Oh Dear God!! Not again

[PLYMCO_PILGRIM]

I defy anyone to explain how someone who has a $1500 a month mortgage is a bigger risk than the exact same person with a $1200 a month mortgage is.

That is the sort of thing this refinancing plan will achieve.

That is easy.

Someone making $60,000/year will be able to pay a $1200/month mortgage a lot easier than a $1500/month mortgage making the $1200 option a smaller risk for lenders.

 

[Foxfyre]

To those without a clue:

Banks do not get 'free' money from the Fed. They do borrow, on a 24-hour basis, money fron the U.S. Treasury. The interest rates, however, are set by the Fed. They have to pay interest on what they borrow at the discount rate set by the Fed who also sets the prime rate that the folks getting the very best deals borrow at--currently 3.25%.

The banks are like any other business. They deal in a product, which happens in their case to be money. They make money by charging interest to those who borrow from them plus commissions and fees on investments and services.

They have to have a certain amount of cash on reserve at all times, but they otherwise loan out the money they borrow from the Treasury and also loan out some of the money that people have on deposit for them. The more depositors the bank has, the less money they have to borrow from the government and the more profitable the bank is. When the bank demands sound lending practices and solid qualifcations from borrowers, defaults are fairly rare and the bank can weather those and still show a profit.

When interest rates are in their normal range--high enough for the banks to profit but low enough to encourage investment and large item (houses, cars, etc.) borrowing, inflation is kept sufficiently in check and the economy rocks along at a comfortable pace.

Make interest rates too high, and the economy is immediatekly depressed. Runaway double digit inflation in the Carter years resulted in double digit interest rates pushing 20% at one point. That, coupled with other negatives, got Reagan elected in 1980.

Make interest rates too low, however, coupled with government pressure to make riskier loans to low income people, and even a few defaults, inevitable in those circumstances, can wipe out a bank's entire profits for a year or several years. Remember they are making those loans for 10 to 30 years and they can't call back the money they have loaned out just because they are in trouble.

Bundle a few good loans with a lot of risky ones as Freddie and Fannie did and sell them off to unsuspecting banks/financial institutions, and you have the recipe for a huge inflationary housing bubble that will inevitably burst and crash the economy as happened in late 2008.

It appears our Fearless Leader didn't learn a damn thing about all that and intends to try to do it again.

Sigh.

PLEASE! PLEASE! PLEASE! You are confusing them with facts!!!! That MUST stop at once!

You doofuses seem to think the entire secondary market was made up of Fannie and Freddie.

By 2005, Fannie and Freddie were less than half the secondary market.

As I mentioned earlier, which you have conveniently ignored, is that the collapse of Lehman had nothing to do with the CRA. Nor did it have much to do with Fannie and Freddie. Lehman Brothers had its own supply chain of mortgage brokers. It blew itself up with toxic assets allllllllll by itself.

The government did not push Lehman to make toxic loans. Quite the opposite. Lehman Brothers, along with the other four largest broker dealers on Wall Street, went to the SEC in 2005 and asked to be exempted from the government's capital reserve requirements. The SEC unanimously voted in favor of this request.

So you are pretty much speaking out of your asses.

You do understand that the margins are so close, it takes considerably fewer than 10% default rate in order for the whole house of cards to come crashing down? That is why those risky low interest loans put us all at risk.

 

[Sunshine]

I defy anyone to explain how someone who has a $1500 a month mortgage is a bigger risk than the exact same person with a $1200 a month mortgage is.

That is the sort of thing this refinancing plan will achieve.

So when you say "here we go again", you are speaking from extreme ignorance.

 

[g5000]

"Unsuspecting banks."

Jesus, that is one of the funniest things I have heard in a while.

Why is that funny?

A lot of the banks bought mortgage backed securities due to their AAA ratings........the ratings were obviously wrong hence the housing market fiasco, the banks that bought these MBS investments were unsuspecting of the level of risk invloved, they thought it was a low risk AAA item.

Oh I get it, the banks are "the evil 1%"

Do you even know what "AAA item" you are talking about? Of course not. Your post screams it.

All those AAA "items" were products created by the financial institutions out of the underlying assets, not bought by them. They were SOLD by them.

These were CDOs and CDO-squareds and a million other structured finance products that you and others can't even comprehend. Those are the ones you have heard press reports about and their AAA ratings. Not mortages! Jesus!

You are confusing the banks with investors. The banks were fully aware of what kinds of loans they were buying because they were the ones demanding these kinds of loans be made. As I mentioned in my last post, most of the broker dealers had their own supply chains. Fannie and Freddie were just getting in on the same game Wall Street was playing. No one was forcing them to.

It was the banks which lowered the underwriting standards, not the government. This is the key point that is missed by you people who are obsessed that blacks had to have something to do with all this. The banks threw the underwriting laws of the Universe out the window in order to acquire more assets to roll into these financial products. After they ran out of prime borrowers (who are a very limited pool by definition), the investors were still screaming for more product. On top of that, the financial institutions realized that you can make more money from a prime borrower by convincing them to take out a sub-prime loan. And that is how you find all those white middle class homeowners in ARMs and Pick-A-Pay mortgages around your town. Not just black people. Open your eyes! Practically EVERYONE took out a sub-prime loan who bought a house. Is it only black people underwater? Is it only black people defaulting in droves? No. It is by far mostly white people. ALL OVER THE PLANET!!! Wake up!

And it was the broker dealers who convinced the ratings agencies to rate their shit products AAA. Jesus, you couldn't have gotten that more backwards!

And how do we know this? Because those same banks bet against the very products they created from these loans. I listed actual names and products in another topic on here today.

The only people who were "unsuspecting" were the clients of these banks. It was they who were tricked into buying the end product made from these toxic loans because of the AAA ratings on them. And it was they who were tricked into taking the other side of the bet against these products. They were bilked over and over and over.

In other words, YOU! You are the client who was fucked over. The guy managing your 401k or your pension fund. He is the one who was sold the bill of goods. Your fund manager thinks proximity to money means intelligence. And as long as Wall Street kept hiim flush with hookers and blow and box seats, he bought what they sold. He is a rube, just like you when you buy this bill of goods which says Fannie and Freddie were being forced to make bad loans.

What do you think Newt Gingrich was doing all this time? He was helping their lobbyists to convince lawmakers to STOP PUTTING THE BRAKES on the GSEs. In 2005, legislation was introduced by the Bush adminstration which would have forced the GSEs to reduce their portfolios. The GSEs were growing their portfolios to the point of becoming a systemic risk. But people like Gingrich and Barney Frank and Chris Dodd and just enough other Republican and Democratic weasels were there to stop that legislation and let the party roll on. It was a bipartisan effort to keep the party going. But that in no way means they were FORCING the GSEs to keep partying. They were ENABLING them to keep partying.

 

[g5000]

I defy anyone to explain how someone who has a $1500 a month mortgage is a bigger risk than the exact same person with a $1200 a month mortgage is.

That is the sort of thing this refinancing plan will achieve.

So when you say "here we go again", you are speaking from extreme ignorance.

Great comeback! I guess smilies are the limit of your rhetorical abilties when your lack of knowledge is exposed. This is what happens when you parrot bumper sticker logic.

 

[PLYMCO_PILGRIM]

"Unsuspecting banks."

Jesus, that is one of the funniest things I have heard in a while.

Why is that funny?

A lot of the banks bought mortgage backed securities due to their AAA ratings........the ratings were obviously wrong hence the housing market fiasco, the banks that bought these MBS investments were unsuspecting of the level of risk invloved, they thought it was a low risk AAA item.

Oh I get it, the banks are "the evil 1%"

Do you even know what "AAA item" you are talking about? Of course not. Your post screams it.

All those AAA "items" were products created by the financial institutions out of the underlying assets, not bought by them. They were SOLD by them.

Who did they sell the MBS securities that were AAA rated to again? Thats right other banks, financial instutions, and other investment firms such as those that handle many americans 401k accounts.

Don't be a hack dude.

 

[Foxfyre]

Again, not mentioning any names, but for the clueless:

For the honest, responsible, and good risk borrower, getting to refinance at a lower rate is a good deal. Mr. Foxfyre and I have done it twice now on our residence. But we leave all the equity in the house when we refinance it, and we have an equity now that substantially exceeds the amount of the mortgage still outstanding on it., And we carry no other debts for more than a couple of weeks--everything we buy on credit is paid off in 30 days or less. As a result, we enjoy a very nice credit score and can pretty well name our terms when we do borrow. No way we are going to default on our home loan and risk losing all that equity we have invested in it.

BUT. . . .for every borrower out there like us, there are others who don't approach it in the same way. They take out some of the equity for a new car or a nice vacation when they refinance and refinance a larger amount than was originally there. Or the lower house payments put more money into their pockets so that they feel they can afford a bigger car payment, or can run up their credit cards bills more, or they can now afford that great HD bundle with phone and high speed internet. That all generates a lot of economic activity but it is just extra money in circulation with little or no net increase in the GDP. It is a short term economic boost that is not sustainable. So the lower house payment makes them no better risk than they were before.

Also, when the very minimum down payment is made and you buy a bigger nicer house than you probably otherwise would buy, any down turn or slow down in the housing market can easily put you under water on your loan. And if you are the sort of person who doesn't put a great deal of importance on your reputation, and you can see your investment is worth less than your obligation attached to it, it is real easy to skip a payment or two when things get tough. And when thousands start skipping payments, some will eventually default, that brings the housing values even lower, and banks no longer are taking in enough money to cover their obligations. And they don't have the money to lend to even responsible borrowers. So you have another economic crisis.

Yes the banks did get greedy and were riding high on the bubble and therefore didn't look as closely at those bundled loans as they should. That exacerbated the problem but it didn't create it. What created it was the government pushing loans for people who were likely never going to pay them if there was any kind of economic slow down.

If Fearless Leader was serious about fixing the economy, he would be doing something to encourage the pirvate sector to start investing venture capital again and would be telling the people to clean up their acts and actually qualify for the jobs created and to qualify for low risk loans with esponsible terms and requirements. And the bank examiners would again be demanding that the banks again practice sound lending principles.

None of that is happening at this time.

 

[g5000]

Why is that funny?

A lot of the banks bought mortgage backed securities due to their AAA ratings........the ratings were obviously wrong hence the housing market fiasco, the banks that bought these MBS investments were unsuspecting of the level of risk invloved, they thought it was a low risk AAA item.

Oh I get it, the banks are "the evil 1%"

Do you even know what "AAA item" you are talking about? Of course not. Your post screams it.

All those AAA "items" were products created by the financial institutions out of the underlying assets, not bought by them. They were SOLD by them.

Who did they sell the MBS securities that were AAA rated to again? Thats right other banks, financial instutions, and other investment firms such as those that handle many americans 401k accounts.

Don't be a hack dude.

Wrong. They sold CDOs and other higher order products to 401k fund managers.

In order to build a CDO, you need an underlying asset. And if the demand for CDO products is great, which it most definitely was, then that means you need an astronomical number of underlying assets.

Which means you need your brokers to hit the pavement and start signing people up for home loans, HELOCs, auto loans, credit cards, whatever it takes.

You then take these assets from your supply chain and package them into CDOs. You then sell the pieces of these CDOs to 401k fund managers, state pension fund managers, city treasurers, Saudi princes, Rockefellers, trust fund babies, and so forth.

These clients thought these products were the greatest thing since sliced bread and wanted more, more, more.

Take a look at the fine print of your 401k. When a fund says it buys a certain percentage of government "bonds", you probably think those are municipal bonds and Treasuries and whatnot. And some of them actually are. But if you read the fine print, you will find the word "bonds" also means "bond derivatives". And THAT is where the shit hits the fan. THAT is where people like you are completely unaware of what is actually going on. You stopped a mile back and got hung up on "loans", thinking that is the source of the problem.

Quite the opposite. Toxic loans are the SYMPTOM. They got greedy. They figured why give a guy a $100,000 loan when we can talk him into a $200,000 loan and make more profit off the interest payments from him?

And when he balks at the high monthly interest, we show him how he can use a sub-prime loan to lower his monthly payments and then when it resets, we tell him he can just refinance.

Don't believe me? Stand by. Evidence bomb is on its way.

 

[Sunshine]

Again, not mentioning any names, but for the clueless:

For the honest, responsible, and good risk borrower, getting to refinance at a lower rate is a good deal. Mr. Foxfyre and I have done it twice now on our residence. But we leave all the equity in the house when we refinance it, and we have an equity now that substantially exceeds the amount of the mortgage still outstanding on it., And we carry no other debts for more than a couple of weeks--everything we buy on credit is paid off in 30 days or less. As a result, we enjoy a very nice credit score and can pretty well name our terms when we do borrow. No way we are going to default on our home loan and risk losing all that equity we have invested in it.

BUT. . . .for every borrower out there like us, there are others who don't approach it in the same way. They take out some of the equity for a new car or a nice vacation when they refinance and refinance a larger amount than was originally there. Or the lower house payments put more money into their pockets so that they feel they can afford a bigger car payment, or can run up their credit cards bills more, or they can now afford that great HD bundle with phone and high speed internet. So the lower house payment makes them no better risk than they were before.

Also, when the very minimum down payment is made, any down turn or slow down in the housing market can easily put you under water on your loan. And if you are the sort of person who doesn't put a great deal of importance on your reputation, and you can see your investment is worth less than your obligation attached to it, it is real easy to skip a payment or two when things get tough. And when thousands start skipping payments, some will eventually default, that brings the housing values even lower, and banks no longer are taking in enough money to cover their obligations. And they don't have the money to lend to even responsible borrowers. So you have another economic crisis.

Yes the banks did get greedy and were riding high on the bubble and therefore didn't look as closely at those bundled loans as they should. That exacerbated the problem but it didn't create it. What created it was the government pushing loans for people who were likely never going to pay them if there was any kind of economic slow down.

If Fearless Leader was serious about fixing the economy, he would be doing something to encourage the pirvate sector to start investing venture capital again and would be telling the people to clean up their acts and actually qualify for the jobs created and to qualify for low risk loans with esponsible terms and requirements. And the bank examiners would again be demanding that the banks again practice sound lending principles.

None of that is happening at this time.

And don't forget that a thing is only 'worth' what someone is willing to pay for it. 'Equity' that is based on inflation is not equity at all. It's just numbers on paper. Until they realize those numbers in cold hard cash, those numbers are like the wind. But as you said, people spent their houses. The spent money based on those imaginary numbers. That's what usually happens because so few really undrstand the economics of borrowing/lending.

 

[g5000]

Big-name Wall Street investment banking houses have joined Fannie and Freddie as buyers of subprime mortgages.

Wall Street has gotten involved in subprime securitization "in a very large way," says Brendan Keane, managing director of CS First Boston, New York. * CSFB and many of its peers on Wall Street have become subprime buyers in recent years. The group includes Merrill Lynch, Lehman Bros., Morgan Stanley, Greenwich Capital, UBS and Bank of America. More recently, Goldman Sachs has entered the competition through its purchase of Household International's collateral, which it securitized for the firm.

All this investor interest in subprime loans is propelled by the mountain of money piling up on the sidelines of the stock market, fearing entry into that uninviting terrain.

"Mutual funds, hedge funds, private-equity funds are sitting on a tremendous amount of liquidity," says Kenneth Slosser, managing director of investment banking at Friedman, Billings, Ramsey & Co., Inc., Irvine, California.

Look at those names. Starting their own securitizations. Propelled by the downturn of the 2001 recession in which the housing sector was the only performing sector. Not propelled by the GSEs. And quite knowingly were buying subprime loans.

Knowingly. Deliberately.

For the past several years, money has been flowing into subprime securitizations. Secondary market purchases of alternative-A loans, high-loan-to-value (LTV) loans, home-equity lines of credit, "scratch-and-dent loans" and other nonconforming products totaled $160 billion in 2002, according to CS First Boston. That was 77 percent higher than in 2001. This year, CSFB reports activity could top out at $200 billion, another 25 percent increase.

Meanwhile on the origination front, subprime lending is estimated to have grown threefold in the past decade. Data cited by syndicated housing columnist Ken Harney at the recent Subprime Lending Conference sponsored by the Mortgage Bankers Association of America (MBA) pegged this slice of the market at 15 percent of all mortgage originations. That's up from 5 percent in 1994.

According to data from CSFB, it led the securitizing pack last year with $9.6 billion in subprime loan transactions, followed by Lehman Bros. with $9.5 billion and Morgan Stanley with $8.7 billion.

You see? No one in government is forcing this. This was all Wall Street's idea. This is identical to the junk bond boom of the 80s. They thought they had made "risk management" their bitch.

And here we see Fannie Mae starting to join the pack:

Even as more "designer legislation" is enacted around the country, subprime loan acquisition continues to gain new appeal among a broader group of participants--partially due to the imprimatur of Fannie Mae and Freddie Mac, who are also actively buying.

Mercy Jimenez, Fannie Mae's Dallas-based senior vice president of marketing, puts the acquisition volume of the government-sponsored enterprise's (GSE's) Expanded Approval (EA) program (for alt-A loans) at $17 billion last year, about a third more than 2001. Because Fannie Mae "makes constant adjustments" in its criteria for buying nontraditional loans, Jimenez says she cannot predict whether more, or indeed less, buying will take place.

"We have our finger on the pulse of this product," says Jimenez. "As we have more history... we'll decide whether to increase volume or decrease [it] where we think the risk is not appropriately priced." At present, some 200 authorized lenders participate in EA.

Finger on the pulse. Seeing what the Wall Street demand is.

But here we see Freddie Mac holding back:

"We are not presently doing T-deal wraps," says Douglas Robinson, director of media relations for Freddie Mac, "because there are better ways to participate and provide liquidity" to that market segment. Going further, Robinson says, "A-minus is now flow business" for Freddie Mac, "and has been for more than a year." Robinson adds that T-deals are "an execution that we continue to have and, if appropriate, we'll use [again]."

By way of further explanation, market professionals say if Freddie Mac can structure entire deals, it does not have to wrap them with a capital outlay of insurance. It is more efficient for the GSE to approach the market this way. "They probably just said, 'Wait a second, we've got guys buying and other guys insuring--wouldn't one group be better than two?"' says one observer.

And here we see the competition from Wall Street providing the impetus to move down the credit spectrum so that everyone can get a piece of the securitization pie:

Bradley Brunts, managing director of capital markets for CitiMortgage Inc., St. Louis, agrees with Posner about the difficulty in defining what the GSEs will want to buy. "[N]onprime is becoming just Like the prime business," he says. As a result, "we're going to continue to see shrinking margins to a certain degree. The GSEs have a huge appetite to grow, [and] this is a wide margin product--so it's no surprise they'll be going after [it]," he says.

It stands to reason, adds Brunts, that "as you get more people into the [subprime] space ... the margins are going to shrink. The distinction between an originator of what is today a subprime product and a prime product is going to continue to blur."

Brunt predicts that "the big survivors are those who can deliver and respond to borrowers across the credit spectrum, and have the outlets to deliver that product into the secondary market."

Check out that last sentence. There is the if-we-don't-do-it-the-other-guy-will mentality right there that fed the whole bubble.


Here: SEC Info - Bear Stearns Asset Backed Securities Inc - 8-K - For 7/15/02 - EX-4.1

Here: Possible Dangers in Home Equity Loans | MidAtlantic Mortgages.com

 

[g5000]

And now I will show you how they deliberately offered sub-prime loans to revitalize the flagging refinance industry:

Not exactly prime: the secondary market for loans not in prime condition is growing. Big-name Wall Street investment banking houses have joined Fannie and Freddie as buyers of subprime mortgages. (Subprime). | Goliath Business News

Citi Unit Halts Mortgage Applications on Missing Data

Citigroup Inc. suspended loan applications at a unit that produced half of its $115 billion in mortgages last year after a review found that some property appraisals and income-verification documents were missing.

The correspondent division, which buys loans from banks and independent mortgage firms, stopped accepting new loans at 5 p.m. yesterday and will restart July 6, Citigroup said in a June 22 letter to clients. The New York-based company said it will use the time to change procedures and fix the omissions.

“There remain key areas that fall short of our quality-control process,” according to the letter, signed by Brad Brunts, a managing director at the bank’s CitiMortgage division. “We ask you to review your processes and join us in this effort to collectively address these areas of concern.”

You see? The banks did get stupid!


And here is the story where Brunts says the refinancing fees will be mo money! Mo money!:Keep Eyes Fixed on Your Variable-Rate Mortgage

Someone now paying $350 a month for a $100,000 interest-only loan could be facing payments of $680 both because of the shift to the higher rate and because the borrower would have to start paying off the principal as well as the interest.

“You need a couple of good pay raises in order to afford it,” said Mark Fleming, chief economist with CoreLogic, which develops risk models for the mortgage lenders. “It’s pretty hard to deal with a payment shock of 80 percent or 90 percent,” he said.

The mortgage industry is not worried about payment shock. Why?

“It offers an opportunity,” said Brad Brunts, managing director of portfolio management at Citi Mortgage, a unit of Citigroup.

He, like others in the mortgage industry, sees the higher payments as a boost to the flagging mortgage refinancing business.

You see how stupid AND evil they were?

 

[g5000]

And now...let me show you "unsuspecting":

1. Daniel Sparks and Tom Montag: Goldman Sachs. Constructed the fraudulent Timberwolf billion dollar toxic mortgage security and sold it to investors, then profited by betting against it. Deliberately stuffed the security with mortgages they knew were toxic so they could be on its failure while also profiting from its sale it to investors.

2. Brian H. Stoker: Citigroup. Constructed the fraudulent Class V Funding III CDO-squared which ripped off investors for over $700 million.

3. Fabrice Tourre: Goldman Sachs. Constructed the fraudulent Abacus 2007-ac1 CDO for which GS was fined but no one went to prison. Tourre allowed hedge fund manager John Paulson to select the toxic mortgages to be placed in the CDO so Goldman Sachs and Paulson could bet against it. Paulson believes when it comes to this kind of business, we should be supporting them and encouraging them.


4. Angelo Mozillo: Countrywide CEO. This guy and his financial officers committed the exact same kind of crime the Enron CEO and financial officers did, and yet he walks free. Mozillo kept telling investors that Countrywide was "consitently producing quality mortgages" while his internal memos show that he was well aware his company was creating the most toxic mortgages on the planet. The SEC originally demanded a jury trial for Mozillo, but he ultimately walked away with a fine and no admission of wrongdoing. This guy is the scummiest of the scum.


That is just a start.

NOT ONE of those guys were forced to make loans to poor people or subject to the CRA.

 

[Foxfyre]

And now...let me show you "unsuspecting":

1. Daniel Sparks and Tom Montag: Goldman Sachs. Constructed the fraudulent Timberwolf billion dollar toxic mortgage security and sold it to investors, then profited by betting against it. Deliberately stuffed the security with mortgages they knew were toxic so they could be on its failure while also profiting from its sale it to investors.

2. Brian H. Stoker: Citigroup. Constructed the fraudulent Class V Funding III CDO-squared which ripped off investors for over $700 million.

3. Fabrice Tourre: Goldman Sachs. Constructed the fraudulent Abacus 2007-ac1 CDO for which GS was fined but no one went to prison. Tourre allowed hedge fund manager John Paulson to select the toxic mortgages to be placed in the CDO so Goldman Sachs and Paulson could bet against it. Paulson believes when it comes to this kind of business, we should be supporting them and encouraging them.


4. Angelo Mozillo: Countrywide CEO. This guy and his financial officers committed the exact same kind of crime the Enron CEO and financial officers did, and yet he walks free. Mozillo kept telling investors that Countrywide was "consitently producing quality mortgages" while his internal memos show that he was well aware his company was creating the most toxic mortgages on the planet. The SEC originally demanded a jury trial for Mozillo, but he ultimately walked away with a fine and no admission of wrongdoing. This guy is the scummiest of the scum.


That is just a start.

NOT ONE of those guys were forced to make loans to poor people or subject to the CRA.

And your point is? These all made huge donations to the Obama campaign and some of their executives are now among his czars and advisors. I have not given the banks a pass. They were as greedy as everybody else including those of us out in fly over country who were enjoying the very nice appreciation of our property along with low interest rates.

But you can point fingers and try to blame the banks and Wall Street and whomever else you can to deflect from the role of our government and its subsidiaries in Fannie and Freddie in creating and allowing the housing crisis to develop.

But that can of course keep you from having to admit the truth that Obama and the liberals in Congress are promoting more of the same now or that our leadership is apparently so flawed it cannot be repaired.

The blind religionists groveling at the feet of the Obama-its are fervent in their faith. And too many simply do not want to see or admit the truth of all that. It feels so much more noble and righteous to blame the banks and the rich.

 

[Mr. Shaman]

"Unsuspecting banks."

Jesus, that is one of the funniest things I have heard in a while.

Why is that funny?

A lot of the banks bought mortgage backed securities due to their AAA ratings........the ratings were obviously wrong hence the housing market fiasco, the banks that bought these MBS investments were unsuspecting of the level of risk invloved, they thought it was a low risk AAA item.

Oh I get it, the banks are "the evil 1%"

Do you even know what "AAA item" you are talking about? Of course not. Your post screams it.

All those AAA "items" were products created by the financial institutions out of the underlying assets, not bought by them. They were SOLD by them.

These were CDOs and CDO-squareds and a million other structured finance products that you and others can't even comprehend. Those are the ones you have heard press reports about and their AAA ratings. Not mortages! Jesus!

You are confusing the banks with investors. The banks were fully aware of what kinds of loans they were buying because they were the ones demanding these kinds of loans be made. As I mentioned in my last post, most of the broker dealers had their own supply chains. Fannie and Freddie were just getting in on the same game Wall Street was playing. No one was forcing them to.

It was the banks which lowered the underwriting standards, not the government. This is the key point that is missed by you people who are obsessed that blacks had to have something to do with all this. The banks threw the underwriting laws of the Universe out the window in order to acquire more assets to roll into these financial products. After they ran out of prime borrowers (who are a very limited pool by definition), the investors were still screaming for more product. On top of that, the financial institutions realized that you can make more money from a prime borrower by convincing them to take out a sub-prime loan. And that is how you find all those white middle class homeowners in ARMs and Pick-A-Pay mortgages around your town. Not just black people. Open your eyes! Practically EVERYONE took out a sub-prime loan who bought a house. Is it only black people underwater? Is it only black people defaulting in droves? No. It is by far mostly white people. ALL OVER THE PLANET!!! Wake up!

And it was the broker dealers who convinced the ratings agencies to rate their shit products AAA. Jesus, you couldn't have gotten that more backwards!

And how do we know this? Because those same banks bet against the very products they created from these loans. I listed actual names and products in another topic on here today.

The only people who were "unsuspecting" were the clients of these banks. It was they who were tricked into buying the end product made from these toxic loans because of the AAA ratings on them. And it was they who were tricked into taking the other side of the bet against these products. They were bilked over and over and over.

[ame=http://www.youtube.com/watch?v=pNBctwAsu48]PBS NOW | Credit and Credibility part 1 - YouTube[/ame]
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[ame=http://www.youtube.com/watch?v=o2iqmywyiQI]PBS NOW | Credit and Credibility part 2 - YouTube[/ame]
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[ame=http://www.youtube.com/watch?v=MaUoa3686RM]PBS NOW | Credit and Credibility part 3 - YouTube[/ame]​

 

[PLYMCO_PILGRIM]

Do you even know what "AAA item" you are talking about? Of course not. Your post screams it.

All those AAA "items" were products created by the financial institutions out of the underlying assets, not bought by them. They were SOLD by them.

Who did they sell the MBS securities that were AAA rated to again? Thats right other banks, financial instutions, and other investment firms such as those that handle many americans 401k accounts.

Don't be a hack dude.

Wrong. They sold CDOs and other higher order products to 401k fund managers.

In order to build a CDO, you need an underlying asset. And if the demand for CDO products is great, which it most definitely was, then that means you need an astronomical number of underlying assets.

Which means you need your brokers to hit the pavement and start signing people up for home loans, HELOCs, auto loans, credit cards, whatever it takes.

You then take these assets from your supply chain and package them into CDOs. You then sell the pieces of these CDOs to 401k fund managers, state pension fund managers, city treasurers, Saudi princes, Rockefellers, trust fund babies, and so forth.

These clients thought these products were the greatest thing since sliced bread and wanted more, more, more.

Take a look at the fine print of your 401k. When a fund says it buys a certain percentage of government "bonds", you probably think those are municipal bonds and Treasuries and whatnot. And some of them actually are. But if you read the fine print, you will find the word "bonds" also means "bond derivatives". And THAT is where the shit hits the fan. THAT is where people like you are completely unaware of what is actually going on. You stopped a mile back and got hung up on "loans", thinking that is the source of the problem.

Quite the opposite. Toxic loans are the SYMPTOM. They got greedy. They figured why give a guy a $100,000 loan when we can talk him into a $200,000 loan and make more profit off the interest payments from him?

And when he balks at the high monthly interest, we show him how he can use a sub-prime loan to lower his monthly payments and then when it resets, we tell him he can just refinance.

Don't believe me? Stand by. Evidence bomb is on its way.

way to avoid the original comments about mortgage backed securities being sold and overrated as AAA when they shouldn't have been, hurting the smaller organizations who bought them and didn't qualify for tarp or bailouts.

I've seen this forum trick too many times and have even used it myself on unsuspecting posters .

Like I said, some got screwed by buying the overrated MBS. Notice they aren't all rated so hot anymore now that things are more on the up and up TEXT-Fitch assigns Lowland Mortgage Backed Securities 1 B.V final ratings | Reuters

 

[8537]

And now...let me show you "unsuspecting":

1. Daniel Sparks and Tom Montag: Goldman Sachs. Constructed the fraudulent Timberwolf billion dollar toxic mortgage security and sold it to investors, then profited by betting against it. Deliberately stuffed the security with mortgages they knew were toxic so they could be on its failure while also profiting from its sale it to investors.

2. Brian H. Stoker: Citigroup. Constructed the fraudulent Class V Funding III CDO-squared which ripped off investors for over $700 million.

3. Fabrice Tourre: Goldman Sachs. Constructed the fraudulent Abacus 2007-ac1 CDO for which GS was fined but no one went to prison. Tourre allowed hedge fund manager John Paulson to select the toxic mortgages to be placed in the CDO so Goldman Sachs and Paulson could bet against it. Paulson believes when it comes to this kind of business, we should be supporting them and encouraging them.


4. Angelo Mozillo: Countrywide CEO. This guy and his financial officers committed the exact same kind of crime the Enron CEO and financial officers did, and yet he walks free. Mozillo kept telling investors that Countrywide was "consitently producing quality mortgages" while his internal memos show that he was well aware his company was creating the most toxic mortgages on the planet. The SEC originally demanded a jury trial for Mozillo, but he ultimately walked away with a fine and no admission of wrongdoing. This guy is the scummiest of the scum.


That is just a start.

NOT ONE of those guys were forced to make loans to poor people or subject to the CRA.

And your point is? These all made huge donations to the Obama campaign and some of their executives are now among his czars and advisors. I have not given the banks a pass. They were as greedy as everybody else including those of us out in fly over country who were enjoying the very nice appreciation of our property along with low interest rates.

But you can point fingers and try to blame the banks and Wall Street and whomever else you can to deflect from the role of our government and its subsidiaries in Fannie and Freddie in creating and allowing the housing crisis to develop.

But that can of course keep you from having to admit the truth that Obama and the liberals in Congress are promoting more of the same now or that our leadership is apparently so flawed it cannot be repaired.

The blind religionists groveling at the feet of the Obama-its are fervent in their faith. And too many simply do not want to see or admit the truth of all that. It feels so much more noble and righteous to blame the banks and the rich.

This response is breathtaking. Confronted with reams of factual information proving otherwise, the poster dismisses all of it - every last sentence - and returns to blaming it on Obama, Freddie and Fannie.

It's proof that absolutely no amount of evidence overcome rightwing rhetoric and cognitive dissonance. When given the opportunity to learn or stick ones head in the sand, the modern right grabs a shovel - and calls the OTHER side the ones stuck in blind and relying on faith.

All of the rightwing nuttery, all wrapped up in a single post.

 

[Foxfyre]

And now...let me show you "unsuspecting":

1. Daniel Sparks and Tom Montag: Goldman Sachs. Constructed the fraudulent Timberwolf billion dollar toxic mortgage security and sold it to investors, then profited by betting against it. Deliberately stuffed the security with mortgages they knew were toxic so they could be on its failure while also profiting from its sale it to investors.

2. Brian H. Stoker: Citigroup. Constructed the fraudulent Class V Funding III CDO-squared which ripped off investors for over $700 million.

3. Fabrice Tourre: Goldman Sachs. Constructed the fraudulent Abacus 2007-ac1 CDO for which GS was fined but no one went to prison. Tourre allowed hedge fund manager John Paulson to select the toxic mortgages to be placed in the CDO so Goldman Sachs and Paulson could bet against it. Paulson believes when it comes to this kind of business, we should be supporting them and encouraging them.


4. Angelo Mozillo: Countrywide CEO. This guy and his financial officers committed the exact same kind of crime the Enron CEO and financial officers did, and yet he walks free. Mozillo kept telling investors that Countrywide was "consitently producing quality mortgages" while his internal memos show that he was well aware his company was creating the most toxic mortgages on the planet. The SEC originally demanded a jury trial for Mozillo, but he ultimately walked away with a fine and no admission of wrongdoing. This guy is the scummiest of the scum.


That is just a start.

NOT ONE of those guys were forced to make loans to poor people or subject to the CRA.

And your point is? These all made huge donations to the Obama campaign and some of their executives are now among his czars and advisors. I have not given the banks a pass. They were as greedy as everybody else including those of us out in fly over country who were enjoying the very nice appreciation of our property along with low interest rates.

But you can point fingers and try to blame the banks and Wall Street and whomever else you can to deflect from the role of our government and its subsidiaries in Fannie and Freddie in creating and allowing the housing crisis to develop.

But that can of course keep you from having to admit the truth that Obama and the liberals in Congress are promoting more of the same now or that our leadership is apparently so flawed it cannot be repaired.

The blind religionists groveling at the feet of the Obama-its are fervent in their faith. And too many simply do not want to see or admit the truth of all that. It feels so much more noble and righteous to blame the banks and the rich.

This response is breathtaking. Confronted with reams of factual information proving otherwise, the poster dismisses all of it - every last sentence - and returns to blaming it on Obama, Freddie and Fannie.

It's proof that absolutely no amount of evidence overcome rightwing rhetoric and cognitive dissonance. When given the opportunity to learn or stick ones head in the sand, the modern right grabs a shovel - and calls the OTHER side the ones stuck in blind and relying on faith.

All of the rightwing nuttery, all wrapped up in a single post.

I have not blamed anything on Obama, Freddie, or Fannie. I have blamed Presidents and Congressiional leaders that forced policies that resulted in the economic meltdown. The fact that they did it in part through Fannie and Freddie is an aside. Obama did not create the financial meltdown. He IS however promoting another one with the policy he has just suggested.

And the fact that you ignore or can't see THAT speaks volumes.

 

[g5000]

I have not blamed anything on Obama, Freddie, or Fannie. I have blamed Presidents and Congressiional leaders that forced policies that resulted in the economic meltdown. The fact that they did it in part through Fannie and Freddie is an aside. Obama did not create the financial meltdown. He IS however promoting another one with the policy he has just suggested.

And the fact that you ignore or can't see THAT speaks volumes.

Please explain how lowering someone's monthly interest payment is "promoting another financial meltdown".

 

[8537]

And your point is? These all made huge donations to the Obama campaign and some of their executives are now among his czars and advisors. I have not given the banks a pass. They were as greedy as everybody else including those of us out in fly over country who were enjoying the very nice appreciation of our property along with low interest rates.

But you can point fingers and try to blame the banks and Wall Street and whomever else you can to deflect from the role of our government and its subsidiaries in Fannie and Freddie in creating and allowing the housing crisis to develop.

But that can of course keep you from having to admit the truth that Obama and the liberals in Congress are promoting more of the same now or that our leadership is apparently so flawed it cannot be repaired.

The blind religionists groveling at the feet of the Obama-its are fervent in their faith. And too many simply do not want to see or admit the truth of all that. It feels so much more noble and righteous to blame the banks and the rich.

This response is breathtaking. Confronted with reams of factual information proving otherwise, the poster dismisses all of it - every last sentence - and returns to blaming it on Obama, Freddie and Fannie.

It's proof that absolutely no amount of evidence overcome rightwing rhetoric and cognitive dissonance. When given the opportunity to learn or stick ones head in the sand, the modern right grabs a shovel - and calls the OTHER side the ones stuck in blind and relying on faith.

All of the rightwing nuttery, all wrapped up in a single post.

I have not blamed anything on Obama, Freddie, or Fannie.

the role of our government and its subsidiaries in Fannie and Freddie in creating and allowing the housing crisis to develop.

 

[hortysir]

I defy anyone to explain how someone who has a $1500 a month mortgage is a bigger risk than the exact same person with a $1200 a month mortgage is.

That is the sort of thing this refinancing plan will achieve.

So when you say "here we go again", you are speaking from extreme ignorance.

Because regardless of the amount of the mortgage, said person is now unemployed.