My 1999

Xu Liang strode over and took the initiative to extend his right hand.

"Mr. Montes, it's an honor to meet you."

Holding his hand, he looked at the taller and stronger young man in front of him, with a hint of complexity in his eyes.

Although he had read information about this person dozens of times, the feelings the real person brought to him far exceeded those cold information.

"Helen mentioned you in front of me many times, but you are better than what she said."

"Thanks."

Xu Liang was a little surprised that his tone was pretty good to him.

But it’s normal to think about it.

When asking for favors, normal people would choose to be polite before fighting.

If you are polite now, you may not be so polite next time.

"Helen has always told me that her father is a respectable elder. Unfortunately, I am too busy with work and have never been able to find time to visit Boston. I am really sorry."

"It doesn't matter, we will still have a lot of time to communicate in the future."

Xu Liang nodded with a smile and turned his eyes to the young man next to him.

"Helen said she had a brother Reed who was very affectionate."

Holding his hand, Reed Montes smiled.

"I also heard her say that she now has a husband who loves her very much."

A biological sister is nothing.

Xu Liang, a world-class rich man, is the person truly worthy of his friendship.

"Everyone, please stop standing. Sit down and say, everyone, please sit down."

Under Xu Yongpei's greeting, the three of them sat down.

Of course, Montes and his son could not understand Mandarin, but they brought a translator with them before coming.

So both parties can still talk.

It's just a little embarrassing.

Jingle Bell…….

Xu Liang's cell phone suddenly rang.

I glanced at the caller ID.

"You guys talk first, I'll take a call."

After that, he quickly walked out of the door.

"Dear Colin, you are very efficient."

"Haha, I have found a lot of people for your matter."

"From your tone, does it sound like there's any result?"

"Yeah. You'd never expect the person who blocked the acquisition this time."

"who?"

"The Montes family."

"What?"

This result was really beyond his expectation.

Subconsciously he glanced in the direction of the living room.

"Xu, Helen Montes is a well-known 'Red Rose' in the upper class of the East Coast. I don't know how many rich and powerful people have fallen under her pomegranate skirt.

Now this rose has been plucked by you.

The Montes family won't let it go. "

"I understand, thank you Colin."

"It's okay. If you need help, just give me a call.

The Montes family is not yet able to cover the sky with one hand. "

Seeing the revenue of Hanhua's funds booming and the money he originally invested multiplying several times, Powell also became proactive.

"Thank you. When it comes time for you to take action, I won't be stingy."

"Haha, that's good. I have something else to do, so I'll hang up first."

"Bye-Bye."

After hanging up the phone, Xu Liang pondered for a moment.

He opened the door and returned to the living room.

After sitting down.

"Mom and Dad, it's getting late. Go to the kitchen and prepare a table of Chinese food for the guests."

"Okay. It's rare that my father-in-law is here, so I'll show off my skills."

As he said this, Wang Lingxiang stood up.

By the way, I pulled Xu Yongpei.

After saying a few polite words, the latter followed his wife to the kitchen.

After they left.

"Mr. Montes, I have some top-notch tea hidden here. Let's go to the reception room and try it?"

"OK."

Montes and his son agreed and followed Xu Liang to the reception room at the end of the first floor.

Looking at their backs, Xu Yongpei whispered.

"I see that Helen's father doesn't look very good. Do you think there will be a fight in a while?"

"Look at our son's physique, he will get an advantage in a fight. Besides, I think Helen's father has a good attitude.

Okay, stop wondering. Think about it for me, what should I cook for lunch? "

——

After closing the door of the reception room, Xu Liang made tea and brought it over.

"Please taste it."

Reed Montes picked it up and took a sip.

"It's true. But with your intelligence, you should have guessed that I didn't come here just to drink tea?"

"certainly.

Your knife is on my neck, how could I not know. "Xu Liang said calmly.

Reed smiled and said, "You are very well-informed. Did you know so quickly that I was behind DreamWorks Animation?"

“My network is wider than you think.”

"I believe this. Hanhua Capital's fund-raising reception last year gathered half of the upper class of the United States. Unless it is related to the national security of the United States, any news you want to know will be known."

"So when you blocked the DreamWorks Animation merger, you didn't want to hide it from me?"

"You are very smart. No wonder you have achieved such an amazing career at such a young age."

Xu Liang smiled calmly, "Mr. Montes, I'm already here. Can you tell me your purpose?"

"It's simple. Helen was the pride of the Montes family.

If you want to marry her, you must pay a certain price. "

"I wonder what the price is?"

"It depends on what you are willing to give."

After Reid Montes smiled, he picked up the teacup on the table and drank.

"I remember that the top tea in China is called 'Dahongpao'. There are only three plants in Wuyi Mountain in China. The annual output is only a few taels, and the taste is unparalleled.

I got a few grams at great expense. "

Seeing the old god Reed Montes making puns, Xu Liang smiled lightly.

"We Chinese people always give a dowry when we marry our wives. Although Helen and I are not married. But now that we have children, it is no different from getting married.

So I am also willing to give the dowry.

But I just don’t know how big the Montes family’s appetite is and whether they can afford my dowry. "

Reed Montes smiled.

“Xu, the Montes family has always had a good appetite.

It is well-known among all blue-blood nobles. "

Xu Liang nodded, "Does Mr. Montes know about subprime mortgages?"

"certainly."

“Hanhua now holds more than 100 billion US dollars in ABS bonds backed by real estate subprime loans, of which 80 billion US dollars are 3B-rated bonds.

Next, Hanhua is planning to acquire an investment bank and develop a new type of bond based on subordinated debt—collateralized debt obligations (CDOs). "

Real estate mortgage loans, after being packaged by banks and resold to investment institutions, become ABS in the securities market, that is, asset-backed securities.

ABS securities are repackaged and become collateralized debt obligations (CDOs).

In the current U.S. securities market, there are naturally CDO products, but there are no CDO products based on mortgages.

"The main purpose of this CDO product is to sell the 3B-rated bonds held by Hanhua at book value."

As soon as these words came out, Reed Montes's face suddenly changed.

Chris Montes on the side even exclaimed.

"This is impossible!"

Xu Liang smiled lightly, "Nothing is impossible.

The asset pool of a mortgage subprime debt product includes 1,000 loans.

We can reclassify the loans in a 3A-rated asset package, such as 800 3A-rated loans and 200 3B-rated loans.

Then we will take this reintegrated asset package to the rating agency for re-rating.

I am 100% confident that this asset package is still rated AAA.

The reason is simple. In the past nearly a century in the United States, the default rate in the real estate industry has never exceeded 6%.

Therefore, even if all 200 3B-rated loans in the entire asset pool suffer losses, the remaining 3A-rated loans can still cover the losses and allow investors to make considerable profits. "

Hearing this, Chris Montes' expression instantly became excited.

Although he is not engaged in the financial industry, he is also very clear about the difference between 3B-rated bonds and 3A-rated bonds. If everything goes as Xu Liang said, the profit will be dozens of times higher if it is sold.

Reid Montes was calmer than his son, and took a deep breath.

“Why haven’t those investment banks done something so lucrative?

I don't believe Wall Street didn't discover this flaw. "

"Of course Wall Street will find out, but they haven't found out now." Xu Liang said with a smile.

After all, credit default swap products for real estate subprime loans have not yet appeared, let alone secured debt obligations.

Now Wall Street is enjoying a surge in subprime debt.

When the dividends from subprime loans were almost exhausted, they started to engage in more exciting financial innovations.

Such as credit default swaps (CDS) and collateralized debenture obligations (CDO).

Later, the famous ‘composite secured debentures’ were developed.

The market is expanding step by step, and the showy operations also start little by little.

Now Xu Liang just took the first step.

Reed was silent for a moment.

"Can you guarantee a triple-A rating? Moody's and Standard \u0026 Poor's are not fools."

Xu Liang smiled and said: "There is a saying circulating on Wall Street: Those who can't find a job on Wall Street go work for Moody's.

Although it was just a joke.

But it can be seen that although Moody's and Standard \u0026 Poor's are world-class rating agencies, they are not omniscient gods.

In fact, the ratings models used by Moody's and Standard \u0026 Poor's are deeply flawed.

The simplest example: FICO score. "

The FICO score was invented by FICO in the 1950s and is used to measure the credit worthiness of individual borrowers.

The highest FICO score is 850, the lowest is 300, and the median score in the United States is 723.

"Both Moody's and Standard \u0026 Poor's use FICO scores to measure a user's credit rating.

What's stupid is that they only care about the score and never consider the borrower's true income.

But FICO scores can be manipulated.

A potential borrower can improve his or her credit score by first withdrawing cash from a credit card and then paying it back immediately.

This fills the FICO score with water.

Many borrowers with high scores may just be Mexican pickers working on a Texas farm.

But what’s even more ridiculous than the FICO score is its abuse by Moody’s and Standard \u0026 Poor’s.

According to our investigation.

Rating agencies ask subprime loan packagers to provide, not the FICO scores of all borrowers, but the average FICO score of the loan pool.

In other words, as long as the loan pool meets the score of 615, it will be rated as a 3A-rated bond by Moody's and Standard \u0026 Poor's.