Slicing and Dicing

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SLICING AND DICING….The Washington Post editorializes today against John McCain’s mortgage rescue plan, and among its bill of particulars it tosses in this:

At least as Mr. Holtz-Eakin described it, it lacks a clear mechanism for reassembling and extricating whole mortgages from the welter of securities “tranches” into which Wall Street slices and dices them.

As I understand things — and I might not — this is a serious problem with any plan to force noteholders to write down their losses and restructure their mortgages to help out distressed homeowners. The problem is that there’s no banker to negotiate with. It’s not just that mortgages today are bundled up and securitized, it’s that the resulting securities are then chopped up and sold into various CDOs. These CDOs are hedged with hundreds of pages of legal covenants, and the end result is that you can’t force the mortgages to be restructured unless all of the bondholders agree. And since every CDO has hundreds of bondholders, that’s basically impossible.

Obviously this doesn’t apply to all subprime mortgages, but I wonder how many it does apply to? And legally and administratively, what’s the answer? I really haven’t been able to find a coherent explanation of this stuff, but it seems like it’s a pretty big deal. Anyone have any reading recommendations?

SIX TRUTHS

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Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

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Truth #5: It's about minority rule.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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