Events Detail

Where Did the Risk Go?

How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt Obligation Market Disruptions

Audio Event Files

First Audio Session

Second Audio Session

Powerpoint Presentation Slides

Lawrence J. White Download PPT Presentation (55 KB)
Joseph R. Mason & Joshua Rosner Download PPT Presentation (3.78 MB)
James R. Follain Download PPT Presentation (135 KB)
Sean J. Egan Download PPT Presentation (175 KB)

Draft paper of “Where Did the Risk Go?” (1.9 MB)

Thursday, May 3, 2007
10:00am - 2:00pm

Building on their previous research on the subprime mortgage market, Joseph Mason (Drexel University) and Joshua Rosner (Graham Fisher & Company) argue that many of the current difficulties in mortgage-backed securities (MBS) and collateralized debt obligations (CDOs) can be attributed to a misapplication of agency ratings. Changes in mortgage origination and servicing make it difficult to evaluate the risk of MBS and CDOs, and the process of creating them requires the ratings agencies to arguably become part of the underwriting team, leading to legal risks and incentive conflicts. Mason and Rosner analyze the fundamental differences between rating structured finance products like MBS and CDOs and traditional products like corporate debt, and conclude that the inefficiencies of rating MBS and CDOs are leading investors to discount U.S. markets.

10:00 a.m. - Registration

10:15 a.m. - Panel
Presentation: Where Did the Risk Go?
Joseph R. Mason, LeBow School of Business, Drexel University
Joshua Rosner, Graham Fisher & Company

Discussants:
Sylvain Raynes, R&R Consulting
James R. Follain, James R. Follain LLC
Sean J. Egan, Egan - Jones Ratings Company
Andrew Davidson, President, Andrew Davidson & Co.

Moderator:
John C. Weicher, Director, Center for Housing and Financial Markets, Hudson Institute

12:30 p.m. – 1:00 p.m. Lunch

1:00 p.m. – 2:00 p.m.
Keynote Luncheon Speaker:
Lawrence J. White, Arthur E. Imperatore Professor of Economics, Stern School of Business, New York University

To RSVP (acceptances only) or to request information, please contact Mr. Ioannis Saratsis at 202-974-2403 or e-mail isaratsis@hudson.org.

Hudson Institute
Betsy and Walter Stern Conference Center
1015 15th Street, N.W., 6th Floor,
Washington, D.C. 20005