Wall Street’s latest idea - FT.com

Wall Street’s latest idea - FT.com

Collateral transformation is different than turning MBS into pristine collateral. Collateral transformation is the newest bankster rage. They take bad collateral and penalize you for the lack of quality in the collateral. That is not what Ben Bernanke wants to do with MBS. He wants those guaranteed by the government.

Indeed, even this crap collateral could end up being guaranteed by the government if the banks teetered on the brink again. That would be a disaster. 


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