Following the tweeting from the MBS market a new little bird starts singing in the ABS market. AAA ratings are no longer AAA, because courts are failing to uphold the priority of defaulted loan holders in liquidation procedures.
Investors don’t care (for now) because the Fed is making them chase yield. Bank lending standards are falling, according to the Fed. The banks don’t care about lending quality, because they now have no skin in the lending game, as they no longer keep loans on the books (allegedly because new Capital Rules make it too costly). The banks lend to the Fed at 25 basis points and repackage then sell-on their commercial loans to private investors in the new Dodd-Frank and Volker Rule banking landscape. New Rules that were supposed to reduce systemic risk have actually increased it.
The new Bubble is now bigger than the one before the Credit Crunch of 2008.