LAS VEGAS — It was Monday night on the Strip, and John Devaney was giving a party for himself and fellow connoisseurs of risk who have seen their hot hands go cold.
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The occasion was, officially, the 5th annual conference of the American Securitization Forum, a celebration of the financial wizardry that supposedly turns risky mortgages and other loans into gilt-edged securities but, as Mr. Devaney belatedly discovered, does not always make them safe. Mr. Devaney, a 37-year-old money manager, lost big on bond investments last year. This week, in Las Vegas fashion, he said he was doubling down.
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At times, the unease here was palpable. During one panel discussion, a money manager stood up and denounced credit ratings agencies, which many investors have criticized for underestimating the risks posed by securities backed by subprime loans.
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“In my 38 years this has been the worst capital destruction and the worst rating decline in history,” Robert L. Rodriguez, the chief executive of First Pacific Advisors, a mutual fund company based in Los Angeles, said to a panel of four executives from ratings firms. “All of you should be ashamed of yourself.”
The lashing elicited scattered applause. The panelists listened, their lips pursed.
Some then admitted making some mistakes but said most investors in top-rated triple-A securities would get their money back....
During another discussion, managers of much-maligned collateralized debt obligations — packages of bonds that are packages of other debt —
criticized the media for what they said was negative coverage of the securities. Most of the speakers on that panel asked that reporters be allowed in the session only if they did not directly quote their remarks or did so with their permission. NY TimesOK, I got it. The chief executive of First Pacific Advisors misunderstanding about securities is because he relied on bad reporting.
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