- Top Features:
- War Room
- Glenn Greenwald
- Broadsheet
- Joan Walsh
- Camille Paglia
- Since You Asked
- Follow Salon:
Read other letters about this article
I'm surprised you didn't include anything about the differences between the unfortunately named terms of "mark to market" and "mark to model". While Moody's and S&P certainly deserve a heap of blame for over-rating various tranches, it seems no one ever really had a firm grasp on how much they were were worth, and yet many funds saw no problem in resting the foundations of their portfolios on them. The financial models of firms holding these high risk investments, designed to judge the value of these wisps of intangibility, were ludicrously optimistic. And why not, given that just nudging a formula in a model could boost their declared returns? And the house of cards stood, till people had to quickly sell their bits of CDOs and suddenly nobody knew how much they were actually worth.
