Read it all to understand it!
OK I remember reading last year about 64 trillion dollars of the credit default swaps. Does this hammer now fall in addition to the lawyers owning the banks when all is said and done?
No bailouts for fraud and its consequences.
why do I have the feeling that there are more than a few political types involved in this?
why do I have the feeling that there are more than a few political types involved in this?
“which claimed that investors were told that the due diligence had been done: on page 48 of the prospectus, there’s language about how the underwriter had done an “underwriting guideline review”, although there’s nothing specifically about hiring a company to re-underwrite a large chunk of the loans in the pool, and report back on whether they met the originator’s standards.”
IOW, reading a prospectus doesn’t mean squat anymore. I wonder how many companies, in how many different industries, are playing this fast & loose with their prospectus’s?
The investment banks didn’t mind buying up loans they knew were bad, because they considered themselves to be in the moving business rather than the storage business. They weren’t going to hold on to the loans: they were just going to package them up and sell them on to some buy-side sucker.
This is what it's really all about. Everyone was in the "moving business" up until the loans wound up with Fannie and Freddie, where they are in permanent "storage".
One thing this author doesn’t mention: the reason the hedge funds couldn’t have cared less about how poor the investment quality of the mortgage pools were.
It wasn’t simply because they were “in the business of moving, not storage.” That is, in the business to simply (and quickly) slice up and sell the pool. The fact is that at some point almost everyone who touched mortgages had the idea — rightly, it turned out — that there really was nothing too much to worry about BECAUSE THE GOVERNMENT WOULD END UP BACKSTOPPING ANY LOSS THAT OCCURRED ALONG THE WAY.
This, in fact, is what basically happened thus far. The gain was private, the loss was public.
This degree of government presence in the market, even if shadowy through FanFredFHA, acted like investment loss insurance in the psyche of the market.
Its increasingly obvious We the People need to take Washington apart and re-assemble a functioning representative government.
The truly depressing thing in all of this is the political bind in which we find ourselves.
One one side of the fence, we have a party of mendacious hacks and grifters, who know full well behind closed doors how the financial system works, and they’re fully happy to work that system for their own private benefit and that of their Ivy League cohorts. Grifters, frauds and thieves all. The bank fraudsters know they can buy their way into huge profits and buy their way out of trouble when the crap hits the fan with this bunch.
On the other side of the fence, we have a party of people who either know nothing about finance, or people who *think* they know something about finance but who, in fact, have an idea of finance as it worked about 30 to 40 years ago. The bank fraudsters know they can depend on this group to squawk like a bunch of trained parrots about such nonsense as “free markets” when in fact there hasn’t been any such thing in this country in decades. The bank fraudsters know that if they talk a good game of “let the private sector solve the problem” with this bunch, they’re too stupid to follow the game of three-card monty as the banksters swindle, dupe and cheat the taxpayer into taking monstrous risks, the American public into giving up their money and the banksters into making absurd profits.
So that’s what we’ve got: the political parties of Cunning Duplicity and Blissful Ignorance.
In between, we’re getting robbed blind.
I’d like to hope that the GOP would do something about this mess, but I cannot name ONE Republican in office today who could tell me the mechanics of this mess off the top of their head, using the correct terminology. Not ONE. They’re all too stupid about finance to do anything other than sound like clones of Larry Kudlow. As such, I have no delusions that the GOP will do anything other than watch the world burn down around them, asking innocently as the rest of us are running around like a Chinese fire drill: “ Do you smell something? I thought I smelled something, but I can’t be sure... “