Can we afford the rich any more? | Corrente:
"Nouriel Roubini explains the financial food chain:
How will financial institutions make money now that the securitization food chain is broken?
Let’s consider in more detail this loan origination and securitization chain for residential mortgages, commercial real estate mortgages and leveraged loans financing LBOs…
Think of this fee generation process along this long food chain: it started with mortgage brokers whose income/fee was based on maximizing the volume of mortgages being generated and approved; they had all the incentive to ignore the creditworthiness of the borrowers and maximize mortgage volume and their personal income. The fee generation machine then passed to the bank originating the mortgage that was packaging these mortgages into MBS and thus making a fee in this process and transferring the risk down the line to someone else;.. "
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