Perhaps I hyperbolize, but it’s still interesting to note—as esteemed business editor Bill Saporito just did to me and Justin—that B of A issued the first private mortgage-backed security. Bill was reading a paper about the resiliency of mortgage-backed securities when collateralized-debt-obligation markets are disrupted (timely!) and came across this:
The first private asset-backed security was an MBS issued by Bank of America in 1977, consisting of a simple pass-through structure—that is, one tranche. As the industry matured and investors became more comfortable predicting mortgage performance [Curious Capitalist clears his throat], MBS became substantially more complex.
Of course, what Joseph Mason of Drexel University and Joshua Rosner of Graham Fisher & Co. don’t mention (unless it’s on another page), is that Ginnie Mae had already gotten the government into that business way back in 1970.
So I guess the real take-away is, even when you think you shouldn’t blame the government for something, you can still usually find a way.
UPDATE: Here’s why Bill was reading that paper. An article provocatively headlined: “Getting Suckered by Wall Street—Again“
Barbara!