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Explaining the Abacus CDO

posted by Adam Levitin

I'm taking particular glee in the SEC's suit against Goldman Sachs for alleged market manipulation with the Abacus CDO.  This isn't Schadenfreude.  Instead, it's that I just taught synthetic CDOs to my structured finance class last week.  The timing couldn't have been better.  When was the last time a synthetic CDO made the front page of the Times?

The news accounts of the suit don't really do justice to the transaction at issue.  Hopefully this description helps a bit. 

In a nutshell, a synthetic CDO is a securitization of a portfolio of credit default swap positions. 

To explain more fully: 

A CDO is more or less a hedge fund.  It's an actively managed, unregulated investment fund.  The assets can be anything.  In the case of the Abacus 2007-ACA deal, the assets were a portfolio of credit default swaps (CDS).  The Abacus CDO was the securitization of a bunch of CDS positions (if it has cash flow, it can be securitized). 

The Abacus CDO was selling CDS protection on a bunch of dodgy mortgage-backed securities.   As long as there was not a credit event (however defined) with the MBS, the protection buyer (John Paulson) would pay protection premiums to the CDO.  If a credit event occurred, however, the payment flow would reverse, and the CDO would pay Paulson.  Presumably in this deal, Paulson did not own the MBS; he was using the CDS to take a short position on the MBS, with the CDO (and ultimately its investors) taking the long position.  

Goldman, the SEC alleges, constructed the CDO as a bespoke deal for Paulson, so there would be someone taking the long position against his short.  Goldman took a nice fee for this and is alleged to also have taken a short position (I'm not clear at this point if it was short on the MBS or if it bought CDS protection on the Abacus CDO, thereby taking a short position on the CDO, which is a derivative bet on Paulson's short). 

There are a lot of acronyms floating around here.  It's easier to understand the alleged fraud by analogy.  Think of Goldman as a fight promoter (Don King, as it were).  The promoter arranges the fight.  If the promoter is betting on the fight, there's a potential problem, though, as the promoter has the ability to fix the fight.   This basic fraud routine goes back to time immemorial.  The promoter arranges a fight between a big guy and a wimp.  Everyone bets on the big guy, except the promoter.  The promoter tells the big palooka that he's going down in the 6th round (and maybe gives him a cut).  The marks in the crowd get fleeced.  

The fight analogy also shows very clearly what the problem is.  The arranger of a fight (or deal) shouldn't be betting on it. 

Of course, then we have the Magnatar case.  So far there are no allegations that the deals' arranger was shorting the deals.  But the arranger still went along with creating a vehicle for a short that was not disclosed to investors.  I see the underwriter/arranger's role in the Magnatar deals as just as problematic as the hedge fund's--no arranger should be setting up a deal filled with what it knows are rotten assets.  Of course, as long as the arranger gets its fee, no questions asked.  This strikes me as a possible case of  aiding and abetting securities fraud.  But after Stonebridge, it's up to the SEC to bring such actions. 

All of this points to the problem with the PSLRA.  Congress thought the tort attorneys were getting out of hand.  And some were.  But as long as there was a real threat of securities litigation, it meant that attorneys (general counsel's office and outside counsel) played a self-regulatory role in the securities industry.  Private securities litigation thus had an important regulatory function.  The SEC can only do so much itself; Congress might have gone too far in curbing private securities litigation. 

Comments

Professor, take a look at the list of servicers handling the various trusts that made up ABACUS 2007-AC1 (p. 18 and 56). Just SOME of the names:

Select Portfolio Services (Fairbanks Capital Corp)
EMC Mortgage Corp.
Wells Fargo Bank
Ameriquest
Aurora Loan Services
Countrywide Home Loan Servicing LP
Option One Mortgage Corp
JP Morgan Chase National Association
Washington Mutual Bank
Saxon
Fremont
New Century Mortgage Corp

Virtually all of servicers involved are well known for servicing fraud issues. Two(Fairbanks/SPS, EMC, etc.) have been the subject of multimillion dollar class actions and a myriad of private litigation - all with similar claims for the most part. Fairbanks/SPS had the 4th largest share of servicing in Abacus at 7.8%. I know that many of the contributors here will be more than familiar with the names.

One of the things that subprime shorter Dr. Michael Burry mentions in Michael Lewis' "The Big Short" is that, contrary to some media spin, these CDO deals started to go bad prior to rate reset dates and also that so many failed to even make their first mortgage payment. Are all of these cases of mortgage fraud by real estate investors/speculators or is it possible that at least SOME of the mortgages were originated from "the inside" in order to help ensure the futures of the trusts and CDS/CDO positions involved?

This is from a part of the book where Burry is following OOMLT 2005-3 and by end of 2007 more than a third of this pool of borrowers had defaulted - 37.7%...

"The losses were sufficient to wipe out not only the bonds Michael Burry had bet against but also a lot of the more highly rated ones in the same tower. That the panic inside Wall Street firms had begun before June 25 (2007) suggested to Michael Burry mainly that the Wall Street firms might be working with inside information about the remittance data. "The dealers often owned [mortgage] servicers," he wrote, "and might have been able to get an inside track on the deterioration in the numbers." p 197 The Big Short by Michael Lewis"

Assuming that the allegations made by the SEC against GS are correct, (and Mortgage Servicing Fraud victims have been saying that there was a connection between servicers and CDS/CDO play for awhile now) given the sheer volume of litigation against them, is it really so difficult to believe that the servicers themselves were/are "helping" the default process along, either independent of the trust owners to increase their own potential investment positions OR in conjunction with the note holders and/or CDS/CDO players?

*****************************************

Bank: Merrill Committed Same Fraud As SEC Claims Goldman Did
By Chad Bray
Dow Jones Newswires
NEW YORK -(Dow Jones)- Merrill Lynch
& Co. engaged in the "same type of fraudulent conduct" that Goldman Sachs Group Inc. (GS: 160.995, -23.295, -12.64%) was accused of committing by the U.S. Securities & Exchange Commission in a lawsuit on Friday, a Dutch bank said Friday.

In a letter filed in New York State Supreme Court in Manhattan on Friday, lawyers for Cooperatieve Centrale Raiffeisen-Boerenleenbank BA, or Rabobank, said Merrill Lynch committed a similar fraud in the structuring of a $1.5 billion collateralized debt obligation, known as Norma CDO Ltd.


http://www.globenewswire.com/newsroom/news.html?d=115256
WEST PALM BEACH, Fla., March 9, 2007 (GLOBE NEWSWIRE) -- Ocwen Financial Corporation (NYSE:OCN) today announced that it has obtained definitive commitments from affiliates of Angelo, Gordon & Co., Metalmark Capital, LLC and other lead investors to form and capitalize a new business, Ocwen Structured Investments, LLC ("OSI"). OSI will invest in the lower tranches and residuals of residential mortgage-backed securities, related mortgage servicing rights, ABX Index Protection and other similar assets.

Ocwen's Chairman and CEO, William C. Erbey, said, "In the current environment of rising mortgage delinquencies, our new venture presents an exciting opportunity to leverage our superior loss mitigation capabilities and knowledge of collateral to generate attractive returns for the investment partners."

http://www.metalmarkcapital.com/investments/financialsvcs_details.aspx?id=OCW
Ocwen Structured Investments - Mortgage Securities - Headquarters location:West Palm Beach, FL- Initial investment date:February 2007

Ocwen Structured Investments ("OSI") was formed to leverage the superior servicing capabilities of Ocwen Financial Corporation ("Ocwen") [NYSE: OCN] and to create value by investing in newly issued residential mortgage-backed securities where Ocwen will provide the servicing for the underlying mortgages. (So they short the very same securities they are servicing! Doesn't anyone see a conflict here?)

Business Week company profile:
http://investing.businessweek.com/research/stocks/snapshot/snapshot_article.asp?ticker=OCN:US
As of December 31, 2009, it serviced 351,595 loans and real estate properties under 547 servicing agreements for approximately 33 clients. These clients include firms, such as Deutsche Bank, Credit Suisse and Goldman Sachs. The mortgaged properties securing the loans that the company services are geographically dispersed throughout all 50 states, the District of Columbia and two U.S. territories. Loans and Residuals The company’s Loans and Residuals segment consists of two components, including trading and investing activities and subprime originations. Asset Management Vehicles The company is developing asset management vehicles. These entities provide it with a source of servicing. Ocwen Structured Investments, LLC (OSI): The company has 25% interest in Ocwen Structured Investments, LLC (OSI). OSI invests primarily in mortgage servicing right (MSRs) and the related lower tranches and residuals of residential mortgage-backed securities, the credit risk of which is partially mitigated by credit default swaps. Ocwen Nonperforming Loans, LLC (ONL): The company’s investments in ONL and its related entities represent approximately a 25% equity interest. Significant Events In 2009, the company separated all of the Mortgage Services, Financial Services and Technology Products operations. History Ocwen Financial Corporation was founded in 1988.

Ocwen Financial Corporation Q4 2007 Earnings Call Transcript - February 12, 2008
http://seekingalpha.com/article/64297-ocwen-financial-corporation-q4-2007-earnings-call-transcript?page=2
We are realigning our business segments to position Ocwen for growth in 2008 and beyond. Ron Faris, our President will be responsible for Ocwen Asset Management or OAM. In addition to our core Residential Servicing business, OAM includes our existing asset management vehicles.

Ocwen Structured Investments, also referred to as OSI, and Ocwen Non-Performing Loans also referred to as ONL. OSI invest in mortgage servicing rights in the related lower tranches and residuals of residential mortgage-backed securities, the credit risk of which is hedged with single named, credit default swaps in the ABX Index. We manage OSI's portfolio and sub-service the mortgage servicing rights that are acquired by OSI.

ONL purchases and resolves non-performing loans. We service the loans owned by ONL. Both OSI and ONL benefit from our superior servicing and loss mitigation performance. These vehicles afford Ocwen a controlled source of supply of servicing and enable Ocwen to generate premium pricing for our superior loss mitigation performance.
Ocwen Financial Corporation Announces First Quarter 2007 Net Income
http://www.globenewswire.com/newsroom/news.html?d=118236
* Unrealized gains on credit default swaps related to subordinate and residual securities: $2.3 million, compared to $0 for the first quarter of 2006.

http://www.reuters.com/finance/stocks/companyProfile?symbol=OCN
The Company is a servicer of subprime residential mortgage loans. As of December 31, 2009, it serviced 351,595 loans and real estate properties with an aggregate unpaid principal balance (UPB) of $49,980,077 under 547 servicing agreements for over 33 clients. These clients include firms, such as Deutsche Bank, Credit Suisse and Goldman Sachs. The mortgaged properties securing the loans that it services are geographically dispersed throughout all 50 states, the District of Columbia and two United States territories. It earns fees for providing services to owners of mortgage loans and foreclosed real estate. In most cases, it provides these services either because the Company purchased the mortgage servicing right (MSR) from the owner of the mortgage or because it entered into a subservicing or special servicing agreement with the entity that owns the MSR. The Company’s Loans and Residuals segment consists of two components: Trading and investing activities, and Subprime originations. Ocwen Structured Investments, LLC (OSI) invests primarily in MSRs and the related lower tranches and residuals of residential mortgage-backed securities, the credit risk of which is partially mitigated by credit default swaps. The Company’s investments in Ocwen Nonperforming Loans, LLC (ONL) and its related entities represent approximately a 25% equity interest. These entities invest in non-performing residential loans purchased at a discount and in foreclosed real estate.

Apologies, the "Bank: Merrill Committed Same Fraud As SEC Claims Goldman Did" story can be found here:

http://www.foxbusiness.com/story/markets/industries/finance/bank-merrill-committed-fraud-sec-claims-goldman-did/

Nicely done professor. Hopefully this will serve an explanation to those still defending Goldman's innocence in the matter.

Question for you. Can we prove with any reasonable doubt that the CDSs being issued by Paulson were issued against securities he knew were destined to fail? So far logic dictates that he did not approach Goldman because he was being charitable, but because he handpicked some rotten fish and needed someone to take the other side of the bet. While Paulson did nothing wrong here per se, one would assume that Goldman was keenly aware of what was going on and standing idly by as this so-called AAA paper was being sold.

I am just interested in knowing how obvious it was for parties involved, (what about ACA?), as everyone is pointing fingers at someone else.

More specifically, I am trying to trace what happened first. Did Paulson already have the CDSs and then worked with Goldman to create the CDO. Or did Paulson find the MBSs, created CDSs with the understanding that he will find someone to take the other side of the bet.

Would it have been crucial for the investors buying the CDO to know that Paulson was on the other side of the bet? Or is that fact benign, while selling the CDO as AAA being the actual crime?

RkD----this entire deal was driven by short demand. Paulson wanted to be short on mortgages, but you can't short mortgages directly and it's hard to short MBS directly because they're illiquid. You have to short them derivatively with CDS. But finding long counterparties for a bunch of CDS on individual MBS is difficult. Easier to create a long counterparty in the form of the CDO and then find a bunch of chump investors to buy into it. So Paulson found the MBS and then had Goldman structure the CDO so someone else would the other side of the bet. The CDO counterparties had to know that there was someone who was short because it was a synthetic CDO. But they didn't know that the short had picked the reference MBS, rather than a neutral third-party. The problem was that material information was not disclosed to the investors (and maybe material false information was disclosed), rather than selling a crappy CDO. (Junk bonds aren't a crime, and a rating is just an opinion...)

The real test of whether ACA, IKB or anyone else believed they were investing in a real bond versus a long bet on the RMBS market should really be this:
- on a real asset backed bond - the buyers of the bond actually fork over the principal to make all those loans (to reimburse the agents who made them) and then they own the loans and their stream of interest and losses

It does not seem to me that this was the case (but please correct me if I am wrong), as RBS settled the deal by paying 840MM much later, only after the loans have been downgraded and many were unpaid.

If this is right, then it was a bet and of course if someone is long, someone has to be short, which kind of makes the fact of whether Goldman told them that someone would or who that someone was kind of irrelevant as someone needed to be by sheer definition (as opposed to the traditional asset back bond where there are no shorts)

I took a look at the prospectus that is now founf online, it is hard to read but there is a diagram that kind of shows I may be right, as it does not show the 1BN in face value changing hands but clearly shows a protection buyer. It is not relevant to the case that the priotection buyer did not own or planned to own the asset as there was no legal requirement for them to do so.

We can banned short sells if we want to, that is another issue altogether. What I will say is that in general shorts allow hedging (as well as a lot of speculation) and without the hedging many investors would demand higher yields whihc may end up hurting the economy

why are rating agencies getting a pass? Rated AAA.

Security brokers, lawyer and insurers of risks....does anyone make anything anymore?

Yes! During the California rolling brownouts Capstone Turbine Corp. made fine turbines that Goldman and others sold on Wall Street...or did they?

Born
in the
Flames of Salvation

Bringing Light and Heat to the Regulation of Ruin

by W.H. Carr

As head of the Commodities Future Trading Commission, Brooksley Born was the only one to call attention to the troubling business practices of Wall Street that led to the current crisis. Sitting before Treasury Secretary Lawrence Summers, Fed Chairman Alan Greenspan and a gallery of grizzly politicians like Texas Senator Phil Gramm, she argued like a middle school Principal for a few basic rules to help quell the threat of ruin.

Frontline, the award winning television documentary, featured her crusade in its film The Warning. She seemed to see through the hype about “complex business transactions” and “complicated derivative instruments” like a teacher intuiting that the spit wads are coming from the pimply-faced kid at the back left corner of the room.

Married to Alexander E Bennett, an attorney with Arnold & Porter Law Firm which had its own Wall Street scandal with its partner, Associate Supreme Court Justice Abe Fortas, Brooksley also worked for Arnold & Porter. Fortas, a 1933 Yale grad and editor of the Yale Law Journal and LBJ Supreme Court appointee, had signed an agreement accepting a questionable $20,000-a-year-for-life contract from Wall Street financier, Louis Wolfson. Wolfson was under investigation for securities fraud at the time Fortas signed the retainer and ultimately was imprisoned Born's first husband was Charles Jacob Landau, a free speech advocate, attorney and journalist whose Reporters Committee for Freedom of the Press prevented Richard Nixon from destroying the Watergate tapes. She has been through the refiner's fires.

Unlike the Stanford educated Brooksley Born, my father was a mere high school graduate who excelled at salesmanship, public relations and advertising. His advertising campaign for selling flame cultivators....burning weeds from crops with clean burning propane gas, he dubbed “Flames of Salvation”....earning the ire of the Southeast Missouri Baptists, but catching the attention of Chester Brown, President of Allied Chemical Corporation and J. Howard Marshall, founder of Union Texas Petroleum who promoted him. Chester and J. Howard flew the company DC-3 into the Sikeston, Missouri airport for the “Flames of Salvation Day Parade”. Farmers from all over the Missouri Boot Heel arrived with their tractors and cultivators for the celebration including a downtown parade. The high school band marched to a Sousa standard and the parade was a great public relations success...save for when the train came through town holding the band in lockstep for several minutes and causing the police chief to worry that the screeching “flames of salvation” blowing from rows of cultivators would melt the tar on Main Street.

J. Howard Marshall, like Fortas, was the editor of the Yale Law Journal. As General Council for Standard Oil he was on the board of the Petroleum Administration for War during WWII. Founder of Union Texas Petroleum he also help Fred Koch start Kock Refining. Most remember him for his marriage to Mexia, Texas blonde bombshell, Anna Nicole Smith. I remember him at the “Flames of Salvation Day” dinner as he sat next to my mother seemingly taken with her beauty and Georgia-belle charm.. Dad's lessons in advertising weren't forgotten either. “Even God promotes his own....this is my beloved son with whom I am well pleased,” Dad was fond of saying.

In November, 1995 when San Francisco 49's all-star receiver Jerry Rice started wearing BreatheRight nose strips I said to myself.... “he'll wear them in this year's Superbowl and every time his face appears in the camera people will identify the strips with high performance... the free advertising would jack up the stock price. I went to my Fidelity account and invested. Jerry made a record five touchdowns on passes and each time give a toothy grin into the camera with his Anglo-flesh-tone strip right across his African-American beak. The stock doubled in price and I was lucky enough to get out before the buzz wore off....thank you Jerry Rice! Thank you Wall Street!

Then came the summer of 2000 and talk of oil shortages and rolling brown outs in California. I heard of an innovative little company called Capstone Turbine Corp. which made turbine generators that kicked on when the rolling brown outs dropped the current. “These will sell like hotcakes, not only in energy ravaged California, but everywhere, like Third World nations and the American Gulf Coast where hurricanes cause annual interruptions in the power supply,” or so I told myself. “They'll be selling them at Walmart for a couple of grand and while Sam Walton's Dad may have made his money off of foreclosing on family farms during the Great Depression, with the sale of the Capstone turbines his Walmart stores would be bringing light and stability to dark and unpredictable world,” I reasoned. The oil shortage was not going away and fossil fuel had become our unshakable habit.

Again I went to Fidelity and invested. The IPO of $16 per share was quickly eclipsed by the $90 per share level by August. Then the stock began to plummet. News of the manipulation of the West Coast power grid by Enron had surfaced in Texas. They had fudged the perceived shortage. Deregulation of the energy market was at the root of the problem and deregulation was being pushed by Fed chairman Alan Greenspan, Treasury Secretary, Lawrence Summers, Texas Senator, Phil Graham, economist Milton Friedman and Wall Street underwriters of the Capstone stock....Goldman Sachs, Merrill Lynch, Morgan Stanley, Solomon Brothers Smith Barney. California was burning and these guys were stoking the fire with naphtha. They weren't flames of salvation, nor does it appear that Mr. Obama learned much from Brooksley Born's experiences. Lawrence Summers, Treasury Secretary Robert Rubin's bulldog on defense of deregulation is now a senior financial adviser to President Obama.

With it coffers engorged by the its stock sales and the electric- grid manipulation of Enron that set the stage for the initial stock offer, Capstone Turbine Corp. would add Enron's General Manager, Douglas Condon, as VP of Sales just as the Enron house of cards began to crumble in Texas. Today he's with Three Rivers Energy in Pleasanton, California. Their website reads: “When the option exists for a business to purchase electricity outside of the regulated utility, many businesses have taken advantage of the first opportunity to improve their supply – utilizing a bidding process with multiple full service suppliers to achieve a more competitive cost. Often, these businesses have also achieved a second advantage by gaining pricing certainty by entering into fixed-priced contracts over a multiple year time frame.” Time will tell if this arrangement works out well for the emerging green energy products...wind and solar.... that companies like Three Rivers also represent. “Outside of the regulated utility” means that whoever uses their services are gambling in the potential no-mans-land of fraud, misrepresentation and market manipulation that led to the Enron debacle just like that created in the newer crisis created by the unregulated credit swaps and derivatives markets

Enron had tried to cover criticism that they were behind the shortages by arguing that in 2000 California's energy crisis was triggered by record usage. It wasn't true. San Francisco Chronicle writers Christian Berthelsen and Scott Winokur in an article titled Soaring Electronic Use More Fiction Than Fact said... “Total electricity consumption in California increased only 4.75 percent in 2000 from 1999, a sharp contrast to claims of industry representatives, who have repeatedly relied on isolated, loose or selective comparisons that make growth appear as high as 20 percent. In fact, the single greatest hour of electricity usage in 2000 was actually lower than any peak demand period in 1999 or 1998.” (March 11, 2001)

When Texas Ranger, John Coffee “Jack” Hays, traveled to California to provide the mussel behind local law enforcement in San Francisco during the gold rush of 1849 he found the local businessmen...most with ties to the power brokers in New York, Boston, Baltimore... sprinkling the streets in front of the local hotels with gold dust to fuel the feeding frenzy and the letter to folks back East encouraging the profitable Westward expansion. The gold in “them thar hills” was mostly found in the pick axes, shovels, tents and wagons sold to the late arrivals like Capstone's turbines sold to the uninitiated. Not much had changed in a hundred and fifty years, except perhaps for the contempt of Texans for Californians. “Let them eat cake!” yelled many of the descendants of the Alamo defenders as Enron's stock rose on the market-manipulation-rape of the Golden State. “California refused to drill offshore for oil? Then they get what they deserve!” So much for the Golden Rule when confronted with the Darwinian ethics of the Golden and Lone Star States.
Jeff Skilling and Ken Lay were the point men for the shenanigans and stepped far enough over the line to go straight to jail while letting their fellow Texans at Enron eat cake, too. Many lost their life's savings in the Enron pension fund. It's a messy world and Mrs. Born thinks it can be made better. Does that make her a Socialist? What driver doesn't hit the brakes when speeding over a hill and seeing a cop on the side of the road ahead. Rules of the road may not create life, but they can certainly protect it.
I bailed out of the Capstone stock without a clue that the whole Enron affair was connected to Wall Street like the hipbone being connected to the thighbone, but the connections were vividly forthcoming in the form of “summary frontispiece”on a class-action law suit being played out in the Southern District of New York. Leading attorney Milberg Weiss, the guru of class action law suits was representing the buyers of the Capstone stock claiming that “there were kickbacks of trades that were created for the sole purpose of enriching underwriter's pocketbooks.” In other words, the insiders knew that the IPO's release was based upon the Bush-Clinton-Bush rush to deregulated commodity pricing. Regulations that the nation had learned since the Great Depression and that were necessary for economic stability. To get out of the scheme quickly leaving the stockholders to hold the bag required Wall Street brokers taking their share the gains upfront in the form of exorbitant brokerage fees.
The letter said that the Capstone settlement amount was $1,305,088 or $0.0582 per share and that “administrative costs could be as much as $27.7 million.” I declined to participate. What was the point? Two hundred shares times a nickle was ten bucks. Having lost a twenty three year old son in December of 2000, burned to death in his car in Houston...ground zero for the Enron inspired losses... we hardly wanted to revisit that painful time or place even if we had known the details.

But then I discovered that Milberg Weiss was indicted for paying witnesses in his class-action law suits and for a $10,000 donation to “friends of Blagojevich”...the embattled Illinois Governor who, according to US prosecutor, Patrick Fitzgerald, had tried to sell a US Senate seat, while Blagojevich's wife was partner with Chicago's Tony Rezko who along with Stuart Levine was indicted for getting kickbacks from investment firms seeking business from two Illinois state boards. Levine pled guilty and testified against Rezko who had been a major political contributor to President Obama who is now unleashing the power of the SEC on the underhanded practices of Wall Street in the complicated derivatives market.

Derivatives? Nobody seems to know too much about them except those who have been bailed out by the taxpayers. Maybe we've made it more complicated than it has to be as Brooksley Born argued before Congress. I have derived from my experiences with these matters that the “flames of salvation” that eliminated weeds from the cotton, soybean and corn fields of Southeast Missouri could be used to cultivate a new crop of Wall Street power brokers while charring a few others. “Somebody ought take a flame thrower to this place,” said Al Pachino's character in the film Scent of Woman as he stood beside his accused young friend, Charlie, a poor prep-school scholarship recipient caught in the crossfire of the uppity power brokers' schemes. In that story, as with this, it was the women who stepped in to clean up the mess by cutting through the male-maneuvering like Arthur's sword through the Gordian knot or like my father's flame cultivators in torching crabgrass and fox tails. It's time for the flames of salvation to burn brightly once again, not on Main Street, but on Wall Street and in the halls of Congress say a growing array of angry militiamen while Daryll Issa charges that the SEC's attack on Goldman Sachs should be thrown out since the watchdogs weren't really watching Goldman as much as they were porn. “It a male thing,” said one female blogger. Put more women in charge....some “earth mothers” who will nurture the future and protect it like Brooksley Born was trying to do.

“Auburn hair,” said Pachino as blind Lt. Colonel Jack Slade as he defended his young friend. His sympathetic female helper and admirer smiled. “Yes, how did you know?” “I felt the heat,” he surely thought and “it was healing”. Nice. “Better than that flame thrower I was wishing I could have taken to the place.” -whc

Query...
Who owned the MBS that they bought protection for? Any of the involved parties? Did they have "skin in the game" ?

Indio, you can find the list of RMBS bundled into this CDO on p. 56-57 of the ABACUS flip book.

Similarly, RkD, with regard to your question of, "Can we prove with any reasonable doubt that the CDSs being issued by Paulson were issued against securities he knew were destined to fail?" the credit ratings for those RMBS trusts can also be found on those pages. Bs and B minuses allll over the place....

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