"CBRE: This Has NOT Been A Liquidity Crisis, But A Crisis Of Bad Credit
S&P shocked the the CMBS market last week by advising that its new models, if adopted, would likely prompt ratings cuts on 95 percent of top bonds issued during the peak of the real estate cycle in 2007 and 85 percent of CMBS from 2006. S&P is mulling responses from a formal request for comment.Anyway, from the CBRE piece:
Some 50 insurers have contacted Horsham, Pennsylvania-based Realpoint over the last few days, saying, "you guys need to get approved" by the NAIC, Dobilas said.
"Realpoint acts as a trump card to any action that S&P takes," he said. "We don't perceive any problem" getting approved by the NAIC, he added.
The NAIC, which represents all of U.S. state and territory insurance regulators, affirmed that Realpoint's application has been received by NAIC's Securities and Valuations Office.
- This has NOT been a liquidity crisis, but a crisis of bad credit
- The system of human incentives and checks and balances was poorly thought out across the board: securitizers, banks, rating agencies, bond buyers, real estate investors
- There was too much liquidity in the system, which led to rising prices, which led to relaxed underwriting standards
hat tip Rob Sphere: Related Content"
Don the Libertarian Democrat