With all the deserved attention over funky residential mortgages, their less publicized commercial counterparts offer competition for dodginess. Their value has not escaped the attention of major banks and their staffs. They understand these instruments, their nuances, and their true value.
In purchases that should raise eyebrows both inside and outside the commercial mortgage business, Deutsche Bank and Barclays won an auction of "complex packages of commercial mortgage bonds at the heart of the controversial government bailout of AIG," according to a story in today's Financial Times.
Deutsche Bank certainly knows these mortgages, as it was the "original counterparty that sold the securities to Maiden Lane III," the
Financial Times reporters observed. In other words, not only did Deutsche Bank know what they were buying, they originally sold them a few years ago for a profit.
Nice work if you can get it.
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