http://blog.usw.org/2009/06/03/a-real-pecora-commission/ USW Fighting Globally For Workers' Dignity Mon, 06 Feb 2012 15:09:19 +0000 hourly 1 http://wordpress.org/?v=3.3.1 http://blog.usw.org/2009/06/03/a-real-pecora-commission/comment-page-1/#comment-119 gspencer Thu, 04 Jun 2009 16:47:52 +0000 http://blog.usw.org/?p=692#comment-119 Maybe Wall Street can create more new financial products such as Junk Bonds, CDOs, SIVs, ABSs, SPVs, VIEs, CPDOs, SiVs, derivatives, and other similar new products out of the thin air. The SEC should also require a study to justify the need and safety of any new derivative type instrument created, similar to an Environmental Impact Statement. When the investment risks are several generations or several layers removed from the instrument that has the actual collateral value (like a mortgage), and this instrument is insured from most of the investment risk, how much due diligence will an investor perform before he will commit to purchase, as compared to the investing into a primary mortgage or similar instrument that is collateralized for the event of failure? If I were driving a car without insurance, I would probably drive much more carefully than if I had insurance since my exposure for loss is lessened with insurance. Maybe we would be better off without any of these recently created new financial products. Maybe Wall Street can create more new financial products such as Junk Bonds, CDOs, SIVs, ABSs, SPVs, VIEs, CPDOs, SiVs, derivatives, and other similar new products out of the thin air. The SEC should also require a study to justify the need and safety of any new derivative type instrument created, similar to an Environmental Impact Statement. When the investment risks are several generations or several layers removed from the instrument that has the actual collateral value (like a mortgage), and this instrument is insured from most of the investment risk, how much due diligence will an investor perform before he will commit to purchase, as compared to the investing into a primary mortgage or similar instrument that is collateralized for the event of failure? If I were driving a car without insurance, I would probably drive much more carefully than if I had insurance since my exposure for loss is lessened with insurance. Maybe we would be better off without any of these recently created new financial products.

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