBTF bank crisis.
In other words the analysis was 100% downside from the mgmt and the auditors said sure whatever without any thought of a recovery.
Why would you reserve this way ever? Oh I know - you want to 'prove' a failed buisness model.
Guess what? The business model didn't fail, instead the GSEs were beaten to death and forced to buy, AT PAR, private label poorly underwritten and defaulting resi MBS and then pointed at for saying they did a bad job on their underwriting, which if you look at the empirical evidence, they didn't. Their loss rates were far far lower than any of the private label issuance.
The TBTF bank shareholders got the benefits of TARP, PPIP, and QE infinity.
The GSE shareholders were left holding the bag thru a series of sly moves by the Treasury (basically all former Goldman alums btw) in a blatantly obvious power play to get the resi mortgage market out of the GSEs in into the private banks, who BTW, are ALSO operating with a government guarantee which is FAR MORE explicit than the GSE guarantee because they actually failed and actually needed a bailout. The GSEs had adequate capital to operate for at least 18 months when they were forced into the conservatorship and take bailout money.
You can say x or y is not in the law but the regulations dictate the actions and the actions have consequences.
That's the story. So don't pretend like you know more than me about how this works because from what I can see you're apparently not that familiar. Thanks for the smugness - really helpful to everyone here. shows you know more than the rest of us.. not.
