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AGNC's leverage increases risk In the company's 10Q (which is its quarterly report to the SEC), it states that: We pledge our securities as collateral under our borrowings structured as repurchase agreements with financial institutions. For example, American Home Mortgage, once a top-10 mortgage lender, went bankrupt in 2007.
Tyler Dickson added: “I’ve admired Blackstone’s innovation since leading the firm’s IPO in 2007. In the past, Dickson held numerous markets and banking leadership positions including running corporate and investment banking, equity and debt capital markets, leveraged finance, structured finance and securitization businesses.
Collateralized loan obligations from the Great Recession of 2007-2009, part of it is what causes the booms and busts. You get a bust, like we saw, for example, in the housing crisis in 2007-2009. William Bernstein: Exactly. Then all of a sudden bankers and investors get religion, they become a lot more conservative.
We are actively gathering year-end financial information for our entire portfolio, and with most of the data already collected, the weighted average debt service coverage ratio remains over two times, with most of the collaterals in our portfolio generating more than twice their annual debt service payments. Those are two examples.
So, until the financial crisis of 2007 and 2009 or however you go — you actually time it, I was in this finance bubble. Any kind, collateral, non-collateral. They don’t have collateral. So, that was that and then comes the financial crisis. I was teaching corporate finance. I did research, theoretical research.
SEIDES: John Yeah, I said back then, the bet started in 2007 and I say today, being in the market and investing in hedge funds is completely apples and oranges. This is the summer of 2007. RITHOLTZ: 2007. And he said, “Well, it has to be this and that “and it has to be collateralized with a letter of credit.”
You’ve probably heard some aspects of this from the various interviews I’ve done with Howard Marks talking about the distressed asset fund they set up in 2007. You joined in 2007. But, but fast forward to June of 2007, you know, oaktree in the distressed debt landscape is, is really, you know, second to none.
MILLER: The collateral won’t be adequate in our view. Leading indicators would be contract activity and listing inventory, sort of transaction-based rather than price-based. RITHOLTZ: I would imagine that would tell a bank, “Hey, if this buyer defaults on this mortgage down the road, here’s what it looks like.
And there was one conversation very early in my career, this was actually 2007, where I was interviewing with an asset manager and I pre-meeting, asked them what they thought of the market. So I was looking at all sorts of things, which is sort of classical equity quant type work. 00:28:05 [Speaker Changed] Exactly.
And you had the great insight and business acumen to tap out of Bear Stearns in 2007 with all of those options that you had and exercise the options, sell them and launch your shortness, the asset management. Jim O’Shaughnessy : No, about five and a half years. Barry Ritholtz : So in the, in the mid two thousands. Totally agree.
MORGENSON: It can be collateralized loan obligations, now it’s big private debt. In 2007, firms extracted — the private equity firms extracted $20 billion from companies in the form of dividend recapitalizations. I think in 2007, we had 24 square feet per capita versus Europe, which was like 14, and Japan, which was like 9.
00:07:47 [Speaker Changed] So, so after, you know, more than 20 years at Goldman, you joined the New York Fed in 2007, overseeing domestic and foreign exchange trading operations, 2007, that, that’s some timing. Well, I had about I seven months of calm and then chaos started in August of 2007. I’m sorry.
And they all sit on a massive amount of properties and collateral that needs to either be financed, sold. 10-year go back -- and I'm dating myself here, but go back to 2004 to 2007, the 10-year sat in a band between 2004 and 2007 of 4 to 4.50, and we had a very, very healthy market. And at the same time, a 4 to 4.50
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