Posted on 11/23/2012 2:28:04 PM PST by ex-Texan
Bad mortgage loans, obscured through complex and unregulated investment instruments, cost taxpayers billions
WASHINGTON—The U.S. economy is slowly making a recovering from a near-collapse and the worst recession since the Great Depression.
But what brought on the subprime mortgage crisis that led to huge financial losses, a decline in wealth for much of the country, a GDP drop of 5 percent for the period from Dec. 2007 to June 2009, and an official unemployment rate that peaked at 10.0 percent in Oct. 2009?
“Very few people understand [what happened],” said University of Maryland Professor Michael Greenberger at the Center for National Policy on Nov. 1. “I firmly believe that the president of the United States doesn’t understand. They don’t understand what went wrong.”
In layman’s terms, Greenberger attempted to explain the essence of how the near collapse of our financial system came about. It’s a story involving new complex financial creations that mask the risks that investors take. The story is also about the role of the federal government—that is, the taxpayers—in rescuing the banks, and the story is ultimately about “criminal” behavior that has eluded prosecution, says Greenberger. * * *
*Ping* !
unregulated?
The mortgage and banking businesses are some of the most regulated things in the world.
Recovering, my patoot.
What about the Feds going after the banks for not loaning money to minorities so that they could by a house? The heck with the traditional 20% down. That is discrimination so say the dimoKKKRATS.
BS. No one forced anyone to get a mortgage, or max out their home equity. It was not deregulation or derivatives that killed the golden goose. It was the government encouraging banks to lend to people with no income, jobs or assets (NINJAs) coupled with Freddie and Fannie’s guarantee on the bank loans, the Fed’s loose monetary policy and the fantasy of ever rising property values.
Also what role did the Black Congressional Caucus, Barney Frank and Christopher “Country Wide” Dodd have in this? A lot IMHO.
The Federal Reserve forbids banks from using mark-to-market.
Go figure.
Congressman Barney Frank is the primary person responsible for Poor Risk borrowers getting home loans from banks.
Banks: What?
Gov: Let's put it this way. You WILL give loans to people that shouldn’t get loans, or forget about your plans for expansion.
Banks: We'll go out of business doing that.
Gov: You know, if you bundle and securitize the mortgages you can sell those securities.
Banks: What? You will let us do that? You never let us do that sort of thing before. Heck, that's not even IN the tens of thousands of pages of regulations.
Gov: You are right, but it's OK. Freddie Mac and Fannie Mae are cool with it to.
Banks: Wow...cool.
Time goes by and these new mortgage backed securities are found to be money machines when they are sold, sometimes in bits and pieces. Like all financial instruments increasingly clever ways are found to turn a profit, especially when there is little to no regulation involved for that type of new investment.
More time passes, and people that should not get mortgages act like people that should not get mortgages.
Banks: Government, please save us!
Government: OK, but this all happened because you were so greedy.
Banks: WHAT!?!?!?!?
Federal government caused this mess and then blamed their tools for it.
“The mortgage and banking businesses are some of the most regulated things in the world.”
Check out the Libor scam trial getting underway in the UK, involving Barclays, HSBC and others. It will disabuse you of the notion that banks are regulated.
Give us a preliminary report if you feel like it.
Ping!
Hello there old Friend!
Nothing will now be done to investigate ANYTHING or ANYBODY. The perps will skate.
The raping of the makers will continue apace. The takers will have big trouble getting mortgages now, but other deviously-clever ways will be found to ensconce them in their own little dream homes.
Oh, well, just another day, another shrunken dollar in our pockets.
Leni
Believe me when I say, "this is well WORTH WATCHING." Miss Barnhardt is NOT a fan of either Democrats or Republicans, as you will hear.
She’s closing in reaction to the recent collapse of MF Global–which she attributes to the criminal acts of MFG president Jon Corzine and the increasingly corrupt nation of American markets.
http://adask.wordpress.com/2011/11/21/barnhardt-capital-management-closes/
No bigger sigh than Jon Corzine, the poster boy of ‘effective’ banking/financial rules and regulations.
So both of you lay the blame squarely on Bush? Well both of you are correct as far as you go. But no enforcement of bank regulations by Bush had just as much to do with it, causing the bankers to get greedy. Now, of course, the Fed is complicit by driving down interest rates to zero, hurting savers, to allow bankers to dump to loans back on the government, which takes the loss as they peddle the loans back to the banks. Net result, savers lose, taxpayers lose, bankers win. There’s nothing new under the sun.
I am offended by bankers and I was a banker for nearly 40 years.
Having said that, I am more offended by folks who clearly have no knowledge of the real perpetrators of this mess chiming in and insinuating that the folks who caused it failed to "regulate" it.
It was these dumbasses' "regulations" in response to misplaced populism on the part of politicians that created the mess in the first place.
Geez!
Beautiful response. The Libor trial might actually open some eyes around here. Thank you for your attempts at educating Freepers.
Can you say sub-prime?
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