David Einhorn on Credit

David Einhorn's remarks from the 17th annual Graham & Dodd Breakfast. It's a must read but here are some quotes:

"[The] fear [among banks, brokerages, and hedge funds] is that the new prices [for mortgage-backed securities and other convoluted structures] are actually disclosed. This is the 'don't-ask, don't-tell method' of security valuation."

"...lenders of all sorts have lent too much money and did not demand enough interest to compensate them for the risks they took. There has been a colossal undercharging for credit across the board."

"Loans [were] based on the borrowers' ability to refinance rather than the borrowers' ability to repay."

"Advocates of securitization say it disperses risk. However, it does so by separating the loan originator from the eventual outcome of the loan."