From the Jokers Who Brought You AAA subprime MBSs...
Warren Buffett's Berkshire Hathaway Loses Top AAA Credit Rating From Fitch
Yet these knuckleheads were saying this not long ago...
July 18 (Reuters) - Subprime mortgage bonds carrying the highest, "AAA," rating have not eroded in quality despite price declines in the securities in recent days, Fitch Ratings said on Wednesday.
And subprime mortgage deliquency rates are amazingly high. This is from today's WSJ.
S&P said the smallest month-to-month increase as of the January distribution date was subprime mortgages, which the biggest amount of behind loans, on a percentage basis, are. But the delinquency rates rose no more than 5.2% for the three years. The delinquency rates, though, still range from 42% of current total pool balances for 2005 to 49% for 2007.
Must be a hell of a capital cushion below the AAA tranche for a 49% delinquency rate not to eat into the AAA rating of the top tranche, eh Fitchie? Either that or you're not lowering the ratings for some other reason -- like political pressure, pressure from clients like Citi, who would be double-secret-screwed if it happened.
Naw, must be the magic of finance that can make steak out of dog food.