Wall Street Cleverly Carves Up Bad Assets

(NEWSER) - Until the day Lehman Brothers declared bankruptcy, all three of the major credit-ratings agencies swore its debt was safe, rating it A or better. They rated AIG at AA. And they gave 75% of the $3.2 trillion of subprime mortgage securities iron-clad AAA ratings. Moody’s, S&P and Fitch were, in short, at the center of the credit crisis. Yet all are still profitable—and regulators aren’t touching them, Bloomberg reports. More»

Credit downgrades key catalyst in Wall Street titan's loss of value

(NEWSER) - After dodging many of the bullets that left its Wall Street peers wounded or dead, Goldman Sachs faces a net loss of up to $2 billion for the fourth quarter, the Wall Street Journal reports. The loss of $5 per share is five times worse than analysts feared as the firm deals with writedowns across its portfolio. Shares plunged $13.23, or 17%, yesterday. More»

One year in, credit crunch has upset all expectations about modern markets

(NEWSER) - Last summer, central banks injected hundreds of billions of dollars into the financial system, desperate to restore liquidity to battered markets. But by then the credit crunch was on—and after 12 months, it shows no signs of abating. The Financial Times looks at how risky US mortgages set off the worst economic crisis in 70 years. More»

Critics say plan would put too much risk on taxpayers

(NEWSER) - The best way for the Fed to help reverse the sagging economy is for it to buy some of the $6 trillion in outstanding mortgage-backed securities that have Wall Street so nervous, investors say. The move would ease the credit crunch but put taxpayers at risk. It’s an option the Bush administration has been reluctant to take, reports Bloomberg. More»

Extra pay could drop in half for some senior bond traders

(NEWSER) - Wall Street's multi-million-dollar bonuses are likely to take a hit for the first time in five years, with extra pay dropping in half for some senior sellers of mortgage-backed securities, according to the Wall Street Journal. Traders in stocks and commodities are expected to do better than those working with bonds and mortgages, reflecting the subprime crisis. More»