For Immediate Release

Kucinich: ‘Is Wall Street Headed for Collapse?’

Questions Repackaging of Complex Financial Instruments, Calls for Additional Hearings

WASHINGTON - Congressman Dennis Kucinich (D-OH) today questioned whether the U.S. would be headed for another financial crisis if Wall Street continues to sell the same old products, with new names, that got us into trouble in the first place. The former Managing Director of Moody's Investor Service, Mr. Ilya Eric Kolchinsky, agreed there is a danger. The admission came during an Oversight and Government Reform Committee hearing examining the role of credit rating agencies in the financial crisis. Following the admission, Kucinich called for further Committee hearings to examine the renamed investment instruments.

"I have been extremely troubled by the increasing popularity of the Resecuritization of Real Estate Mortgage Investment Conduits (Re-Remics). It basically amounts to repackaging original investment instruments that no investor will touch, into a more complex investment vehicle.

"The total resecuritization market right now is approximately $664 billion. Of that total, only $60 million is considered registered transactions. That means that the Securities and Exchange Commission has looked at only $60 million. The vast majority of the transactions are exempt from registration with the SEC," said Kucinich.

"...seeing as that Re-Remics are more complex, more opaque than the Collateralized Debt Obligations (CDOs) that came before them, what is to stop Re-Remics from bringing the whole system to the brink once again? What does the SEC have to do to protect against a new disaster in the securities market?" asked Kucinich.

Mr. Kolchinsky answered, "I agree that these Re-Remics ... are potentially dangerous. Some have a purpose. That purpose may be a gaming of capital requirements, accounting requirements or what have you... I recently saw a (Re-Remic) proposed that had, to my view, no discernable economic value. Substantial costs would be incurred, but to my knowledge, there would be no value you added. To me, that is a sign that somebody is playing a game with some regulation somewhere."

Kucinich: "So, You agree there is a game here?"

Kolchinsky: "Yes, Sir."

Congressman Kucinich has previously brought the potential threat of Re-Remics to Ms. Mary Shapiro, Chairman of the SEC, in an August 26, 2009. Discussions resulting from the letter are ongoing.



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