Comment of the Week: Oh, the irony!

by MPA30 Aug 2013

This week, it was reported that the FHFA would go after JPMorgan for $6bn to settle mortgage suits related to the subprime fiasco. Wm Matz pointed out that JPMorgan had dug its own grave years ago.

What incredible irony! JPMorgan developed the derivatives model [read Gillian Tett's Fools' Gold for details]. But their own risk quant, Krishna Varikooty, warned against using the model with home loans due to lack of sufficient performance data. As a result, JPM Chase did far less of the derivatives than the others. Now their model comes back to bite them, vicariously through the acquisitions of the Bear Stearns and WaMu trash.

Congratulations, Wm Matz. You've won MPA's Comment of the Week!



Is TILA-RESPA a good or bad thing long term?