Skip to comments.The Obama Sub-prime Connection: Magnetar Capital (2010 article but related to current events 2013)
Posted on 10/21/2013 2:59:40 PM PDT by Lorianne
Let me first start with a disclaimer of sorts, I am not pro-republican or pro-democrat, I simply project information that I feel is informative or interesting at the least. I am doing this in the hope that through intelligent dialog, collaboration, and patience, we all can learn from one another and ultimately become students of open source education, and better members of our individual communities.
I stumbled upon a recently recorded radio archive that got me thinking (see Magnetar). It was from this audio that led into an elaborate web of shady suspects, political pawns, government conspiracies, and quite possibly the biggest political scam in history.
In order to understand any "crisis", you have to understand root cause analysis. The best way I can describe root cause analysis is to basically ask "why?" until it is not longer possible. 3 year olds are really good at this and it is because they are literally trying to figure out "why" the things around them are what they are. This sort of "critical thinking" is taught out of most of us in grade school but that is a different topic. I applied this principle to the Magnetar audio and came to some disturbing conclusions.
What I found is, in neither in the old media or new media, nobody is admitting (or understanding) that the sub-prime mess all originated with SEIU (See SEIU 1 & 2) and ACORN protests (see ACORN) in the 1990's and the resulting regulatory changes made in the Community Reinvestment Act (See CRA 1 & 2). It was in this legislation that two blunders were made. The first was that the CRA lowered the credit requirements for borrowers through Fannie, and Freddie (see Fannie). Both are Government-Sponsored Enterprises or GSE's (see Reuters) and accounted collectively for roughly 50% of the entire sub-prime market. The second was that it created a rating system for banks that placed them on an ill-conceived scale. The higher the rating, the higher percentage of loans an institution held in assets on the books of "CRA Compliant" demographics (aka sub-prime markets).
The whole point of developing this rating was to use the information against the banks when they needed permits to expand or to merge. If they did not have a certain rating, then they would not be approved for various permits and requests (see Rating). So, obviously the banks issued these sub-prime loans to improve their CRA rating. Once they had these toxic assets on their hands they had to figure out what to do with them, how to get rid of them. Everyone understood that they were ticking time bombs waiting to go off. The borrowers were in no position to make their payments for a pro-longed period of time; the banks knew this, which is why they had not already lent to the particular demographic previously. Thus the situation calls for "short selling" or "selling short" (see Short 1) which is exactly what Magnetar did.
The key players who were directly involved with the "crisis" were the usual suspects that we have all heard of, Fannie Mae, Freddie Mac, and Lehman Brothers. However, there are also three other "behind the scenes" players that have been identified. The obvious is Goldman Sachs, a top campaign donor for the democrats and specifically Obama, along with Morgan and Chase (see Campaign). It is safe to say that these two will be used as political pawns in sideshow that is currently taking place. They are "in on the joke" so to speak. The main punch line comes from Obama's state Illinois, and that is in Magnetar Capital LLC of Chicago (not of Wall Street) (see Magnetar).
The basic idea of Magnetar is to buy up billions of dollars of these rapidly accumulating toxic assets with the ultimate intention of short selling against the funds their investors were buying. They bought the most toxic and risky loans from all the banks who had been accumulating these "insecurities" for a significant period of time which had stressed individual institutions capital ratios.
[It is important to remind you that the regulation that resulted in these toxic loans was sparked by the actions and will of Andy Stern (Former SEUI president and newly appointed member of Obama's NATIONAL COMMISSION ON FISCAL RESPONSIBILITY AND REFORM) and Acorn. Both organizations were key figures in getting Obama elected and key figures in the root cause of the current financial crisis.]
It was recently discovered that Alec Litowits (founder of Magnetar) listed the sole recipient of political contributions in 2008 election as Rahm Emanuel (see Rahm), who was quoted in the WSJ as saying, "Never let a serious crisis go to waste. What I mean by that is it's and opportunity to do things that you couldn't do before" (see WSJ).
In the comprehensive study by Propublica on Magnetar, they discovered that the whole business model was a kind of sick joke, from the name of the company to comments like, "[We] figured out a way to make money and figured out how to repeat it and do it over and over again" from fonder Litowitz (see Propublica). They also discuss in detail the effects of Magnetars credit default swaps on the markets and how they did absolutely nothing illegal, but rather balanced the fine line of a necessary checks and balances in the inflated real estate market and a greedy politically influenced LLC (see Propublica). It is also important to point out that the "bubble was fueled and maintained" by inflated real estate prices specifically in Nevada and California (see Magnetar) which happen to be the home states of Harry Reid and Nancy Pelosi. Interestingly, it was in 2006 when Pelosi and Reid gained their pristine offices and positions of great political influences, the same year this all began to turn sour, and less than a year after the founding of Magnetar.
Again, everyone knew that these mortgages were going to default, statistically speaking, and the they did, igniting the worst economic downfall since the 1930's. It was worse for the economy then 9/11 and it all originated in a well intended law to help minority and low income families "live the American dream" and "own their own homes". What Magnetar, G.S., and J.P.M.&C. did was unfortunate and undesirable for the country and the market as a whole. Yes, they made billions short selling the funds but thats the whole function a short sell, to keep the markets grounded in reality. The loans should have never been issued but they were, not voluntarily, but through regulation and playing favorites (like obama with gs, jpm, and lehman and the billions they received in bailout funds and the complete lack of focus on fannie and freddie).
The only logical explanation for their actions is that they were in on the joke. They ("Obamanites") intentionally created this situation, or stoked the flames at a minimal, in order to have the "opportunity to do things you couldn't do before", like say financial reform. The facts are there, hidden in plain site for all to see. Further aiding to the theory of the "North American Union", the "Amero", and big money interests behind both Bush and Obama are at play to destabilize the dollar to create the right conditions for the union of the American, Canadian, and Mexican economies and sovereignties (see new world order)
See other post: Magnetar Goes Long Ohio Town While Shorting Tax Base: Mortgages http://www.freerepublic.com/focus/f-news/3081773/posts
Moe Tkacik, formerly of the Wall Street Journal, worked with individuals from nakedcapitalism.com on an article about the relationship (and large number of campaign donations) between Barack Obama’s chief of staff Rahm Emanuel and Magnetar CEO Alec Litowitz. Moe's article was “de-published” from DailyFinance, but Yves Smith published another version of the story on Huffington Post.
Obama and a bunch of thugs crashed a private meeting in a Chicago bank protesting red lining. This was filmed and brodcast on network TV. ?????
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