Speech by SEC Chairman Mary L. Schapiro: Remarks Before the American Securitization Forum 2011 Annual Meeting

“One of the root causes of the mortgage crisis was that many originators were not accountable for the loans they made, loosening underwriting standards and passing off the entire credit risk to investors through securitization.

~

Speech by SEC Chairman:
Remarks Before the American Securitization Forum 2011 Annual Meeting

by

Chairman Mary L. Schapiro

U.S. Securities and Exchange Commission

Chairman Mary L. Schapiro
Washington, D.C.
June 22, 2011

It is a pleasure to be here today.  We share a concern about the future of the mortgage securitization market and, in particular, the private label market that has almost wholly evaporated in the last three years.

In the years leading up to the financial crisis, the nearly $10 trillion securitization market provided liquidity to almost every sector of the economy: from residential real estate to student loans to credit card debt. Lenders were able to make new loans and credit available to a wide range of borrowers and companies seeking financing.  In conjunction with low interest rates and rising home prices, securitization helped fuel the real estate boom of the last decade.

In the area of mortgage-backed securities, sound underwriting practices often took a back seat to immediate profits, however, and underwriting standards deteriorated. When home prices stalled and declined, poorly underwritten mortgages began to default and the securities backed by the mortgages lost their value.

The result was a broad crisis in the securitization market, whose aftereffects are still being profoundly felt.  Nearly every RMBS offered in 2010 was federally backed and only one publicly registered residential mortgage-backed securities transaction completed an offering last year.

As one research consultant put it in Monday’s Wall Street Journal: “investors are on strike.”  In the aftermath of the crisis, would-be investors are waiting for needed reforms in the securitization market before they are willing to wade back in.

But efforts to implement the reforms that would bring investors back to the markets are being met with strong and what I believe to be short-sighted resistance.

Look at the numbers: while other asset classes have recovered to varying degrees, the volume of registered RMBS has fallen from $609 billion in 2006 to just $231 million last year.  In addition, the number of unregistered, or 144A-eligible ABS, has fallen to a fraction of the volume offered in 2004. Those figures will not significantly improve until investors again feel confident – and that confidence will only come with better standards.

I am sure that today few if any industry professionals, would ignore the lessons of the last few years and assume the risks that enabled the mortgage crisis.

As time passes, though, memories fade.  An improving economy makes risks seem smaller while the pressure to assume risk in search of profits can rise.  And people have an almost infinite ability to convince themselves that “this time it’s different.”  Eventually, conditions accumulate for another crisis like underbrush in a dry forest, waiting for a spark to touch them off.
And so it is important to translate lessons learned at great cost into permanent reform while memories are still fresh. This was a driving force behind the Dodd-Frank Act, and for the securitization rulemakings that we at the SEC have undertaken separately.

SEC Priorities

While there were a number of factors contributing to the securitization slowdown, there are three areas of particular concern to the SEC:

  • Lack of accountability among participants in the securitization chain.
  • Flawed credit ratings.
  • Investors’ lack of tools and information to value the securities properly.

Each of these problems has eroded investor confidence, and without willing investors, the securitization markets cannot possibly come back.  I’d like to discuss each in turn and what the SEC can do about them.

Lack of Accountability

One of the root causes of the mortgage crisis was that many originators were not accountable for the loans they made, loosening underwriting standards and passing off the entire credit risk to investors through securitization.  It is no wonder that investors remain wary.

As you know, Congress sought to address this concern through the risk retention requirements in the Dodd-Frank Act.  In March 2011, the Commission, along with federal banking and housing agencies, proposed rules that push accountability further up the securitization chain. These rules would require that a securitizer retain an economic interest in a material portion of the credit risk for any asset that it transfers, sells, or conveys to a third party.

The proposed rules take into account the heterogeneity of securitization markets and practices and reduce the potential for negative impacts on the availability and cost of credit, by offering the sponsor a menu of options with which to satisfy its risk retention requirements.

The public comment period on this proposal has been extended to August 1, and we look forward to reviewing your comment letters.  I am aware of concerns regarding the proposed premium capture cash reserve account.

And I encourage commentators on that aspect of the proposal to recommend revisions or alternatives that would still ensure that the issuer does not avoid the requirements by structuring around an option to retain risk.

Another provision of Dodd-Frank requires issuers to undertake a review of the assets underlying the ABS and to disclose the nature of the review and the review’s findings and conclusions.  Our rules implementing this requirement establish a minimum standard of review, which should increase the issuer’s accountability for the assets placed in the pool.

We also are concerned with accountability for representation and warranty mechanisms built into underlying transaction agreements.  Many of these reps and warranties have proven to be ineffectual, frustrating investors attempting to assert their rights.

One way to provide better assurance that the assets whose credit risk investors purchase meet the criteria required under the contractual provisions is through our fast-track “shelf eligibility” requirements.  As you know, the commission proposed ending reliance on investment grade ratings in determining shelf-eligibility early last year, an idea subsequently incorporated into Dodd-Frank as well.

Instead, the Commission proposed requiring a new provision in pooling and servicing agreements that address representations and warranties violations.  This provision would require that an independent third party periodically furnish an opinion regarding the obligated party’s decisions to repurchase or not to repurchase any loans that the trustee put back to the obligated party for violation of the representations and warranties.

 A number of commentators felt that this proposal was too “clunky” and that a third party opinion would not be an effective means of fully resolving disputes.  I continue to believe that some type of mechanism to better redress breaches of representations and warranties and give real meaning to this important investor protection is very important to investors in asset-backed securities.  Our staff is currently working to address commentators’ concerns while still achieving this goal.

The necessity of balancing risk and reward is a key to rational investment decisions and a linchpin of market self-regulation. Aligning the interests of originators, securitizers and investors by ensuring that entities at every step in the securitization process are accountable for the risks they assume and pass on will make the market more stable and rational.

Flawed Credit Ratings

A second weak link in the securitization chain was the failure of rating agencies to adequately detect problems in the securities which they rated – magnifying the dangers of the inadequate underwriting practices increasingly adopted by originators.   Here again, it was people and institutions who invested in these securities who ultimately suffered the bulk of the harm resulting from failures occurring earlier in the securitization process.

As the Financial Crisis Inquiry Commission noted, “The three credit rating agencies were key enablers of the financial meltdown.  The mortgage-related securities at the heart of the crisis could not have been marketed and sold without their seal of approval … This crisis could not have happened without the rating agencies.”

The ultimate effect of flawed ratings was exacerbated by over-reliance on ratings throughout the market and the sheer number of instruments receiving high ratings.  On one hand, fixed-income investors in search of low-risk vehicles and institutions required by state and federal laws – or by their own investment criteria – to hold highly-rated securities could choose between only a small handful of corporate issuers with Triple A ratings.

On the other hand, as late as January, 2008, 64,000 asset-backed securities were rated Triple A.

Unfortunately, as the Senate Investigations Subcommittee found, “Over 90% of the AAA ratings given to subprime RMBS originated in 2006 and 2007, were later downgraded by the credit rating agencies to junk status.”

The Commission currently is pursuing reforms aimed at improving transparency and the credit rating process.

On May 18, the Commission issued a series of proposals to establish new requirements for credit rating agencies registered with the Commission as nationally recognized statistical rating organizations (NRSROs).

These proposed rules, stemming from the Dodd Frank Act, would:

  • Give market participants access to important information about providers of third party due diligence services and their findings regarding the assets underlying securities.
  • Require a provider of third-party due diligence services for an asset-backed security to provide a certification that includes their findings and conclusions to any NRSRO that is producing a credit rating for the security.  The NRSRO would, in turn, be required to disclose any certifications it receives.
  • Increase the amount of information an NRSRO must disclose about the assumptions behind, and limitations of, its credit ratings, and about the performance of its credit ratings for different classes of asset-backed securities.

These proposals follow two separate sets of rulemakings issued in 2009, in which the Commission added new requirements for NRSROs that included:

  • Requiring new disclosure by NRSROs regarding whether and how they rely on the due diligence of others to verify the assets underlying a structured product.
  • Prohibiting NRSROs from structuring the same products that they rate.
  • Requiring an NRSRO that is hired by issuers, sponsors, or underwriters to determine an initial credit rating for a structured finance product to disclose to other NRSROs that it is in the process of determining such a credit rating.
  • Requiring an NRSRO to obtain representations from the issuer, sponsor, or underwriter that it will provide the information it provided to the hired NRSROs to other NRSROs as well.

Investors, too, can play a role in reducing reliance on rating agencies and facilitating increased competition among rating agencies, which should help to improve ratings and which was a goal of the Credit Rating Agency Reform Act of 2006.

That Act’s overarching goal as stated in its legislative history was to “improve ratings quality for the protection of investors and in the public interest by fostering accountability, transparency and competition in the credit rating industry.”  I encourage institutional investors to revisit their organizational documents that delineate the criteria for investments.

If your documents require a specific rating by a specific rating agency I urge you to revisit it.  If investors are not allowed to invest in securities rated by new NRSROs, how will more competition that may improve the quality of ratings develop?

Ratings should serve as a check on originators and issuers of RMBS, and be an additional source of accurate risk assessment for investors. In a world where risk cannot be measured exactly, these reforms should at least ensure that investors have an opportunity to evaluate ratings against a backdrop of third-party findings and improved rating agency practices.

Investor’s Lack of Tools and Information

Realistic analysis of risk by investors is a key component of stable and efficient markets.

However, investors must have access to accurate and useful information. Unfortunately, as the mortgage bubble expanded, investors over-relied on ratings even as market discipline declined.
I remember that when Regulation AB was adopted in 2004, the Commission and its staff endured a lot of criticism and accusations of over-regulation – accusations which look pretty absurd in hindsight.  Unfortunately, today, we are hearing echoes of that earlier criticism.

With proper information, investors actually become partners in the pursuit of stable markets.  This is why I believe that improving the quality and timing of disclosure to investors will have the most beneficial impact on this market of any of the reforms now underway.

In April, 2010, the SEC proposed changes to Regulation AB that would transform a one-dimensional system into a vastly more transparent system that that allows investors in ABS to more easily and efficiently assess the securities and the underlying assets.

As proposed, this transparency would include:

  • Standardized terms and definitions, so that investors can easily compare the assets underlying different offerings.
  • Pool characteristics provided on a granular basis, with issuer discussion of exception loans.
  • Timely investor access to transaction agreements.
  • Sufficient time for investors to process the information.

The April 2010 proposal also included several other significant changes to Regulation AB, requiring:

  • A computer program of the contractual cash flow provisions of the securities.
  • Enhanced descriptions relating to static pool information, such as a description of the methodology used in calculating the characteristics of the pool performance.
  • Static pool information for amortizing asset pools that comply with the Regulation AB requirements for the presentation of historical delinquency and loss information.
  • The filing of Form 8–K for a one percent or more change in any material pool characteristic from what is described in the prospectus, rather than for a five percent or more change, as currently required.

Provisions of the Dodd-Frank Act also address the need to put better information in investors’ hands.  Issuers will be required to report on the performance of the underlying assets and the securities on an ongoing basis, rather stopping after a single annual report.

And rules adopted under Section 943 require disclosure related to representations and warranties in ABS offerings, which will shine needed sunlight on underwriting practices and the responsiveness of sponsors.

Investor decisions ultimately drive the financial markets. When investors do not have the proper tools and information to make sound decisions, the consequences can be dire: for investors’ accounts, for capital allocation, for the financial markets and for the economy as a whole.

Ensuring access to detailed information and time enough to analyze it, is an effective and a cost-effective way to bring vitality to the ABS markets.

I am determined that we will pursue and require the greatly enhanced disclosure in this market that investors must have, in the near term.

What’s Next?

For all the progress we have made, there is still a great deal of work ahead of us.

We will be re-evaluating our April 2010 AB proposals in light of the changes brought about by the Dodd-Frank Act, and I expect we may re-propose a few of these, such as the tests for shelf eligibility.

In addition, I look forward to a constructive dialogue dedicated to improving the information available to investors in the unregistered market.  I know there is some concern about our proposal to impose registered offering disclosures in the Rule 144A market, particularly with respect to asset classes that have not historically been offered on a registered basis so that there aren’t explicit requirements to import from registered deals to Rule 144A deals.

But I believe it is important for us to address concerns about information gaps in the unregistered markets and we should be able to craft a regulatory solution that appropriately balances the competing concerns.

Conclusion

As we work to finalize our rules, I want to thank you for your comments on our proposals and ask you to continue to work with us to address concerns.

We believe that the weaknesses we have identified in the ABS market can best be addressed by embracing the SEC’s investor protection role and reinforcing building blocks of stable markets: accountability; improved performance by the rating agencies; and better information for investors.

Although our reform initiatives are the result of lessons learned only a short time ago, it does sometimes seem that memories are fading.  While we are focused on the current weaknesses in the securitization market, we aim to adopt rules that support a market that functions not just in the near term, but also when markets heat up. We should not weaken reform for short-term gain.

Investors will return to the market when a structure for long-term strength and stability is in place, and they can be confident that the interests of other participants are aligned with their own and that the information they need is available and accurate.

There is and should be a healthy debate about how precisely to implement effective regulation.  But I believe that we can all agree that important reforms that make this market healthier and more stable are essential to the securitization markets’ recovery.

Thank you.

~

4closureFraud.org

Comments
13 Responses to “Speech by SEC Chairman Mary L. Schapiro: Remarks Before the American Securitization Forum 2011 Annual Meeting”
  1. CoCo says:

    Looks like everyone is gearing up to protest this whole mess. The economy is not improving and we all know that. I agree with I Vent-take your money out of the bank. You’ll probably need to leave a smll amount in-just enough to create bookkeeping problems for the banks. They’ll have to send you a statement everything month. Opt out of online banking and make them send you a statement-cost of paper, postage. I just deposited $2.00 in my account last week. Will deposit a $1.00 on Monday. I call them asking them to verify information in writing-paper,postage. I never keep over $9.00 in my account. If everyone did this, the banks would go broke. Besides, at the rate things are going, if you do have substantial money in the bank, you may not be able to access it if the banks collapse or if they decide to take monay out of your account-just because. some of the creditors are taking payments out of people’s accounts without their knowledge-scary city. Foreign investors will own the financial institutions soon-the banks and Wall Street have created our financial demise. Only the truly strong are still fighting. Most gave up a long time ago.
    When the foreigners control the banks, they will bring their own high level executives and the fraudulent banksters will be out of a job. The foreign banks will not want them as they are crooks and yesterday’s garbage. A lot of them will lose their lavish lifestyles and probably move out of the country to exist in some country where they have stashed away some money.

  2. Dee Preston says:

    The fraud is exposed now its on the table and what comes from here isn’t going to be pretty for any one… how long can this cherade go on before it is just a comedy. Our congress and our senate and our financial regulators are all corrupted to the very core. They are so far in now it is going to be almost comical. What do badgers do when cornered? They are defensive and blaming and avoid the subject…I wonder when the next huge disaster will come now to throw off all the investigations again>>>This is the most corrupted governmental system of all times. I am just wondering how long this can all really go on. We all know what they did, and of course we don’t know what they are doing—even with the frand-dodd bils promise of transparency. Where has that gone? But —It will only take a few transparent moments, for every thing to be exposed…next, they will be putting us in jail for their crimes….it seems as if this is a possibility…with all the fraud a judge can look down and say “summary judgement granted” without a twitch, knowing full well, they just stole another home from a family…but the judge also knows where her pension is and that is most important right? As long as BoA is protected to keep her investments safe, another family experiences a shock that will leave long term scars and deep psychological damages for years to come.
    God bless all of you who fight and have not quit. When the goal is long, we must stay focused on what is important through out the entire process. If we do not stand up for our liberties NOW, they will be gone before we can even imagine. It could happen, there is too much volitility in the whole financial system through out the entire world. God Bless those still worthy; and for the rest of the lying fuks, let the devil have his full dues with interest and deficiency judgement without producing the general ledger … Debi 561-389-9339

    • l vent says:

      THE IMF THOUGHT THEY RANG AMERICA UP AND THEY OWNED OUR HOMES WHEN THEY INTENTIONALLY COLLAPSED THIS ECONOMY. WHERE ARE THOSE SUPPOSED INVESTORS, TRUSTS AND TRUSTEES HIDING ANYWAY?? HMMM………I hear the trusts are empty….and the fraudsters destroyed the notes. Could it be that maybe the Origination fraudsters Fannie and Freddie actually are the trustees and the investors and that is why they destroyed the notes? They had to hide their true identity or that could cause a huge UNCONSTITUTIONAL and therefore ILLEGAL conflict of interest issue now wouldn’t it? Playing all sides of the deal. That is exactly what Goldman Sachs does! SELLER, BUYER, SPECULATOR, INVESTOR. THEY GAMBLE, that is how they play the game.The IMF owns FANNIE FREDDIE AND GOLDMAN/WALL STREET. SO THAT WOULD BE RIGHT ON PAR WITH WHAT THEY DO. I believe it is UNCONSTITUTIONAL and ILLEGAL for a GSE to do that sort of thing with agency paper backed with the full faith and confidence of the U.S. Government that we would repay the debt that the IMF created. TALK ABOUT AN UNCONSTITUTIONAL CONFLICT OF INTEREST!! THE U.S. GOVERNMENT BACKED THE DEBT THE GSE’s CREATED BUT, THE FOREIGN OWNED AND OPERATED IMF OWNED FANNIE AND FREDDIE.. THE DEBT WAS CREATED BY IMF OWNED FANNIE AND FREDDIE BUT THE DEBT DOES NOT REALLY EXIST. IT WAS A MERE SPECULATION OFF OF OUR ABILITY TO PAY OR DEFAULT AND THAT IS HOW THEY CREATED THEIR WEALTH AND STOLE OUR WEALTH. THE CREDIT DEFAULT SWAP INSURANCE WAS INSURANCE FOR WHEN THE DEFAULTS THEY KNEW WOULD BE COMING started coming. WHY? BECA– USE FANNIE/FREDDIE KNEW THEY MADE TONS OF LIARS LOANS. WHEN THE DEFAULTS STARTED COMING IN THEY KNEW THEY WOULD CRASH THE STOCK MARKET, STEAL EVERYTHING NOT NAILED DOWN, AND STILL GET PAID TRILLIONS MORE IN FRAUDCLOSURES AND THEN GET PAID THE CREDIT DEFAULT SWAP INSURANCE MONEY . WHICH IS WORTH 3-4 TIMES WHAT THESE UNDERWATER HOMES ARE WORTH. THE PONZI SCHEME WEALTH MADE THE FRAUDSTERS, BY SOME ESTIMATES, 100 TRILLION DOLLARS FROM THEIR MORTGAGE FRAUD PONZI SCHEME.. THE IMF AND FANNIE AND FREDDIE — USED US AND RANG AMERICA UP WITH A HUGE FALSE DEBT. THEY HAD NO SKIN IN THE GAME, THEY WERE JUST USING US TO CREATE WEALTH FOR THEMSELVES AND THEIR OWNERS. THE NEW WORLD ORDER INTENTIONALLY CRASHED THE STOCK MARKET IN THEIR MANUFACTURED FINANCIAL CRISIS (SEE THE YOU TUBE VIDEO CNBC THE ILLUMINATI CRASHES STOCK MARKET) BECA– USE THEY THOUGHT THEY HAD US BY THE BALLS AND THEY OWNED US BECA– USE THEY CREATED SO MUCH DEBT AND SENT MILLIONS OF OUR JOBS OVERSEAS WITH NAFTA. THEY KNEW WE COULD NEVER MAKE GOOD ON ALL OF THAT DEBT THEY CREATED SO THEY CALLED IN THE DEBT. AND CRASHED EVERYTHING. THEY THOUGHT THEY HAD US, THEY THOUGHT THEY FINALLY OWNED US.. ,TOO BAD FOR THEM THEIR PERPS COMMITTED SO MUCH FRAUD THEY BROKE THEIR OWN LEGAL CONTRACT AND THEY NEVER SECURED THE COLLATERAL LIEN FOR THEIR OWNERS.. THIS WAS ALL ABOUT GREED AND WORLD DOMINATION BY THE RULING ELITE/NEW WORLD ORDER AND WE DO NOT OWE THEM ANY MONEY, LEAST OF ALL OUR HOMES BECA– USE OF THEIR PONZI SCHEME SWINDLE AND HEIST. NOW OUR HOMES ARE PAID FOR FREE AND CLEAR. RESCIND!!!

  3. housemanrob says:

    STOP PAYING YOUR MORTGAGE. YOU CANNOT GO TO JAIL FOR NOT PAYING! IF WE ALL STOP PAYING, THEY GO BROKE………..WE WIN! END OF STORY!

  4. l vent says:

    LYING BIYATCH!!! Improving economy? For whom? She wishes we were all that DELUSIONAL. The Banksters and Wall Street are bigger and fatter than ever while we all struggle to survive. This is a secret strategic NAZI/NEW WORLD ORDER/WORLD BANKSTER/IMF/FEDERAL RESERVE class warfare plan TO DESTROY AMERICAN SOVEREIGNTY If they have their way, and we DO NOT FIGHT THIS TYRANNY, we will all wake up homeless and poor surrounded by foreign multinational bankster, foreign multinational corps and FOREIGN INVESTORS WILL OWN OUR HOMES. We will be the foreigners in our own country living in TRAILER PARKS AND TIME SHARES!!! WE THE PEOPLE WILL BE THE RENTERS AND THE FOREIGNERS WILL BE THE OWNERS!!!!!!! Make these crooks pay!! DEATH TO THE NEW WORLD ORDER TYRANNY.

    • Bobbi Swann says:

      Hey @ Ivent – just received this news in my email. Coming soon to a (corrupt) state near you! I supposed they picked Florida since it’s such easy pickins’ now.

      From the Editors of American Banker
      Brazilian, Spanish Buyers Inject New Life into Florida’s Community Banks
      There is a definite yin and yang to Florida banking these days.
      The state’s banking market is still seriously impaired, but foreign banks are increasingly attracted to it for the same reason — and their arrival may feed the turnaround.
      Buyers from Brazil and Spain have aggressively sought out community banks in Florida because of the historically low prices, the expansion of its international business and the inflow of foreign cash. Foreign banks need ways to diversify beyond their own troubled economies.

      • l vent says:

        That is the NWO order plan for Globalization. They are invading us because we are financially weak. I heard today on Bloomberg that South America’s economy is booming and it is a great place to invest.. Sure, the crooks who stole our wealth are spreading all of our wealth around the world to this very day. You are right it is a global ying for a yang. Obama was down there kissing their Brazilian asses a few months ago. He declared war on another country from Brazil. I say we boycott all of the banks. We can pay with money orders and cashiers checks like my Grandparents did. They grew up during the Great Depression. They hated the banks and credit. They hid their wealth around the house. We should all ride our bikes and walk when possible and try to consume alot less oil. We The People must learn to become more independant from this Tyranny. There will be a heavy price to pay for the American people for convenience, food, oil and credit from these tyrants and it will be our National Sovereignty if we keep supporting this fascist Nazi,Foreign, Global NWOTyranny..

      • l vent says:

        It is the NWO fleecing of America. I am with Ron Paul and Bob Marley,, LEGALIZE IT and get up, stand up……… stand up for your rights America!!!

  5. Chairman Shapiro should do stand-up comedy. That would be a more honorable profession than making pompous and delusional statements about “liquidity” and “stability”. I’m sure that there must be someone in the financial world that understands “The Real Weapon of Mass Destruction: POVERTY”, as well as I do.

    http://georgesblogforum.wordpress.com/2011/06/20/the-real-weapon-of-mass-destruction-poverty/

    Inquiring minds want to know who is doing the fleecing and how it’s being done. We already know who is getting fleeced.

  6. Jason Werner says:

    Good ideas, but they will never be able to implement those ideas because the whole banking industry is based on crimes.

  7. Bobbi Swann says:

    “As time passes, though, memories fade. An improving economy makes risks seem smaller while the pressure to assume risk in search of profits can rise.” – WTF – is she drinking the Koolaid? Memories fade, are you kidding me? and an “improving economy”? The only improvement has been assets to the banksters. And oh, how about this quote from her “Investor decisions ultimately drive the financial markets. When investors do not have the proper tools and information to make sound decisions, the consequences can be dire: for investors’ accounts, for capital allocation, for the financial markets and for the economy as a whole.” so what happened to the homeowners whose homes were stolen by fraud? Excuse me, but the real estate market is an integral part of the financial market and who buys real estate? Is this woman elected or appointed? She needs to follow Humpty Dumpty………..she’s already a little cracked.

    • leapfrog says:

      Bobbi…that sentence stuck in my mind too. WHAT “improving” economy???

    • AliceN.Wunderland says:

      Yes, some serious denial going on in that speech! Guess she didn’t notice the elephant in the room. I am glad the Investors have noticed they don’t have any assets in their mortgage backed securities. Am so proud of them..quite a swing….609 billion down to 231 million in four years. Think they are going to come back after this, I don’t. I agree Bobbi, she is already cracked.

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