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Wall Street repackages debt for sale

ReportonBusiness.com – Financial gurus call it a “rerecuritization of real estate mortgage investment conduits.” On Wall Street, it goes by the acronym Re-Remic (it rhymes with epidemic).

“It actually makes a lot of fundamental sense,” said Brian Bowes, the head of mortgage trading at Hexagon Securities in New York. “It’s taking a bond that doesn’t necessarily have a natural buyer and creating two bonds that might have a natural buyer for each.”

As for the bottom-of-the-barrel bonds that are left over, those are getting sold off for pennies on the dollar to investors and hedge funds willing to take big risk for the chance of a big reward.

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