Posted on 11/30/2008 10:49:56 AM PST by libstripper
In what is apparently the first legal action of its kind, an association of community-based organizations has filed a federal civil rights complaint against two of the three largest Wall Street rating firms, charging that their inflated ratings on subprime mortgage bonds disproportionately caused financial harm to African American and Latino home buyers across the country.
The complaint, filed by the National Community Reinvestment Coalition, alleges that Moody's Investors Service and Fitch Ratings enriched themselves by assigning high ratings to bonds backed by mortgages "that were designed to fail" because of "unfair payment terms and insufficient borrower income levels."
(Excerpt) Read more at latimes.com ...
It’ll never get that far, it’ll be settled or thrown out of court.
But it got some publicity, so mission accomplished.
Amazing, isn't it.
As for this cockeyed lawsuit, it will go nowhere. They tried to sue big tobacco for the same sort of thing. That got nowhere.
the “you owe me” mentality @work!
Lemme know how that works out for you...
They have this exactly backwards. Subprime borrowers received financial benefit, not harm, if the ratings were inflated.
These borrowers, regardless if they’re members of a minority group, obtained loans they otherwise couldn’t have gotten. Those that have been responsible own homes they wouldn’t own otherwise. Those that were irresponsible got to live in a nice house for a quite a while, ultimately at the lenders expense.
Those that bought the mortgage backed securities may have a good case against the ratings agencies. But I don’t see how a borrower getting a loan they otherwise couldn’t have gotten qualifies as financial harm.
“designed to fail”
So this nonsense that was started to help minority group members is now fodder for law suits?
It was a typical well-meaning, feel good liberal solution to a problem, and like all liberal solutions, it failed.
“How, perchance, could ARMs and other dubious mortgages be “distributed more equitably” to people, like me, who never wanted anything to do with them??”
Well of course the govt would step in and force you to take an arm.
“But it got some publicity, so mission accomplished.”
Mission accomplished as in redirecting the discussion of truth that in fact it is the fault of Democrats to one more of a list of contrived Democrat diversions that allegedly are the reasons for the distress we suffer today?
The Lefties are trying so hard to divert attention from themselves for the mess, yet every step of the way was a major Democrat figure from Carter, to Clinton, To Ruben, to Reno, to Dodd, To Frank, and many other Democrat players throughout the process.
The major fear I have right now is they, the ones whom were instrumental in the Subprime scheme are all getting quality positions within the Obama misAdministration, and will be able to further their own agendas’ without much hinderance. The MSM is owned by the Democrats, and the Government Bureaucracies are packed like Sardines in a can with Leftist Bureaucrats.
This means the only chance we really have in the near future to put forth the truth is now, otherwise it will be ancient history by the time of the next opportunity, and the Left will have screwed up everything in the interim.
The problem I have as an investor with the credit rating agencies is that they rather clearly did not do due diligence in rating the Fannie/Freddie mortgage backed securities. If they had, they’d have marked them as junk grade or less. Of course, that would have killed the whole CRA scam in the cradle, meaning the rating agencies had to be under as much AA pressure as any other entities on earth to force them to give the fraudulently good ratings they did.
Remember, the whole scam was a chain and every link had to work for it to succeed. Lenders initially had to be forced, enticed, or both to grant the bad loans. Then Fannie and Freddy had to be induced to buy the toxic paper. Fannie and Freddy, however, couldn’t sell the bad paper and raise the money to continue the the scam unless they obtained fraudulently good ratings from the services, which they did. It will be truly interesting if somebody ever smokes out how the services were induced to give those ratings.
Unfortunately, banks didn’t have a choice. If they wanted to expand, for instance, they had to show that they were giving loans that fit the CRA.
“I see we’ve learned nothing from the subprime meltdown.”
This is a classic “double bind” situation: if financial institution do not make housing available to high-risk groups, they are sued for “red lining”; conversely, if they do make housing available for high-risk groups, they are sued for creating an economic crisis.
Could this be further application of the “Clowen-Piven strategy” for creating chaos and pushing us yet closer to a fully socialist, top-down, command economy?
And the purpose of THAT goal is for the political/financial elite to continue wielding power with no threat of removal from upstarts except those who have been vetted and “approved” by the tightly controlled educational system. The “masses” are kept at bay by providing them with a subsistence level standard of living, with only very slow improvements over a long period of time.
Actually, however, as Ludwig von Mises showed in his excellent work from the 1920s titled “Socialism,” socialist economies prosper ONLY because of the existence somewhere in the world of capitalist, free economies. If the entire world is socialist, there will be market distortations and capital/labor dislocations on a global scale.
Just the sort of societal anarchy welcomed by terror groups on land and sea.
I said how it was done. They where paid by the very firms that wanted the ratings. It would be like a student paying his teacher to grade his work. A clear conflict of interest.
Andersen Consulting was convicted of obstruction of justice (later overturned) in what is in my opinion a very similar case, at least morally.
The ratings agencies will not be prosecuted, however, as they are "too big to fail", and for other reasons.
And the Wall Street firms being sued will probably cave and settle out of court just like they did when Jesse Jackson threatened them.
What Wall Street frim has the guts to call this for what it is.... using the original fraud as a premise for extortion?
What were the community organizers advising these prospective borrowers to do as part of their mortgage counseling services?
And if slots in the NBA had been distributed equally?
How did the lenders know the race of the borrowers if asking them their race was considered discriminatory and against federal law? How would a lender be able to discriminate when they did not know the race?
Initially, it was interest only which really helped out. Now it is fully amortizing but the interest rate is so low that the majority of my monthly payment is principal. In the same amount of time, I have paid less on average and applied more money to principal than I would have had I stayed with my original 30 year fixed.
Present conditions do have me thinking about either refinancing or selling out as relocation is a real possibility.
>>>>>>>>Mission accomplished as in redirecting the discussion of truth?<<<<<<
Yes, that’s what I meant.
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