The Wall Street Journal reports that going into 2011, battered mortgage bonds looked like a relatively safe bet for Wall Street. Prices of bonds underpinned by subprime home loans had recovered from the depths of the financial crisis, and mortgage defaults—while still high—were easier to predict.
For months, banks were able to profit from buying the bonds and selling them to investors as they rose in value. In late 2010, Boston custody bank State Street Corp. sold $11 billion in mortgage- and asset-backed securities to investment banks including Goldman Sachs Group Inc. that quickly sold most of them to investors, a sign of market demand for ...
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http://online.wsj.com/article/SB10001424052702303627104576410013661451094.html?mod=googlenews_wsj
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