Miscellaneous
Cornwall's Position
Rating Agencies
CDOs
Subprime Mortgage Market
100
What happened the day after the subprime mortgage market insiders left Las Vegas and returned to their trading desks?
The market crashed. ABX fell more than a point, 93.03 to 91.98. (pg 161)
100
They purchased $10 million for 150 basis points (1.5%).
After the ISDA went through, how much did Cornwall Capital initially purchase in Credit Default Swaps?
100
Name the two rating agencies Steve Eisman meet with
Who is Moody's and S&P (pg 169)
100
What is Collateralize Debt Obligation
What does a CDO stand for
100
What was the "Great Treasure Hunt"?
Finding where all the subprime mortgage risk was hidden
200
What company is always there during a calamity?
Who is Merrill Lynch "When it came time to bankrupt Orange County with bad advice, Merrill was there. When the Internet went bust, Merrill was there. Way back in the 1980s, when the first bond trader was let off his leashand lost hundreds of millions of dollars, Merrill was there to take the hit. That was Eisman’s logic: the logic of Wall Street’s pecking order. Goldman Sachs was the big kid who ran the games in this neighborhood. Merrill Lynch was the little fat kid assigned the least pleasant roles, just happy to be a part of things. The game, as Eisman saw it, was crack the whip. He assumed Merrill Lynch had taken its assigned place at the end of the chain."
200
Morgan Stanley refused to sell anymore CDS stating "something has happened in another arm of the bank that’s caused some kind of risk management decision at the very highest levels of Morgan Stanley.”
What happened when Charlie Ledley tried to purchase more Credit Default Swaps the next day?
200
The CEO of Moody's
Who is Raymond McDonald (pg 171)
200
They found out that there is nothing inside a CDO
Who is Jim Grant and Dan Gertner from Grant's Interest Rate Observor (pg. 176)
200
“With one hand the Wall Street firms were selling low interest rate–bearing double-A-rated CDOs at par, or 100; with the other they were trading this index composed of those very same bonds for 49 cents on the dollar.”
What was the disconnect from selling individual CDO's and using the index?
300
How did Ben describe Wachovia?
“A gift from god” “It was like we were in a plane at 30,000 feet, which had stalled, and Wachovia still had a few parachutes for sale.” (pg 163)
300
They talked to the guys in Vegas who took them to the shooting range as a business expense, they purchased $45 million in CDS.
Who did Cornwall talk to to try to persuade Wachovia to to sell them Credit Default Swaps, and how much did they eventually purchase?
300
The level of data that Eisman and Vinny were allowed to see for the sub-prime mortgages.
What is pool-level data (pg 170)
300
They were informed that $1.6 billion dollars of it was absolutely worthless (pg. 176)
What happened with Bear Stearns triple-A-rated subprime-backed CDOs
300
The same day as Frontpoint's conference call with it's investors.
When did the subprime mortgage market begin it's rapid collapse?
400
Which bonds received higher ratings, fixed or floating?
Bonds backed by floating-rate mortgages received higher ratings than bonds backed by fixed0rate ones. This is why the percentage of subprime mortgage loans with floating rates had risen in the past 5 years from 40 to 80. (pg 169)
400
Of their $30 million portfolio, how much did they own in Credit Default Swaps?
$205 million, and they wanted to own more.
400
Who was keeping information from the S&P; and therefore the subprime mortgage bonds did not have their correct ratings.
Who is the Wall Street
400
A CDO is what type of security
What is an asset-backed security (pg. 175)
400
The premium rate was constantly going up and a lot of banks outright quit selling them.
How did the decline in the subprime mortgage market effect Cornwall Capital buying Credit Default swaps?
500
Who did Steve Eisman meet with from S&P
Who is Ernestine Warner (pg 170)
500
They had a lot of trouble trying to buy the swaps because firms refused to sell them, but the market was ticking along like nothing was wrong with them.
What made no sense to Cornwall Capital about the market of Credit Default Swaps on Subprime Mortgages at this time.
500
Owns over 20 percent of Moody's company
Who is Warren Buffett
500
What can be reformed to create a CDO
What is non-investment mortgage slices (pg.177)
500
The section "How to Short a CDO" was removed from the schedule.
When Carlie Ledley went to the conference on CDO's hosted by Bear Stearns, what had changed about the conference?
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