Who Wasn't Investing In Subprime Mortgages?

MoneyGram is the latest non-mortgage lender to be caught investing in the subprime mortgage market, says BusinessWeek. (emphasis ours)

The money transfer services provider’s stock lost half its value Jan. 15 after the company disclosed a plan to recapitalize its balance sheet that depends on its ability to shed its risky loan portfolio.

While the company has been a relatively conservative play on money transfer services to consumers, its other business of transferring money between banks and other financial institutions has turned sour. MoneyGram now faces larger losses after reinvesting money it receives for bank transfers in risky investments such as subprime mortgages.

So which companies haven’t been investing in the subprime mortgage market? Taco Bell?

MoneyGram Rescue Plan At Risk [BusinessWeek]
(Photo:stirwise)

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  1. Me?

  2. jeff303 says:

    It probably depends a lot on how you define “investing”. Probably even Taco Bell (Yum Brands) has a nontrivial sized pension fund for some of its employees, and chances are that fund is overseen by an investment house which may allocate some of the capital to subprime backed securities.

  3. Silversmok3 says:

    “In other news:
    Taco Bell takes a $1 Billion write down as the company tries to distance itself from the housing meltdown.
    A company spokesperson admits Taco Bell’s policy of thinking ‘outside the bun’ led to the fast food chain investing in mortgage-backed securities.”

    You heard it here first.

  4. mac-phisto says:

    i had the news playing in the background last nite & half-heard a pundit trying to explain why citibank was in such trouble. at one point, the interviewer asked something along the lines of “didn’t they know these were risky investments?” & the pundit’s response was “they most likely did, but the highs were just too high & the money was rolling in”.

    normally i hate talking heads, but i thought that was a pretty good summary of the whole debacle. this was a multi-trillion dollar cash cow with a teet for everyone.

    & now mamma wants her milk back.

  5. esqdork says:

    Once upon a time (about two years ago) asset-backed securities based on mortgages were considered stable investments just one notch riskier than bonds backed by the U.S. government. A lot of institutions (banks, large companies, local and state governments) allocated quite a chunk of change into these securities and everyone involved played along despite some very scary warning signs that these investments were not as safe as they thought. Now the risk is coming home to roost. At best, Moneygram takes it in the rear, at worst, city governments can no longer pay for critical services or their pension obligations. Good times.

  6. The_Truth says:

    I Love You Taco Bell!

  7. ahwannabe says:

    This would be funny if it wasn’t absolutely terrifying.

  8. CumaeanSibyl says:

    Berkshire-Hathaway?

  9. humphrmi says:

    @CumaeanSibyl: You would think, wouldn’t you? But no, even the mighty have fallen:

    [www.loschmanagement.com]

    H&R Block
    M&T Bank [www.rttnews.com]
    Moodys
    (One could argue that Moody’s contributed to the sub-prime balloon…)
    Sun Trust Bank
    [online.barrons.com]

    Oddly enough, US Bancorp avoided most of the subprime mess.

    One could also argue that it would be difficult to be as huge as BRK and not have an exposure to almost everything.