Dumb Money At Extremes! The Stock Market Is Close To Bubble-like Conditions, Banks GO FULL RETARD! Moody’s Lowers Ratings of Four U.S. Banks After Review
November 16th, 2013
Banks GO FULL RETARD – Self Securitze then Rehypothecate and Leverage to Infinity
Self-securitisation (retained securitisation) is defined as those securitisation transactions done solely for the purpose of using the securities created as collateral with the central bank in order to obtain funding, with no intent to sell them to third-party investors. All of the securities issued by the Structured Finance Vehicle (SFV) for all tranches are owned by the originating bank and remain on its balance sheet.
Which means that should these same banks that self-securitize with Central Bank X, then proceed to re-use the same security with the same counterparty – i.e., their host central bank, or the Fed of course – then this $1.2 trillion in assets, already carried off-balance sheet with Basel III’s blessings, can get 2x, 3x, 5x, 8x, 13x or more turns of leverage
Very Quietly Moody’s downgrade of Morgan, Goldman, JP Morgan & NY Mellon…UH OH?
Moody’s lowers ratings of four U.S. banks after review
(Bloomberg) Moody’s Investors Service cut its ratings on four of the biggest U.S. banks after deciding the government would be less likely to help them repay creditors in a crisis.
Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of New York Mellon Corp. had their senior holding company ratings lowered one level yesterday after Moody’s concluded a review of eight U.S. banks that began in August. Bank of New York was cut to A1 from Aa3, and Goldman Sachs was lowered to Baa1 from A3, Moody’s said. JPMorgan was cut to A3 from A2, and Morgan Stanley was downgraded to Baa2 from Baa1. Subordinated debt ratings were also lowered for BNY Mellon, Goldman Sachs, JPMorgan, and Morgan Stanley.