Being able to understand what she was talking about so quickly, obviously she was quite familiar with the bank's business, Fu Zhengyi couldn't help but breathe a sigh of relief, if she really wanted to explain in detail by herself, it would not be possible to do it in a few days. Pen ~ fun ~ pavilion www.biquge.info

Since this kind of financial derivatives already exist in the market and can be traded frequently, why should Jiamei Bank lower the review standards for residential mortgages, lower the down payment of housing loans, and appropriately raise the interest rates of some residential mortgages, so as to expand the number of loan customers of the bank on the one hand, and increase the loan income of the bank at the same time?"

Liu Meijia exclaimed. "Are you kidding? Lowering the review standard and lowering the down payment ratio will cause the bank's risk to soar! Even if the loan interest rate is raised, the excess return will definitely not be enough to make up for the risk of falling housing prices, let alone resist the potential risk of lenders abandoning the house and cutting off the mortgage due to the fall in housing prices!"

"What's so scary about being able to package and sell a residential mortgage to other financial institutions, passing on the risk to a third party, a fourth party, or a Nth party?"

Seeing his relaxed face, Liu Meijia was really anxious. You must know that even if these mortgages are packaged and sold to other institutions or investors, the rating of such mortgages is quite strict, and triple-A bonds are basically equivalent to cash and can be circulated normally, but C-rated and D-rated bonds are almost uncared for!

"Who told you to rate a mortgage as C, D, and then sell it as a package? You wouldn't package an A mortgage with a B and a C?"

"What about the proportion? What about the proportion? Loans issued to high-quality customers are rated A, while low-quality mortgages are impossible to be rated A......"

"Have you specifically studied the content of a credit default swap contract for a residential mortgage?"

Liu Meijia smiled bitterly. "Please! A credit default swap contract for a residential mortgage may include hundreds of residential mortgage contracts, and it is impossible to figure out each of these agreements without ten days and half a month! I remember that the credit default swap contract provided by JPMorgan Chase claimed that more than 93% of the mortgages were triple A, and the remaining part of the double A loans were no more than 3 percent, and B loans were no more than 1 percent, so after the combination, the risk was almost A-rated. It can even barely reach double A, and such a product is almost no different from treasury bonds......"

Don't trust the rating agencies too much, and don't think that those guys on Wall Street have a moral limit, I can tell you one thing clearly, that is, when the real estate market is in the process of a steady upward trend, as long as the rise in housing prices can exceed the increase in loan interest rates, then even if it is a residential mortgage with zero down payment, its risk is almost zero, regardless of whether it is triple A or C or D, as long as Jiamei Bank can provide a loan, then someone dares to buy! With the prosperity of the market, investors and investment banks are even willing to pay a certain premium to buy this product! Don't worry about not being able to sell it, when the market is booming, you will feel that the product in your hand is not enough to sell!"

Liu Meijia was stunned, and only exclaimed after a moment. "It's a commercial fraud! It's a crime!"

"No, no, no, these are some tricks within the rules of the game, as long as you don't become the last holder of this kind of bond, even if the bubble is burst, what does it have to do with Jiamei Bank? The big deal is to take a small risk for a certain period of time......

"Justice! This is a commercial crime! You have to understand that lending loans to those unqualified customers is equivalent to harming them! In order to buy a house with a loan, these people not only need to pay a down payment, but also need to pay various deed taxes and fees, and after the mortgage is down, these people have to repay the loan on a monthly basis, once they fail to repay the loan on time, then the house as collateral will be taken away and auctioned by the court, and the final result will be nothing!"

Seeing that the more she spoke, the more serious and excited she became, Fu Zhengyi picked up her jaw with a finger. "What, you don't think you can make this kind of money?"

didn't care about his frivolous moves, Liu Meijia was stunned, she blinked, thought for a moment, and then said a little embarrassed. "Of course, it is necessary to make money, but the problem is that illegal things cannot be done, and the consequences are too serious to bear......"

"Let's look at this business in a different way! Suppose housing prices are on the rise, and the poor get their own houses with a low down payment, is that a good thing or a bad thing?"

Liu Meijia immediately affirmed. "Good thing! Housing appreciation can offset some of the risks, and even lift homebuyers out of poverty, get better jobs, and change their lives......"

"Okay, so are the decision-makers of banks like JPMorgan Chase and Lehman Brothers stupid or smart?"

Liu Meijia said. "It's definitely the latter!"

"So are Freddie Mac and Fannie Mae, the two federal mortgage companies, helping the poor to own their own homes?

Liu Meijia hesitated for a moment, then nodded. "They're helping the poor get a house, and they have to make money! Because these two companies are now private companies, how can they give back to shareholders if they don't make money?"

"Now that you agree with all of the above questions, let me ask you one last thing, if Jiamei Bank provides residential mortgage loans to its customers as I said before, what kind of rating do you think the rating agency will give if these loans are packaged into credit default swap type contracts?"

Liu Meijia stopped nodding and asserted directly. "B! or even C!"

If you look closely at the bonds sold by JPMorgan Chase or Freddie Mac, you will find that there are more than 90 percent of the triple A bonds, but in fact the triple A ones account for 50 or 60 percent at most, and the rest are B, C or even D junk bonds!"

Liu Meijia exclaimed. "Impossible! It is impossible for a rating agency to give such a bond an A rating or higher! The rating agency is impartial and unaffected by the outside world, and it is an independent institution......

"Where there are people, there will be rivers and lakes," Fu Zhengyi smiled and touched a cigarette and lit it, and took a puff before continuing. "Shall we make a bet? Do I say it right, or do you think it's right?"

"Don't gamble!" Liu Meijia responded instinctively, and when she saw the corners of his lips raised, she immediately continued. "But I don't think you're right!"

"Hey, you're a scoundrel!"

"Hmph, I'm a woman, it's my privilege to cheat!"

Liu Meijia raised her face proudly, stood up and walked to the window after speaking, took out her mobile phone and dialed a number, and explained that she immediately set up a confidential team to conduct a comprehensive and in-depth study of the mortgage bonds offered by JPMorgan Chase, and must have a detailed understanding of each loan customer in the bonds, including but not limited to their personal income, work status, credit rating, marriage, children and other circumstances.

Hearing her say this, Fu Zhengke said with a smile. "Remember, there are at least two professional lawyers involved in this team, and remember to require these lawyers to sign strict confidentiality agreements......

Liu Meijia smiled gratefully at him, and said seriously on the phone. "Also, there should be three lawyers in the team who are affiliated with different firms, and the confidentiality agreement should be strict, don't care about the relevant fees, and start arranging it immediately!"

Liu Meijia supplemented what Fu Zhengyi said, and only after explaining did she walk back, looked at his expression with one hand, and sighed after a long time. "I still have a question, if what you say is correct, how can this kind of bond be rated as triple A?"

"How many rating agencies are there in the world?"

Fitch Ratings, Standard & Poor's, and Moody's!"

Fu Zhengyi asked with a smile. "Is there competition between these three?"

"Yes!"

Fu Zhengyi asked again. "So are these three non-profit bond rating agencies?"

Liu Meijia shook her head. "It's not!"

"Isn't that right? Since these three are not non-profit organizations and there is competition among themselves, then it is the same kind of bond, who has a low rating, and who has no business to do?"

Liu Meijia opened her mouth wide and looked stunned, and only muttered after a while. "Won't it?"

"Will it be, just look at the results!"

"Oh my God, isn't Wall Street crazy? This is a mass fraud! The CDS market is now over $800 billion and is expanding rapidly, and if these bonds are like that, then Wall Street will be doomed......

Fu Zhengyi sighed and looked at her with pity. "Wall Street is not finished, has something to do with you and me?"

Liu Meijia sneered and was happy, and gave him a charming look. "You're bad!"

"Now, do you think you still have any questions?"

Liu Meijia bit her lower lip, frowned, and thought about it before saying. "And one last question! When is it time to withdraw?"

"Retreat? Let's talk about it then, there will be signs that will allow you to retreat with your whole body! Remember, most of the questions in the world can be answered with 'your' and 'my'......"

Seeing that he was still in the mood to joke, Liu Meijia couldn't cry or laugh. "Please, don't say that, okay? When you have a sign, you may not be able to get out of the way! You know, the Wall Street guys react quite quickly, and they will definitely pull out before the market fully reacts......