This is the one-year anniversary of the failings that changed the mortgage meltdown to a market meltdown that led to economic crisis for the country. Bear Stearns went out a year ago April, followed, unbelievably, by Freddie and Fannie, Lehman Brothers, and, almost, AIG. There have been many reviews this past week about the factors that contributed to the meltdown, and much analysis about what took place.
A year later, there still isn’t any financing for home or commercial loans, to speak of. The commercial market is teetering, on the brink of its own collapse. Foreclosure pipelines are chock-full, and millions of loans are waiting for modification. Yet there is a semblance of market revival. Distressed loans are changing hands more frequently. TALF has helped move securitizations. And modifications and workouts have employed many people from this sector who had lost their jobs.
Still, I am left with a nagging worry that things in our market haven’t really changed. The rating agencies are gearing up for securitizations, but their new requirements for third party review firms don’t give the investors much that they didn’t have before. There isn’t any real transparency. The review firm’s findings aren’t disclosed to the investor. Many of the subtleties of the review process are determined behind the scenes, as in the days of old. I am not interested in repeating what was done before. I want investors to know what they are buying. It’s a free country, and they can buy anything they want to invest in, but—and here is where I see room for a difference—only if they have full disclosure and know exactly what they are buying. I haven’t seen enough to convince me that this is the mandate of the newly-emerging market, but I hope to make it a reality.