Hedge Funds run in an opaque market, and it seems to me that spells of market turmoil about match the "service life" of a typical market trader ... maybe 10 yrs.
Therefore there is a lack of memory.
And maybe it's been long enough that some don't know that they can get spanked
WSJournal:
"The SEC is checking the books at Wall Street firms, including Goldman, Bear Stearns and Merrill, to make sure they aren't hiding subprime-mortgage losses"
NYTimes
"Unlike investors who hold large stakes in publicly traded American stocks, and must report those holdings to the Securities and Exchange Commission, no central government agency or private organization tracks who may be holding subprime or other mortgage-related securities in any detail. (The United States Treasury does track broad foreign country holdings of American mortgage securities.)
“I don’t think any of the regulators have a handle on where the net exposure of subprime is,” said Christopher Whalen, managing director of Institutional Risk Analytics, which builds risk systems for regulators and auditors.
Mr. Whalen said the situation was worse in Europe, where even less public data was available.
Furthermore, because of accounting rules, some holders of these mortgage-backed securities do not have to own up to or recognize any losses until they actually sell them.
But these days, trying to value certain subprime securities or the more complicated collateralized debt obligations, or C.D.O.’s, which are pools of mortgage securities, is difficult as well."
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