No - the ABS markets are all about slicing up pools of debt.
Suppose I created a security that would give me back all the loose change found on the streets of Manhattan at any one instant. How much is that worth - $5, $20, more? (there's a lot of streets, and I'm always surprised how often I find a coin).
But I can guarantee that it's worth at least $1.00. That would be a AAA risk. And Moody's would rate it so, just by looking at the statistical properties of coins * streets.
This adds 1 security to the totals. The 'new idea' is that investors were willing to invest in new 'slices' of existing pools - chosen so that they'd get a AAA rating.
The idea itself isn't bogus. But the historical statistics of the subprime market were not valid for the wave of 'new money' moving into the Florida & Vegas markets... Subprime mortgages were a different animal than the rating agencies modeled, and no-one had any incentive to call them out on it.
Suppose I created a security that would give me back all the loose change found on the streets of Manhattan at any one instant. How much is that worth - $5, $20, more? (there's a lot of streets, and I'm always surprised how often I find a coin).
But I can guarantee that it's worth at least $1.00. That would be a AAA risk. And Moody's would rate it so, just by looking at the statistical properties of coins * streets.
This adds 1 security to the totals. The 'new idea' is that investors were willing to invest in new 'slices' of existing pools - chosen so that they'd get a AAA rating.
The idea itself isn't bogus. But the historical statistics of the subprime market were not valid for the wave of 'new money' moving into the Florida & Vegas markets... Subprime mortgages were a different animal than the rating agencies modeled, and no-one had any incentive to call them out on it.