credit crisis
Posted at 9:01am on Mar. 10, 2008 Ominous Events in the Mortgage Markets This Past Week
Metastasis
By blackhedd
Several very important things happened in the market for mortgage-backed securities (MBS) this past week. They're technically arcane and hard to reduce to sound bites, so they didn't make a big ripple in the news. But the effects will be far-reaching.
Many published reports (here's one) at midweek had it that UBS (the Union Bank of Switzerland) had dumped a $24 billion portfolio of securities backed by Alt-A mortgages, which are intermediate in quality between prime and subprime.
According to the whispers, UBS received 70 cents on the dollar for the position. (The rumored buyer is interesting too. More on that in a moment.)
You know what happens when the guy down the block sells his house. The price he gets becomes a "comparable transaction" that affects the perceived market-value of your own house. Same thing happens with illiquid securities like MBS.
Read on...
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