How To Ruin Due Diligence
The inquiry into what the banks knew about the structured credit products they built from mortgages has begun to show signs of moral panic and paranoia. Already we’re seeing the typical result: really bad, radical ideas being put forth as sensible, or even obvious reforms.
Take the proposal coming from some securities industry specialists to make public the due-diligence reports provided to banks by independent diligence specialist. “We need to…improve the due-diligence process by standardizing it and by disclosing” the results to ratings agencies and investors, s…
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