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Tattered Standard of Duty on Wall Street - Ben Stein
NY Times ^ | December 23, 2007 | Ben Stein

Posted on 12/23/2007 6:13:39 PM PST by txzman

BASICALLY, a crossroads was passed in the Drexel/Milken scandals. Although hundreds and perhaps thousands of men and women were profiting from misconduct, only a few people, including Mr. Milken himself, went to prison. And even he emerged from prison a very rich man (and by what I see here in Los Angeles, a model citizen).

Today, in the midst of the mortgage mess, we see people breaching their fiduciary duty and getting away with it. A few may lose their jobs and wander off to a wealthy retirement. But the ordinary stockholders of the banks and mortgage companies are staggered.

(Excerpt) Read more at nytimes.com ...


TOPICS: Crime/Corruption; Culture/Society; News/Current Events
KEYWORDS: benstein; finance; stein; wallstreet
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Scathing commentary on Wall Street today. My voice as well - I am tired of all those who yell back (blindly) "But It's Capitalism". Stick this in yer pipe.
1 posted on 12/23/2007 6:13:40 PM PST by txzman
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To: txzman

Its not capitalism—its cronyism pure and simple. The financial elite form a fraternity—they went to the same schools, worked at the same companies, and now cover each others ass—be if from the Industry or the Government side.
There is a book called “Mergers and Acquisitions” by Dana Vanchon. It is short and very humorous, but doubtless mirrors what really goes on on Wall Street.


2 posted on 12/23/2007 6:31:11 PM PST by rbg81 (DRAIN THE SWAMP!!)
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To: txzman

Once bitten, twice shy.

Around here, it seems to take three or four times. But eventually, there will be no customers.


3 posted on 12/23/2007 6:35:39 PM PST by proxy_user
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To: txzman
In 1992 the American people elected Bill Clinton as Peter Jennings led the cheer "character doesn't count". Until we repudiate that mantra this nation will continue in its decline.

The "erection election" of 1992 was the beginning of the fall.

4 posted on 12/23/2007 6:54:36 PM PST by The Duke (I have met the enemy, and he is named 'Apathy'!)
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To: txzman

Then the feds should enforce the gosh-darned laws. If people broke them they should be gone after and punished.


5 posted on 12/23/2007 6:58:13 PM PST by LiveFree99
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To: txzman
Stein's commentary here seems ill-informed at best.

For one thing, he directs his ire at the wrong people. Ultimately, what is the reason that these CMOs and similar vehicles have been written down? Answer: because a lot of people took money from banks/mortgage brokers (often under false pretenses) and now are reneging on paying it back. So a diatribe about "trust" seems fair enough but shouldn't it be directed at the borrowers?

Stein admits he has no expertise on risk management, yet hints at something untoward regarding Goldman's position, which he acknowledges he has no details of, yet he hints darkly that there's something sinister about Goldman not opening their client list to him, even though that would be a breach of privacy and a violation of the very same "trust" whose supposed loss Stein bemoans.

Stein frets over "small investors" exposed to CMOs. Small investors should not be investing in these things in the first place. Maybe some of them were "ultimately exposed" by an indirect means (e.g. Florida city governments): this would be the fault of their money mangers for irresponsibly buying them, not the banks for selling them.

6 posted on 12/23/2007 6:58:15 PM PST by Dr. Frank fan
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To: Dr. Frank fan

I think I’ll go with Ben on this one.


7 posted on 12/23/2007 7:07:43 PM PST by nygoose
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To: LiveFree99

There is no one left in the US Federal Government that has the aptitude, ability, permission level and political backing to take on the financial institutions and their executives in this country and abroad.

Demanding that someone in the government do something about this is relatively equal to supporting a socialist populist like Eliot Spitzer to be the President in this country.


8 posted on 12/23/2007 7:31:18 PM PST by JerseyHighlander
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To: Dr. Frank fan

You are off base. Go with Stein on this one.

Every financial institution was fudging ratings to pump out business. There wasn’t and isn’t a single source of reliable information available for outside investors to make properly informed decisions on incredibly obfuscated investment vehicles.


9 posted on 12/23/2007 7:34:18 PM PST by JerseyHighlander
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To: Dr. Frank fan
Small investors should not be investing in these things in the first place.

They had no real choice as "those things" have been rolled into pension funds and 401K funds with the usual amount of financial and legalezed obfuscation.

10 posted on 12/23/2007 7:41:45 PM PST by glorgau
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To: txzman

“The investor’s interests always had to be superior to those of the investment bank, financial adviser or broker.”

We can enforce these laws only if we hold those receiving their ill gotten gains accountable. WS only does what it does because it can always buy Congress off. We need to go after the crooks on WS like we do the drug lords...confiscation of all property that is related to the crime. We always forfeit our part in stock losses. Traders make money whether you win or lose.

Can you imagine buying houses on Martha’s Vineyard for pennies on the dollar. Well I had to add a little humor.


11 posted on 12/23/2007 7:45:08 PM PST by A Strict Constructionist (We have become an oligarchy not a Republic.)
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To: Dr. Frank fan

Your points are spot-on, and Ben is off-base.

Capitalism works when those who put money at risk profit when their bets are wise ones... and the flip side is necessary and inescapable: capitalism works when those who put money at risk lose when their bets are unwise. It’s called discipline, and it was sorely lacking here. In this case, lenders in the go-go late-’90s shoveled money with temporarily discounted cost to people who could not afford the loans when the discounts ran out. Bad bet. Lots of folks are hurting, and there’s a huge human toll, but the problem is not capitalism, nor is it greedy bankers.

Encouraging people to spend money they don’t have is never a bargain, long term.


12 posted on 12/23/2007 7:47:37 PM PST by RightOnTheLeftCoast ([Fred Thompson/Clarence Thomas 2008!])
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To: txzman

Ben Stein’s a national treasure. That said, it’s time to change Wall Street incentives...


13 posted on 12/23/2007 7:58:31 PM PST by GOPJ (Drug dealers are NOT "unlicensed pharmacists" and illegals are NOT "undocumented workers". Bailey)
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To: txzman
"Since the eighties .." That means Cocaine. The cocaine generation threw off all bindings to the duties of agency -- of being a trustee of OTHER people's money.

The link to cocaine was told to me by a friend, passed a few years ago in his nineties. He was a head bank examiner. A auditor of bank examiner out of NYC. A son of Edinburgh. A real Scot. He left the trade out of disgust for the attitude, the pervasiveness of the drug and the live-greedily-for-the-moment attitude the use of it amplified.

14 posted on 12/23/2007 7:59:11 PM PST by bvw
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To: Dr. Frank fan
The bankers and mortgage brokers are supposed to evaluating the borrowers, their job is to weight the risk.

They failed and aren’t paying the price.

15 posted on 12/23/2007 8:01:20 PM PST by razorback-bert (Remember that amateurs built the Ark while professionals built the Titanic.)
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To: txzman
If you question any practice that involves making money, you are a liberal!

My favorites are the ones who defend Chinese slavery.
16 posted on 12/23/2007 8:03:14 PM PST by mysterio
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To: txzman
Wall Street gets money from those who have it and loans it or sells it to those who need it. Problem is the "in between".

I don't begrudge Wall Street their profit. I do begrudge them their fraud.

17 posted on 12/23/2007 8:06:28 PM PST by groanup (When companies fail they go out of business. When a gov't project fails it gets bigger. M.F.)
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To: mysterio
If it weren't for those factories in China, those young girls would be making 1/5th of what they are currently making as farm hands. If not farm hands, they would be working on their backs.

If I hear one more person who knows nothing about capitalism in China talking about how "all Chinese work as slave laborers" I'm going to vomit.

18 posted on 12/23/2007 8:12:47 PM PST by Clemenza (I NO Heart Huckabee)
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To: Clemenza
If I hear one more person who knows nothing about capitalism in China talking about how "all Chinese work as slave laborers" I'm going to vomit.

No, just the ones who make 35 cents an hour and live in the factories.

If I hear one more person try to tell me that the slaves should stay on the plantation because they get food and a roof over their heads, I'm going to vomit.
19 posted on 12/23/2007 8:32:45 PM PST by mysterio
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To: txzman
has no expertise on risk management

There is no such thing as expertise in that business. They found out a Monkey throwing Darts is a better stock picker and risk manager.
It's like saying, one has "expertise in going to the toilette".
20 posted on 12/23/2007 8:33:26 PM PST by modican
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To: mysterio
35 cents in a factory beats 10 cents in the fields. Besides, purchasing power parity is different over there, especially in the interior.

My ancestors left the fields for the mines, back when mining was VERY dangerous. They knew what they were getting into, and did so to provide a more lucrative life for themselves.

21 posted on 12/23/2007 8:41:36 PM PST by Clemenza (I NO Heart Huckabee)
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To: Dr. Frank fan

Remember when you read Stein, he gives money to Hollywood radical leftist politicians.


22 posted on 12/23/2007 8:45:35 PM PST by DManA
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To: Dr. Frank fan

There are several more at this site that you might be interested in.

http://www.youtube.com/watch?v=SJ_qK4g6ntM


23 posted on 12/23/2007 8:53:19 PM PST by Snoopers-868th
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To: Clemenza
They knew what they were getting into, and did so to provide a more lucrative life for themselves.

And the detestable conditions that the miners worked in were made better and safer because they were unacceptable and inhumane. China should be compelled to do this as well if they want access to our markets.
24 posted on 12/23/2007 9:05:45 PM PST by mysterio
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To: The Duke

I agree with you that 1992 was a turning point for America.

In only 15 years, we have fallen very far, and the bottom is not yet in sight.

Look at all of the Pres’l candidates. With the exception of Hunter and Thompson, you would think this was a Comedy Central production.


25 posted on 12/23/2007 9:07:33 PM PST by exit82 (How do you handle Hillary? You Huma her.)
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To: JerseyHighlander
You are off base. Go with Stein on this one.

Like I said, he is ill-informed. I gave reasons. You haven't addressed any of my points. Just saying I am "off base" isn't an argument, and I'm not going to "go with" someone who admittedly doesn't know what he is talking about.

Every financial institution was fudging ratings to pump out business.

Moody's, Fitch etc. are the entities that rate these things. Everybody agrees that their ratings methods were horribly flawed. If you want to blame someone, blame them.

There wasn’t and isn’t a single source of reliable information available for outside investors to make properly informed decisions on incredibly obfuscated investment vehicles.

1. This is true, and again, is a reason to direct your ire at the ratings agencies.

2. All the more reason why investors who couldn't afford the risk should have stayed away.

26 posted on 12/23/2007 10:53:50 PM PST by Dr. Frank fan
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To: glorgau
They had no real choice as "those things" have been rolled into pension funds and 401K funds with the usual amount of financial and legalezed obfuscation.

If such peoples' exposure to these vehicles in their pension funds was so high that they are feeling the results right now, that is a reason to blame their pension fund managers.

27 posted on 12/23/2007 10:55:10 PM PST by Dr. Frank fan
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To: razorback-bert
The bankers and mortgage brokers are supposed to evaluating the borrowers, their job is to weight the risk. They failed and aren’t paying the price.

Agreed. They failed, are paying the price, as they should.

But if you must blame someone for violating "trust" (and this is what Stein's piece is about), the blame must nevertheless go to the borrowers.

28 posted on 12/23/2007 10:57:06 PM PST by Dr. Frank fan
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To: groanup
I don't begrudge Wall Street their profit. I do begrudge them their fraud.

To a large extent the fraud here tends to lie with the borrowers and mortgage brokers, not with Wall Street.

29 posted on 12/23/2007 11:11:08 PM PST by Dr. Frank fan
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To: DManA
Remember when you read Stein, he gives money to Hollywood radical leftist politicians.

Well, I like Stein and more often than not agree with him. In fact there have been times when I have found writing of his to be very moving.

I just think he is ill-informed here on this particular topic.

30 posted on 12/23/2007 11:12:19 PM PST by Dr. Frank fan
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To: txzman
I'm trying to figure out what Ben's arguing for.

If a broker breaches his fiduciary duty to his principal, then his principal (the investor) can sue him for damages. Ben implies that not enough people are going to prison, but breach of fiduciary duty is a civil cause of action, not a crime.

Ben Stein doesn't even mention civil remedies here.
31 posted on 12/23/2007 11:13:52 PM PST by The Pack Knight (Duty, Honor, Country.)
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To: The Pack Knight

Ben Stein is very concerned about something in the Market, I don’t think he is sure what has happened but being Ben Stein he must speak up....my question is how rigged is this type of speculation and how much can we trust the Regulators and the Government to do the right thing?


32 posted on 12/24/2007 5:57:30 AM PST by iopscusa (El Vaquero. (SC Lowcountry Cowboy))
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To: Dr. Frank fan
To a large extent the fraud here tends to lie with the borrowers and mortgage brokers, not with Wall Street.

Okay, maybe fraud was a bad word. How about this? If your doctor prescribed a pill that has many bad side effects but only told you about the good qualities, would you be less than thrilled? It is what WS does every day, both as a fiduciary and as a middleman.

By the way, Mr. Stein uses the term CMO (collateralized mortgage obligation) when they have been around since the early '80's without a major blow up.

The newer products that have caused all the uproar this time are CDO's (collateralized debt obligations).

33 posted on 12/24/2007 6:06:56 AM PST by groanup (When companies fail they go out of business. When a gov't project fails it gets bigger. M.F.)
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To: Dr. Frank fan
Google Ben Stein and pick the first site you find. I found this information there. I cut out certain irrelevant sections.

He graduated from Columbia University in 1966 with honors in economics. He graduated from Yale Law School in 1970 as valedictorian of his class by election of his classmates. He has worked as a trial lawyer in the field of trade regulation at the Federal Trade Commission in Washington, D.C., a university adjunct at American University in Washington, D.C., at the University of California at Santa Cruz, and at Pepperdine University in Malibu, CA.

Regarding your point about who is ultimately responsible for the whole mortgage mess, I tend to fall on your side of that argument. The banks loaned to borrowers with no money down in the anticipation that even if the borrowers did default, the market was always going to go up, so how could they lose? IMHO the banks were playing the real estate bubble as much as any one. You could argue that the borrowers should have known better, but I'm sure that in many cases they were just glad to be getting a house on terms they could (at that time) afford.

I know I wouldn't have argued it if I were in that position, but then again, I always knew better than to get an ARM, because when you get an ARM, you ultimately get the other arm (Italian gesture with hand slapped into the crook of my elbow and my fist raised straight up).

34 posted on 12/24/2007 6:11:02 AM PST by Hardastarboard (DemocraticUnderground.com is an internet hate site.)
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To: Dr. Frank fan

He is also an ardent advocate of increased taxation.


35 posted on 12/24/2007 6:51:06 AM PST by DManA
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To: Hardastarboard

The real problem was not with the lenders and the borrowers, it was with the packagers that bundled the loans, lied about the risk, and sold them to greedy idiots and giant financial institutions too stupid to find out the truth about what they were buying.


36 posted on 12/24/2007 6:53:24 AM PST by DManA
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To: DManA

Too stupid and/or too lazy.


37 posted on 12/24/2007 6:54:03 AM PST by DManA
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To: Dr. Frank fan

I disagree. Ben Stein is on target here.

It was up to the banks/brokers to screen the potential borrowers—they failed in their duty here. They ignored their own standards to satify their own short term greed. You have to expect that a certain percentage of people applying for a loan will be irresponsible—its just human nature.

The other factor is enforcement of the law. In this, we have been going downhill as a society. The law increasingly seems not to apply to certain groups, be they illegals or the financial elite. Clinton and OJ set the tone for this in that they were able to commit crimes (perjury and murder) and get away with it. In addition, judges are increasingly emboldened to legislate from the bench, twisting the law into whatever shaped pretzel they want. This also subverts our democratic process and creates an oligarchy of people who “know best”. If this trend is not halted, it will corrode our society like nothing else.

These problems are not new problems, but in our age of instant information, the effect they have on society is both magnified and accelerated.


38 posted on 12/24/2007 7:25:04 AM PST by rbg81 (DRAIN THE SWAMP!!)
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To: groanup
How about this? If your doctor prescribed a pill that has many bad side effects but only told you about the good qualities, would you be less than thrilled?

Wall Street is in business, not medicine. Salesmen are salesmen, not doctors. I'm not sure what you expect them to do. That said, I think you may be exaggerating the extent to which WS traders & salesmen downplay the risks of these things. Surely they are salesmen and act like it, but then again, does a Coca-Cola salesman play up tooth decay? What do you want? Truth be told WS folks probably emphasize risks more than regular salesmen - regulations require it.

The people whose job it is to weigh risks properly and make such decisions are the money managers who invest in these things, not the traders/salesmen who peddle them per se (unless they actually have power of attorney or something). For the Nth time in this thread, the thing you are complaining about is better directed elsewhere than Wall Street.

Wall Street is who is taking most of the hits by the way, in the writedowns of these instruments they're stuck with.

By the way, Mr. Stein uses the term CMO (collateralized mortgage obligation) when they have been around since the early '80's without a major blow up. The newer products that have caused all the uproar this time are CDO's (collateralized debt obligations).

Stein is probably unaware of the difference. Anyway, it doesn't really matter to his point nor does it change the reason his complaint is misguided. All of these MBS's, CDOs, derivatives, indices, what have you - they have exploded because of the fact that recent-vintage mortgages in a certain class have stopped paying or threatened to do so at an unprecedented rate. Again, this is fundamentally about borrowers who borrowed lots of money and are reneging on paying it back, and I don't understand why someone complaining about a breach of trust doesn't aim his first volleys at those people. It may have been stupid of banks to throw around this money at the first place but that doesn't excuse the speculators and money-grubbers who snatched at it.

To the extent that there is fraud higher up in the process, a lot of it is concentrated on the mortgage brokers who pushed mortgages on people so they could flip them to Wall Street, and in some cases they may have actually committed outright fraud. Yet even in many of those cases it is ultimately the consumer's responsibility to read what he is signing and people didn't. I'm all for assigning blame but there's plenty to go around here and "Wall Street" is too easy of a target.

39 posted on 12/24/2007 9:43:57 AM PST by Dr. Frank fan
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To: rbg81
It was up to the banks/brokers to screen the potential borrowers—they failed in their duty here.

In that sense they are paying for it by having assets on their books that they failed to value properly. So, they made bad decisions and are paying accordingly. That's the way it's supposed to work when you make bad decisions. Where is the "fraud", why get mad at them (when they're the ones suffering), and who are exactly we supposed to send to jail?

The other factor is enforcement of the law.

To this extent, the banks are the victims. Many many of these mortgages are fraudulent in one way or another, yet the banks bought them (speculating, as you say). They are therefore the victims of that (so far) unpunished fraud. Again, how does any of this add up to a reason to get mad at "Wall Street", and not at the defrauders?

40 posted on 12/24/2007 9:47:43 AM PST by Dr. Frank fan
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To: DManA
The real problem was not with the lenders and the borrowers, it was with the packagers that bundled the loans, lied about the risk, and sold them to greedy idiots and giant financial institutions too stupid to find out the truth about what they were buying.

If a loan is made that the borrower can't afford, or the borrower isn't made aware of all the terms, isn't that a problem with the lender?

If the borrower lies on his loan application, or takes a loan to buy a house for speculation thinking "i'll just walk away from it" if home-prices don't go up enough, isn't that a problem with the borrower?

You say that the "packagers" (structurers?) shouldn't have "lied" about the risk. I don't know who you think "lied" or how you think you know that. But anyway, since you think these things were riskier than advertised, haven't you asked yourself why they were risky? The answer is: because of the probability that these loans wouldn't be paid back. Right?

So given that you are aware that there was a large probability that a loan to a borrower wouldn't be paid back, how can you simultaneously assert that the lenders and borrowers weren't the "real problem"? Are not fraudulent loans, and borrowers who don't pay back, problems? You seem to take those things for granted. Seems to me that attitude is the real problem.

Since when is it "okay" and "to be expected", especially in conservative thought, for people to borrow money from other people and not pay it back? What happened to responsibility?

41 posted on 12/24/2007 9:58:41 AM PST by Dr. Frank fan
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To: Dr. Frank fan

I’m afraid you don’t understand the concept of risk. If you know the true level you can manage it and profit from it. True, risk is only applicable to a fallen world but that is the world we live in.


42 posted on 12/24/2007 10:01:29 AM PST by DManA
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To: DManA
I’m afraid you don’t understand the concept of risk. If you know the true level you can manage it and profit from it.

Which is the part did you think I didn't know?

I'm corresponding with people who are implicitly asserting that Wall Street "lied" about the risks of these instruments (whose loss of value Wall Street is being hit with, so the complaint doesn't make much sense, but whatever). The same people are saying that lenders/borrowers weren't the "real problem".

But if there is more risk than anticipated, it's because of the practices and behavior of lenders and borrowers. I'm simply pointing out that the complaint that (1) risk was greater than advertised/stated and (2) lenders/borrowers are not the primary reason for the troubles, is inconsistent.

43 posted on 12/24/2007 10:05:53 AM PST by Dr. Frank fan
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To: Dr. Frank fan

While the article is well-written and expresses feelings that I agree with, I have trouble with the lack of action-orientation. I am pleased that Goldman Sachs refused to share their client list with him.

But there needs to be an outcry for adequate actions to punish the guilty and avoid a recurrence. Here are the contributors and the behaviours that some of them did to contribute to the problem.

Realtors
They work for a 6% commission and will tell prospects anything to try and get the sale.

Buyer/borrowers
They want to own a house and have been lead to believe that they can’t go wrong buying even if they have to exagerate their earnings.

Mortgage Brokers
They work on commission and are motivated to get borrowers cheap money from banks.

Bank Lending Officers
They work on bonuses and are motivated to close a large number of deals.

Bank Executive Management
They work for sales bonuses and know they can sell off mortgage loans to Investment Banks.

Investment Banks
They work on bonuses are are motivated to package up a large number of offerings and sell them for a fee.

Ratings Agencies
Their job is to make an independent assessment of Investment Banks Offerings and assign a rating that indicates the risk of principal losses.

Portfolio Managers
They work for bonuses and are motivated to generate the greatest returns for the amount of risk they are allowed to take.

So who is resonsible for the problem? All of the above. Who can avoid a recurrence? It seems like the Investment Banks have the responsibility to ensure that their offerings are properly rated. They cannot blame the ratings agencies. Who oversees them? The SEC.

Without the Investment Banks playing games with these offerings, the chain would be broken and the rest of the guilty chain would have had no point in continuing their collusion.


44 posted on 12/24/2007 11:24:10 AM PST by kcowan (Distrustful investor)
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To: Dr. Frank fan

Your logic reminds me of a person when the Minneapolis I-35 bridge collapse was being discussed. He seriously (at least I think so) suggested that there should be a sign on each end of every bridge in America. It should say “Cross at your own risk”. If anything happens and you don’t get to the other side, well, tough.


45 posted on 12/24/2007 11:25:05 AM PST by jim_trent
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To: txzman

bump for publicity


46 posted on 12/24/2007 11:26:11 AM PST by VOA
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To: Dr. Frank fan
Lenders were the victims of congress, bureaucrats and activists. Remember the bank mergers that were held up until they could be "approved" by activists dogging for more money lending to minorities?

Wall street doesn't disclose risk properly and when you omit that material fact it is fraud. The onus is certainly on the investor to protect himself but, remember, many of these things were rated AAA and, overnight, the bid for these things disappeared.

I was a CMO salesman once upon a time and the heroes were the guys who could dispose of the toxic waste tranches. Nobody cared about the guys who were selling the less risky stuff because the profitability of CMO deals depends on getting rid of the s%%t.

They didn't care who bought it and, more often than not, some little unscrupulous regional dealer bought the stuff and crammed it down the throat of some small, regional insurance company. Wall Street knew exactly what was going on when that happened.

47 posted on 12/24/2007 11:30:50 AM PST by groanup (When companies fail they go out of business. When a gov't project fails it gets bigger. M.F.)
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To: Dr. Frank fan

Wrong people? We have CEO who earn huge amounts by defrauding their customers and then sail off into comfortable retirement. These men are bandits who have no high moral standing than a bank robber. As Bill Buckley has said, the worst thing about capitalism is the capitalists. There is so much slight od hand in these matters, that no one sees the tricks that are played. We get Enron,... we get everything going back to the South Sea Bubble.


48 posted on 12/24/2007 11:44:52 AM PST by RobbyS
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To: groanup
Wall street doesn't disclose risk properly and when you omit that material fact it is fraud.

This is a sweeping, grandiose charge - that "Wall Street" (all of it?) doesn't disclose risk "properly". How should it/they disclose risk?

The onus is certainly on the investor to protect himself but, remember, many of these things were rated AAA and, overnight, the bid for these things disappeared.

That's why investors should look at more than just "ratings".

There is definitely a problem with the ratings, they ought to be improved, they will have to be improved if there's going to be a chance of recovering something approaching previous liquidity, and everyone realizes that.

I still don't see how that adds up to Stein's charge that banks were violating someone's "fiduciary trust".

I was a CMO salesman once upon a time and the heroes were the guys who could dispose of the toxic waste tranches. Nobody cared about the guys who were selling the less risky stuff because the profitability of CMO deals depends on getting rid of the s%%t.

In other words, investment banks are businesses and they try to maximize returns.

Why are people continually surprised by this?

49 posted on 12/24/2007 1:15:21 PM PST by Dr. Frank fan
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To: RobbyS
Wrong people? We have CEO who earn huge amounts by defrauding their customers and then sail off into comfortable retirement.

Which CEOs? How did they defraud their customers, exactly? Which customers?

Sounds like what's really going on are that banking CEOs are an obvious target because they get such huge compensation. Banks employ those CEOs, therefore this whole thing is the banks' fault. QED

50 posted on 12/24/2007 1:18:02 PM PST by Dr. Frank fan
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