Comments on: How Vanguard Avoided The Subprime Mess

By: Mrs. Micah

Mrs. Micah — Sun, 30 Dec 2007 17:40:03 +0000

This just deepens my crush on Vanguard. I was recently reading an interesting piece which showed how some companies affected by the sub-prime mess didn’t have to be…but they decided to go beyond what they’d been doing because the money was just too good. Pop.

By: MoneyNing

MoneyNing — Fri, 28 Dec 2007 18:25:03 +0000

Jim: I guess it means that other people were just ignorant and lazy. It’s a little disheartening to think that these people get paid so much money.

By: Dave

Dave — Thu, 27 Dec 2007 22:54:26 +0000

I think this type of information really exposes some laziness on the part of the banks and investment managers, since they blindly took the word of the bond ratings agencies, when a little common sense checking would have given warning that all was not well. If all it takes to be a money manager is looking at a few letters and picking the ones that say “AAA”, why are they paid so much?

It also really makes the bond rating agencies look terrible. Yes, bundling mortgages together reduces the risk of individual defaults. But how can you give a high rating to a mortgage backed security when the whole pool is made up of stated income, 95% LTV loans to borrowers with poor credit in overheated markets? That seems like exactly the type of thing the “experts” are supposed to notice!

By: jim

jim — Thu, 27 Dec 2007 20:17:48 +0000

MoneyNing: Vanguard sat out of investing in those securities, Goldman actually bet against them. It was a gutsy move that paid off tremendously but both firms had some smart folks working for them.

By: RacerX

RacerX — Thu, 27 Dec 2007 19:46:11 +0000

There is a great article about this in the latest Fortune magazine. My favorite part is that while his company has melting, the CEO of Lych was golfing on most days.

Now, since he is outed, he will have to live off of his $116MM parachute! Now he can golf!

By: MoneyNing

MoneyNing — Thu, 27 Dec 2007 18:55:10 +0000

I wonder how much of the big companies losing so much money is the investment managers being lazy and how much of that is them just not knowing how to do what the guys at Vanguard and Goldman Sachs did.