"One number can collapse an entire company… watch him reveal the secret strategy! 😲 #Shorts"

[00:00:00]piece of advice, for everyone before we go in there.

[00:00:03]This could get a little ugly.

[00:00:05]But whatever you do, just tell the truth. No sugar coating, do not change a word of it. No one here is smart enough, including the rocket scientist. Oh, Mr. Sullivan, you're here. Good morning.

[00:00:14]Maybe you could tell me what you think is going on here. And please, speak as you might to a young child, or a golden retriever.

[00:00:23]It wasn't brains that got me here. I'll show you that. Well, as you probably know, over the last 36 to 40 months, the firm has begun packaging new MBS products that combine several different tranches of rating classification in one tradable security.

[00:00:40]Well, the firm is currently doing a considerable amount of this business every day. Now, the problem, which is I guess why we are here tonight, is that it takes us, the firm, about a month to layer these products correctly, thereby posing a challenge from a risk management standpoint. So, we have to hold these assets on our books longer than we would ideally like to.

[00:01:00]YEAH.

[00:01:01]BUT THE KEY factor here is these are essentially just mortgages. So, that has allowed us to push the leverage considerably beyond what you might be willing or allowed to do in any other circumstance, thereby pushing the risk profile without raising any red flag. Uh Mr. Sullivan, what would your mother say that means for us here? Well, that's where it becomes a projection.

[00:01:22]But um You're speaking with me, Mr. Sullivan.

[00:01:28]Well, sir, if those assets decrease by just 25% and remain on our books, that loss would be greater than the current market capitalization of this entire company.