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Happy Veteran’s Day to all. Today we were graced with our own WWII veteran Hawley Smith. Hawley served as a paratrooper during WWII and shared his collection of ribbons, awards and medals. Hawley’s medals include the Purple Heart and the Bronze Star- a true HERO! Thank you for your service Hawley and all our other veterans in the chapter.

At the lunch table I chatted with Ken Fox, a mortgage banker/broker with Cohen Financial. We discussed how the capital markets arrived in the predicament we have today. Ken’s input was interesting. To paraphrase; the credit agencies (Moody’s, Standard & Poors, etc) were competing against each other for the purpose of winning more business. Very much like a broker competing for a listing who will inflate the asking price knowing that is what the seller wants to hear.

Of course, an overpriced listing just doesn’t sell. But when hundreds of millions of dollars are at stake as loans are bundled for the purpose of being sold to foreign investors- we have a different situation. These securities, better known as mortgage backed securities or MBS (CMBS for commercial loans) have compromised the integrity of our capital markets by being valued at a safer risk category than was actual. The big question: Is our bailout package enough to save the credibility of American monetized securities?!

I welcome your comments and feedback. Thank you to my listeners and readers for providing their feedback. To learn more about my background, visit Consult Pete. To learn more about my company strategy, visit Commercial MasterMinds.