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Yesterday was a huge news day on Wall Street as Standard & Poors announced they will be changing the way they rate the credit derivatives made up of subprime mortgage loans. This is expected to have dire consequences to the hedge funds, pension funds and other investors that are holding subprime-backed mortgage securities as the value gets hammered from the new rating system.
If all of this news has you confused here is a great clip from CNBC about how mortgage backed securities work and why this new rating system is a major sea-change for Wall Street and subprime mortgages (h/t Keith at HousingPANIC for the link)
