Mr Cooper Group Inc (COOP)

[ron_66271]

Incredibly Significant Post.

Bear Stearns was a major holder of derivative insured ABS/RMBS for their investors. Great investment income from these bonds.
Same for Lehman’s, AIG, F&F.
WaMu held cash reserves between the two banks.

Investment banks like BS, Lehman’s, and AIG keep little in reserve because the market was mark to market to maximize returns for investors and the bonds were insured.

For JPM as a derivative writer as the mortgage market rose it was all free money and promoting the expansion of the mortgage market. More free money.
JPM, 57% of a $13 Trillion RMBS market.

Then the market starts to change to the downside and JPM is very exposed to the derivative contracts written. Now JPM and other Derivative exposed banks start manipulation of the LIBOR interest rates to control their losses.

JPM slow paid on the derivative contracts and forcing the ‘in the money’ counter parties into bankruptcy due to the lack of payments.
JPM was broke.



Ron