Greg Palast wrote that the Mortgage Backed Securities (MBS) which Bush wants
to bail out were called "tranches". He uses the word like it means
"package". But in fact a "tranche", (French for "slice"), specifically
means a level of risk in a venture, like "preferred" and "common" stock. If
the MBS are really "tranches" there must be high-risk, high-yield, shares
and low-risk, lower-yield shares. The mortgage payments would go into a
special account, the low-risk MBS would be paid from that account, and the
rest of the money, reduced by any defaults on mortgages, would go to the
high-risk tranches. Only those high-risk tranches, sold at high prices
because of their risk, would now be in any danger.
Does anybody know if these MBS are really high-risk tranches?
It would not surprise me for the government to want to bail out the very
people who deliberately assumed a high risk in exchange for higher interest.
The voters certainly do not know this, but they should.
Does any reader know? Does anybody know how to find out?
It know it would make a lot of difference to the voters. They might help
"innocent" bankers who gave loans to too many citizens; the voters would
not want to bail out speculators who were looking for a fast buck when they
knowingly bought into the higher-risk tranche.
Does any reader know if the government is really planning to bail out
speculators who bought the higher-risk tranches?
LP of San Mateo County CA