"Wall St. Meltdown","criminal charges"..WHY??

[rdean]

I am NOT an expert in Wall Street, mortgages, much less "criminal charges for Wall St. meltdown fraud"!
I am an expert in Medicare though but this NOT the point of the thread.

For YOU EXPERTS in "Wall St.", Mortgages, and (what ?) "meltdown".. please correct the following dots....

I saw the "60 Minutes" piece about two high-ranking financial whistleblowers say they tried to warn their superiors about defective and even fraudulent mortgages

Read more: http://www.cbsnews.com/video/watch/?id=7390540n#ixzz1jX2lO1LF


But even after that, I don't understand the "fraud" part.

A) Banks forced by Acorn among other protesters in 1995 started granting loans to
unqualified people. Knowing that if they didn't the banks would be picketed and the
biased MSM write totally inaccurate stories..

in the Buycks-Roberson v. Citibank Fed. Sav. Bank, 1994 suit against redlining.
Most significant of all, ACORN was the driving force behind a 1995 regulatory revision pushed through by the Clinton Administration that greatly expanded the CRA (Community Reinvestment Act) and laid the groundwork for the Fannie Mae, Freddie Mac borne financial crisis we now confront.
Barack Obama was the attorney representing ACORN in this effort. With this new authority, ACORN used its subsidiary, ACORN Housing, to promote subprime loans more aggressively.
-------------------------
In 1999, under pressure from the Clinton administration, Fannie Mae, the nation's largest home mortgage underwriter, relaxed credit requirements on the loans it would purchase from other banks and lenders, hoping that easing these restrictions would result in increased loan availability for minority and low-income buyers.
------------------------------------
Rham Emmanuel, Former OBAMA CHIEF OF STAFF and Jamie Gorelick were employees and directors of Fannie and freddie took between the two took out over $20 million. Gorelick was appointed Vice Chairman of Federal National Mortgage Association (Fannie Mae) from 1997 to 2003. She served alongside former Clinton Administration official Franklin Raines During that period, Fannie Mae developed a $10 billion accounting scandal. Gorelick took home $26.46 million in the period from 1998 to 2002 (she left in that year, so she wasn’t there for the entire period under investigation).
Of that figure, nearly $15 million came from EPS bonuses.
and while serving as Deputy Attorney General under Bill Clinton, Gorelick spoke in favor of banning the use of strong encryption and called for a key escrow system to allow the Federal government access to encrypted communication.

Top 3 politicians receiving campaign funds from Fannie/Freddie...
Dodd, Christopher S D-CT $133,900
Kerry, JohnS D-MA $111,000
Obama, Barack S D-IL $105,849

B) Banks made the loans BUT under pressure from FDIC that considered rightfully so
the toxicity "securitized" and resold WITH Fannie Freddie FEDERAL Guarantee..
Oct. 23,2008 (Bloomberg) --
Fannie Mae and Freddie Mac have an ``effective'' federal guarantee, not the
"full faith and credit'' of the U.S. government, Federal Housing Finance Agency
Director James Lockhart said after the hearing.
That does give them effectively a guarantee of the U.S. government.''
Lockhart's Fannie, Freddie Guarantee Remarks Stir Up Confusion - Bloomberg

C) So investors bought these toxic securities mortgages BACKED by Fannie/Freddie that
in turn was GUARANTEED by the Federal Govt.

WHERE is the fraud when investors knowingly bought "bad" mortgages knowing the Federal Govt. would lend them the money?
* House Financial Services Committee Chairman Barney Frank (D-MA) criticized
the President's warning saying:
"these two entities - Fannie Mae and Freddie Mac - are not facing any kind of
financial crisis .The more people exaggerate these problems, the more
pressure there is on these companies, the less we will see in terms of
affordable housing."..
(Stephen Labaton, "New Agency Proposed To Oversee Freddie Mac And Fannie
Mae," New York Times, 9/11/03)

* Senate Committee on Banking, Housing and Urban Affairs Chairman
Christopher Dodd also ignored the President's warnings and called on
him to "immediately reconsider his ill-advised" position. (Eric Dash,
"Fannie Mae's Offer To Help Ease Credit Squeeze Is Rejected,
As Critics Complain Of Opportunism," New York Times, 8/11/07)


"Fraud"???

Did I miss where you used the word "derivatives"? Without that single word, the situation you describe is totally inaccurate. Find out how derivatives fits into the scandal and you find out the truth. "Good Luck".

 

[occupied]

Things like this usually start small, in this case it started with a bunch of gullible investors (the best kind) from India and China wanting very badly to invest in our already saturated mortgage industry. Everything flowed from this mountain of money wanting to be invested, the lie of bond ratings, giving mortgages to people who could not afford them or to speculators that counted on the housing bubble to continue to inflate. At some level everyone involved knew it was bound to collapse, look to those who personally cashed out before the crash yet continued to sell worthless crap, there's your culprits.

 

[Mr. Shaman]

Was there a massive fraud? Yes. Why no criminal charges? Because the guys who were involved are also running the country.......

Ah, yes......the brainless, Bubblehead-perspective.....

....RATING$-AGENCIE$....

....are (now) running our Country.

 

[Mr. Shaman]

I am NOT an expert in Wall Street, mortgages, much less "criminal charges for Wall St. meltdown fraud"!
I am an expert in Medicare though but this NOT the point of the thread.

I saw the "60 Minutes" piece about two high-ranking financial whistleblowers say they tried to warn their superiors about defective and even fraudulent mortgages

But even after that, I don't understand the "fraud" part.

[ame=http://www.youtube.com/watch?v=rKKvMJeBBSA]Q&A: Leslie & Andrew Cockburn - YouTube[/ame]​

 

[kyzr]

Was there a massive fraud? Yes. Why no criminal charges? Because the guys who were involved are also running the country.......

Ah, yes......the brainless, Bubblehead-perspective.....

....RATING$-AGENCIES$....

....are (now) running our Country.

​

Then stop borrowing so much money!!
If we balanced the Budget we wouldn't care about the rating agencies. You would be better served trying to posit how to cut spending and cutting the Debt & Deficit.​

 

[Mr. Shaman]

Not only guarantees, but creation of the scheme to bundle and sell mortgages in a package containing both good and bad loans. This was the carrot leading the financial ass.

I have said, more than once, that what happened was what economists called a 'perfect storm'... meaning, that there were several unconnected 'strings' of issues.... each one open to massive problems. Some of those strings were international issues - such as the massive long term economic imbalance between countries. Some, such as the US, were consuming too much and producing too little. Others, such as China, were consuming too little and producing too much. That imbalance was the fault line.

OK. So, imagine if you will: a global economic 'fault line' - everyone (economists, governments etc) knows it is there but, apart from the odd local tremor... it's pretty stable.

Then, you have (not just in the US but ours was by far the largest).... a financial 'problem'. That problem - let's take the mortgage market since that's what this thread is about - would have been a local tremor (confined to the US.... and probably would have been a blip - not a long term clusterfuck).... except.... because of the 'fault line', that tremor shook and kept shaking... and it caused other fault lines to appear... and then a few more... and hey presto.... a perfect financial storm that spread around the world.

It is fine and dandy to take one of those little fault lines and make it into the San Adreas fault but, if it had not been for that global imbalance, none of it would have been as bad as it has been.

Bullshit!!!!!

September 16, 2008
[ame=http://www.youtube.com/watch?v=lUnIyH1jVhw]Cramer on AIG Disaster - YouTube[/ame]

Stupid fuckin' Bubbleheads....​

 

[Intense]

you people are insane

In your Imagination, Everyone but you is Insane. Time for your pill and your nap.

 

[Mr. Shaman]

Was there a massive fraud? Yes. Why no criminal charges? Because the guys who were involved are also running the country.......

Ah, yes......the brainless, Bubblehead-perspective.....

....RATING$-AGENCIES$....

....are (now) running our Country.

​

Then stop borrowing so much money!!
If we balanced the Budget we wouldn't care about the rating agencies.​

Riiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiight.....all-of-a-sudden....with a balanced-budget.....there'd be no need to rate investment-opportunities!!

 

[Intense]

Not only guarantees, but creation of the scheme to bundle and sell mortgages in a package containing both good and bad loans. This was the carrot leading the financial ass.

I have said, more than once, that what happened was what economists called a 'perfect storm'... meaning, that there were several unconnected 'strings' of issues.... each one open to massive problems. Some of those strings were international issues - such as the massive long term economic imbalance between countries. Some, such as the US, were consuming too much and producing too little. Others, such as China, were consuming too little and producing too much. That imbalance was the fault line.

OK. So, imagine if you will: a global economic 'fault line' - everyone (economists, governments etc) knows it is there but, apart from the odd local tremor... it's pretty stable.

Then, you have (not just in the US but ours was by far the largest).... a financial 'problem'. That problem - let's take the mortgage market since that's what this thread is about - would have been a local tremor (confined to the US.... and probably would have been a blip - not a long term clusterfuck).... except.... because of the 'fault line', that tremor shook and kept shaking... and it caused other fault lines to appear... and then a few more... and hey presto.... a perfect financial storm that spread around the world.

It is fine and dandy to take one of those little fault lines and make it into the San Adreas fault but, if it had not been for that global imbalance, none of it would have been as bad as it has been.

Bullshit!!!!!

September 16, 2008
[ame=http://www.youtube.com/watch?v=lUnIyH1jVhw]Cramer on AIG Disaster - YouTube[/ame]

Stupid fuckin' Bubbleheads....​

Funny one. I saw Cramer try to tell the truth once. His Producers came down on him so fast, his balls still hurt. I'm sure he will never make that mistake again.

 

[Mr. Shaman]

Many new that these were going to fail and bet against them, while selling them. That's fraud. But, your post does not even begin to capture the issue of the mortgage crisis. There was an expansion of credit with artificially low rates. Which signaled to lenders that people who might not otherwise qualify, could do so with nothing down on variable rate mortgages. This policy of "everyone should have the chance to own a home", was a Bush doctrine. If you want to blame someone, blame the central banksters. The fun starts there.

Actually, the "fun" started with Phil Gramm's hu$tle......

[ame=http://www.youtube.com/watch?v=rKKvMJeBBSA]Q&A: Leslie & Andrew Cockburn - YouTube[/ame]

See: 5:00 thru 12:00​

 

[Mr. Shaman]

I have said, more than once, that what happened was what economists called a 'perfect storm'... meaning, that there were several unconnected 'strings' of issues.... each one open to massive problems. Some of those strings were international issues - such as the massive long term economic imbalance between countries. Some, such as the US, were consuming too much and producing too little. Others, such as China, were consuming too little and producing too much. That imbalance was the fault line.

OK. So, imagine if you will: a global economic 'fault line' - everyone (economists, governments etc) knows it is there but, apart from the odd local tremor... it's pretty stable.

Then, you have (not just in the US but ours was by far the largest).... a financial 'problem'. That problem - let's take the mortgage market since that's what this thread is about - would have been a local tremor (confined to the US.... and probably would have been a blip - not a long term clusterfuck).... except.... because of the 'fault line', that tremor shook and kept shaking... and it caused other fault lines to appear... and then a few more... and hey presto.... a perfect financial storm that spread around the world.

It is fine and dandy to take one of those little fault lines and make it into the San Adreas fault but, if it had not been for that global imbalance, none of it would have been as bad as it has been.

Bullshit!!!!!

September 16, 2008
[ame=http://www.youtube.com/watch?v=lUnIyH1jVhw]Cramer on AIG Disaster - YouTube[/ame]

Stupid fuckin' Bubbleheads....​

Funny one. I saw Cramer try to tell the truth once. His Producers came down on him so fast, his balls still hurt. I'm sure he will never make that mistake again.

That doesn't detract from the fact AIG had WORLD-WIDE INFLUENCE on economic-stability!!!

When they insured the unregulated-hu$tles that Phil Gramm created.....there was NO WAY to avoid the meltdown going GLOBAL!!!!!​

 

[Intense]

Bullshit!!!!!

September 16, 2008
Cramer on AIG Disaster - YouTube

Stupid fuckin' Bubbleheads....​

Funny one. I saw Cramer try to tell the truth once. His Producers came down on him so fast, his balls still hurt. I'm sure he will never make that mistake again.

That doesn't detract from the fact AIG had WORLD-WIDE INFLUENCE on economic-stability!!!

When they insured the unregulated-hu$tles that Phil Gramm created.....there was NO WAY to avoid the meltdown going GLOBAL!!!!!​

News Flash. I don't support AIG. I do not support the Bailouts. I do support the chips falling where they may. I do support restructure. I do support a full audit of the Federal Reserve. Now bend over.

 

[Cuyo]

I listened to the senate probe into Goldman Sachs last year for hours as I was outside painting my fence, and although I think anyone would agree they acted despicably in many regards, I wasn't convinced at that time that they were actually guilty of a crime or even an actionable tort.

Our criminal code simply doesn't de-legitimize fraud by false pretenses under most circumstances. If you signed at the X, it doesn't matter if you understood it, or in many cases, what the motives were of the people who put it in front of you.

This is what CFPB is aimed at changing. It's hard for me to fathom why anyone would be against it... Unless said someone was either 1.) A huge benefactor of the status quo or 2.) Tricked by a massive PR campaign perpetrated by said benefactors, or politicians advocating on behalf of said benefactors.

 

[Intense]

I listened to the senate probe into Goldman Sachs last year for hours as I was outside painting my fence, and although I think anyone would agree they acted despicably in many regards, I wasn't convinced at that time that they were actually guilty of a crime or even an actionable tort.

Our criminal code simply doesn't de-legitimize fraud by false pretenses under most circumstances. If you signed at the X, it doesn't matter if you understood it, or in many cases, what the motives were of the people who put it in front of you.

This is what CFPB is aimed at changing. It's hard for me to fathom why anyone would be against it... Unless said someone was either 1.) A huge benefactor of the status quo or 2.) Tricked by a massive PR campaign perpetrated by said benefactors, or politicians advocating on behalf of said benefactors.

Or,
3) Bought and Paid for.

 

[Toro]

See this is one of the reasons we have such a mess today!
People with a little information passed to them by BIASED MSM form opinions which influence congress to pass laws that DO MORE HARM!!!

CRA perfect example of "unintended consequences"!
Then you have banks forced to clean up i.e. FDIC.. toxic loans!
Banks complain what can they do? Fannie/Freddie BACKED by the govt GUARANTEE the buyers!
TARP!

Citing biases and mis-information of others then referencing the CRA as a cause for the Financial Crisis is hilariously ironic.

ONCE again hyperbole, jumping to conclusions seem to be what ignorant people do!
I simply pointed out that specifically the Democrat biased MSM defended what they thought was the "populist" position.. i.e. having the "poor" downtrodden, be able to buy homes that they would never pay for!
I mean look who at who were the champions.. Obama/Clinton/Dodd/Frank.. a list of pandering poverty pimps!
And then when the banks tried to comply with FDIC in cleaning up toxic loans their recourse was Fannie/Freddie.. again with complicity from Obama/Dodd/Kerry top 3 receivers from Fannie/Freddie .. these GSEs GUARANTEED the toxic portfolios!

But you poverty pimps still have to defend the "poor" the "unqualified" of who many were flippers i.e. bought two,three properties KNOWING they were going to default and cleaned up .. probably donating some of the profits to the Democrats via ACORN!

This was the scheme du jour by Democrat poverty pimps!
1) protests with MSM assistance banks that caved to the bad loans.
2) Bad /unqualified borrowers buy 2,3, multiply properties and with plunder
3) donate to Acorn which gets more unqualified undocumented people register as Dems!
4) More Dem voters/bogus bad borrowers complete the cycle!

And all the while honest, people making their mortgage payments, paying their taxes are supporting this GRIFT and GRAFT!
Unbeknownst to these honest people their local/national MSM supporting Democrats NEVER connect the dots..
Acorn/Obama/protestors ..>>.
... protests banks till banks lend to unqualified borrowers...>>
...>>>borrowers donate to Acorn that registers more Democrats...>>
...>>>Democrats -Frank/Dodd/Clinton/Kerry/Obama say NOTHING wrong with Fannie...>>
..>>.Fannie/Freddie guarantee with Federal funds toxic loans..>>
...who pays??? >>>
Honest hard working mortgage paying tax paying Americans who blame Wall Street/ and big bad banks ... why... Because the biased MSM won't Connect the dots...

Those are the FACTS and the model for this..National Motor Voter Bill.. which most
of you DON"T seem to remember what that did in:
1) creating more illegal river crossing democrats..
2) rising health care costs ... going to hospitals and due to 1986 EMTALA..
3) Now we have Obamacare once again.. a Democrat driven voter supposedly helpful
to the "poor" down trodden.. offered by Poverty PIMPS' DEMOCRATS!

rofl

I stand by my original statement.

Citing biases and mis-information of others then referencing the - whatever the fuck it is you're babbling about - as a cause for the Financial Crisis is hilariously ironic.

 

[healthmyths]

I am NOT an expert in Wall Street, mortgages, much less "criminal charges for Wall St. meltdown fraud"!
I am an expert in Medicare though but this NOT the point of the thread.

For YOU EXPERTS in "Wall St.", Mortgages, and (what ?) "meltdown".. please correct the following dots....

I saw the "60 Minutes" piece about two high-ranking financial whistleblowers say they tried to warn their superiors about defective and even fraudulent mortgages

Read more: http://www.cbsnews.com/video/watch/?id=7390540n#ixzz1jX2lO1LF


But even after that, I don't understand the "fraud" part.

A) Banks forced by Acorn among other protesters in 1995 started granting loans to
unqualified people. Knowing that if they didn't the banks would be picketed and the
biased MSM write totally inaccurate stories..

in the Buycks-Roberson v. Citibank Fed. Sav. Bank, 1994 suit against redlining.
Most significant of all, ACORN was the driving force behind a 1995 regulatory revision pushed through by the Clinton Administration that greatly expanded the CRA (Community Reinvestment Act) and laid the groundwork for the Fannie Mae, Freddie Mac borne financial crisis we now confront.
Barack Obama was the attorney representing ACORN in this effort. With this new authority, ACORN used its subsidiary, ACORN Housing, to promote subprime loans more aggressively.
-------------------------
In 1999, under pressure from the Clinton administration, Fannie Mae, the nation's largest home mortgage underwriter, relaxed credit requirements on the loans it would purchase from other banks and lenders, hoping that easing these restrictions would result in increased loan availability for minority and low-income buyers.
------------------------------------
Rham Emmanuel, Former OBAMA CHIEF OF STAFF and Jamie Gorelick were employees and directors of Fannie and freddie took between the two took out over $20 million. Gorelick was appointed Vice Chairman of Federal National Mortgage Association (Fannie Mae) from 1997 to 2003. She served alongside former Clinton Administration official Franklin Raines During that period, Fannie Mae developed a $10 billion accounting scandal. Gorelick took home $26.46 million in the period from 1998 to 2002 (she left in that year, so she wasn’t there for the entire period under investigation).
Of that figure, nearly $15 million came from EPS bonuses.
and while serving as Deputy Attorney General under Bill Clinton, Gorelick spoke in favor of banning the use of strong encryption and called for a key escrow system to allow the Federal government access to encrypted communication.

Top 3 politicians receiving campaign funds from Fannie/Freddie...
Dodd, Christopher S D-CT $133,900
Kerry, JohnS D-MA $111,000
Obama, Barack S D-IL $105,849

B) Banks made the loans BUT under pressure from FDIC that considered rightfully so
the toxicity "securitized" and resold WITH Fannie Freddie FEDERAL Guarantee..
Oct. 23,2008 (Bloomberg) --
Fannie Mae and Freddie Mac have an ``effective'' federal guarantee, not the
"full faith and credit'' of the U.S. government, Federal Housing Finance Agency
Director James Lockhart said after the hearing.
That does give them effectively a guarantee of the U.S. government.''
Lockhart's Fannie, Freddie Guarantee Remarks Stir Up Confusion - Bloomberg

C) So investors bought these toxic securities mortgages BACKED by Fannie/Freddie that
in turn was GUARANTEED by the Federal Govt.

WHERE is the fraud when investors knowingly bought "bad" mortgages knowing the Federal Govt. would lend them the money?
* House Financial Services Committee Chairman Barney Frank (D-MA) criticized
the President's warning saying:
"these two entities - Fannie Mae and Freddie Mac - are not facing any kind of
financial crisis .The more people exaggerate these problems, the more
pressure there is on these companies, the less we will see in terms of
affordable housing."..
(Stephen Labaton, "New Agency Proposed To Oversee Freddie Mac And Fannie
Mae," New York Times, 9/11/03)

* Senate Committee on Banking, Housing and Urban Affairs Chairman
Christopher Dodd also ignored the President's warnings and called on
him to "immediately reconsider his ill-advised" position. (Eric Dash,
"Fannie Mae's Offer To Help Ease Credit Squeeze Is Rejected,
As Critics Complain Of Opportunism," New York Times, 8/11/07)


"Fraud"???

Did I miss where you used the word "derivatives"? Without that single word, the situation you describe is totally inaccurate. Find out how derivatives fits into the scandal and you find out the truth. "Good Luck".

That's easy!!!
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Derivatives

A derivative is a financial contract whose value is derived from the performance of underlying market factors, such as interest rates, currency exchange rates, and commodity, credit, and equity prices. Derivative transactions include an assortment of financial contracts, including structured debt obligations and deposits, swaps, futures, options, caps, floors, collars, forwards, and various combinations thereof.

OCC: Derivatives

From the OCC’s Quarterly Report on Bank Trading and Derivatives
Page 9

The notional amount of derivatives contracts held by insured U.S. commercial banks in the third quarter fell by $1.4 trillion (0.6%) to $248 trillion from the second quarter.

Point is I was simplifying in for simpletons!

Derivatives though are the by product!
NOT The cause!
They came about as a result of political decisions to encourage unqualified borrowers
i.e. Democrat poor pimps and this market was greatly expanded because of the risk of unqualified democrat borrowers!

Including derivatives as part of the mess just expands the issue ... and the issue is political meddling all for political power to Democrats just exacerbated the mess!

 

[TakeAStepBack]

The OCC derivatives market is somewhere in the ballpark of 600 trillion.

That said,

Housing Bubble: Myth or Reality?
Mises Daily: Tuesday, March 04, 2003 by Frank Shostak

Federal Reserve Chairman Alan Greenspan said on Thursday, during questioning by the Senate's special committee on aging, that he does not believe that a housing price bubble exists on a national level in the United States.

"The notion of a bubble bursting and the whole price level coming down seems to me as far as a national nationwide phenomenon, is really quite unlikely," Greenspan said. He does say that it is unrealistic to believe that housing prices will increase at the current rate, but as for a bubble, he says no way.

Is he right? To provide an answer to this one needs to establish, or define, exactly what a bubble is.

We can define a bubble as activities that spring up on the back of loose monetary policy of the central bank. In other words, in the absence of monetary pumping these activities would not emerge. Since bubble activities are not self-funded, their emergence must come at the expense of various self-funded or productive activities. This means that less real funding is left for productive activities, which in turn undermines those activities. In short, monetary pumping gives rise to the misallocation of resources, which as a rule manifests itself through a relative increase in non-productive activities against productive activities.

When new money is created, its effect is not felt instantaneously across all market sectors. The effect moves from one individual to another individual and thus from one market to another market. Monetary pumping generates bubble activities across all markets as time goes by. Once, however, the central bank tightens its monetary stance, i.e. reduces monetary pumping, this undermines various bubble activities. The bubble bursts. Since monetary pumping generates bubble activities across all markets, obviously the eventual bursting of the bubbles will permeate all markets—including the housing market.

As a rule the act of bursting bubbles, or the liquidation of nonproductive activities, is set in motion by a tighter monetary stance of the central bank. A tighter stance purges various nonproductive activities thereby eliminating past excesses, which in turn lowers the ratio of nonproductive-to-productive activities, so to speak. In short, a tighter stance brings harmony to the structure of production and sets the foundation for a sustainable economic revival. A situation however, can occur where the bursting of bubbles takes place despite an easy stance by the central bank. This can emerge when the pool of real funding begins to shrink.

Historically, between 1970 to 1994 there was a 12-month lag between changes in the federal funds rate and its effect on industrial production (see chart). Since 1995 onward, the inverse correlation between the lagged fed funds rate and industrial activity ceased to exist. We suggest that this has something to do with the possibility that the pool of real funding is in trouble. In other words, as long as the pool of real funding is growing the loose monetary policies of the central bank appear to "work". This is because the nonproductive activities supported by loose monetary policies masquerade as wealth generating activities.

However, this illusion is shattered once the pool of real funding stops growing. There is the possibility that this is what may be taking place at present. Despite the aggressive lowering of the fed funds rate since the end of 2000, industrial activity in relation to its long term trend has remained depressed (see chart).


We suspect that the prolonged monetary abuses of the Fed may have severely undermined the ability of the economy to generate sustainable real production in the future. In short, loose monetary policy sets in motion consumption that is not supported by a corresponding production and thereby dilutes the pool of real funding.

A major increase in US monetary pumping began in the early 80's with the advent of financial deregulation, which, for all its merits in permitting financial entrepreneurship, also removed various restrictions on banks' lending "out of thin air." The quantity of money AMS in relation to the trend between 1959–1979; i.e., the trend prior to financial deregulation, can assist in assessing the magnitude of monetary pumping since 1980 onwards.

Thus in December 2002, money AMS stood at 181% above the trend (see chart). This massive monetary expansion has been accompanied by a steep downtrend in the federal funds rate. From 17.61% reached in April 1980, the federal funds rate had collapsed to 1.25% as of February this year (see chart).

If the pool of real funding is in trouble at present then this is likely to undermine various markets including the housing market. Moreover, the more aggressive the Fed's loose stance is, the worse it is for the productive capacity of the economy. This in turn raises the likelihood that the liquidation of past excesses is likely to be imposed in earnest this time around.

Observe that the likely burst of the housing market bubble is on account of the decline in the pool of real funding and not a tighter stance on the part of the Fed. This contradicts the popular view, which holds that as long as the Fed keeps interest rates at low levels the housing market will remain strong.

The magnitude of the housing price bubble is depicted in the following chart in terms of the median price of new houses in relation to the historical trend between 1963–1979. In this regard the median price stood at 73% above the trend in December 2002 (see chart).


There are already signs that the housing market may not be far from its peak. Purchases of new homes dipped to their lowest level in a year in January. The Commerce Department said new home sales fell to a seasonally adjusted annual rate of 914,000 units in January, the slowest pace since January 2002. The percentage drop, at 15.1 percent, was the biggest one-month decline in nine years.

Our monetary analysis raises the likelihood that the cyclical component of home sales is likely to remain under pressure (see chart). Furthermore, year-on-year, the median price of new houses fell by 2.6% in January after rising by 6.7% in the previous month (see chart).


Although commercial bank real estate loans remain buoyant, the likely weakening of the housing market will put a brake on the growth momentum of these loans (see chart). This in turn is likely to weaken the growth momentum of money AMS and further undermine various nonproductive activities. There are some indications that demand for mortgages may be weakening. The MBA mortgage applications index fell by 7.5% in the week ending February 21 from the previous week (see chart). Moreover in the week ending February 19 commercial bank real estate loans fell by almost $10 billion from the previous week.

The link holds the charts embed.

 

[rdean]

I am NOT an expert in Wall Street, mortgages, much less "criminal charges for Wall St. meltdown fraud"!
I am an expert in Medicare though but this NOT the point of the thread.

For YOU EXPERTS in "Wall St.", Mortgages, and (what ?) "meltdown".. please correct the following dots....

I saw the "60 Minutes" piece about two high-ranking financial whistleblowers say they tried to warn their superiors about defective and even fraudulent mortgages

Read more: http://www.cbsnews.com/video/watch/?id=7390540n#ixzz1jX2lO1LF


But even after that, I don't understand the "fraud" part.

A) Banks forced by Acorn among other protesters in 1995 started granting loans to
unqualified people. Knowing that if they didn't the banks would be picketed and the
biased MSM write totally inaccurate stories..

in the Buycks-Roberson v. Citibank Fed. Sav. Bank, 1994 suit against redlining.
Most significant of all, ACORN was the driving force behind a 1995 regulatory revision pushed through by the Clinton Administration that greatly expanded the CRA (Community Reinvestment Act) and laid the groundwork for the Fannie Mae, Freddie Mac borne financial crisis we now confront.
Barack Obama was the attorney representing ACORN in this effort. With this new authority, ACORN used its subsidiary, ACORN Housing, to promote subprime loans more aggressively.
-------------------------
In 1999, under pressure from the Clinton administration, Fannie Mae, the nation's largest home mortgage underwriter, relaxed credit requirements on the loans it would purchase from other banks and lenders, hoping that easing these restrictions would result in increased loan availability for minority and low-income buyers.
------------------------------------
Rham Emmanuel, Former OBAMA CHIEF OF STAFF and Jamie Gorelick were employees and directors of Fannie and freddie took between the two took out over $20 million. Gorelick was appointed Vice Chairman of Federal National Mortgage Association (Fannie Mae) from 1997 to 2003. She served alongside former Clinton Administration official Franklin Raines During that period, Fannie Mae developed a $10 billion accounting scandal. Gorelick took home $26.46 million in the period from 1998 to 2002 (she left in that year, so she wasn’t there for the entire period under investigation).
Of that figure, nearly $15 million came from EPS bonuses.
and while serving as Deputy Attorney General under Bill Clinton, Gorelick spoke in favor of banning the use of strong encryption and called for a key escrow system to allow the Federal government access to encrypted communication.

Top 3 politicians receiving campaign funds from Fannie/Freddie...
Dodd, Christopher S D-CT $133,900
Kerry, JohnS D-MA $111,000
Obama, Barack S D-IL $105,849

B) Banks made the loans BUT under pressure from FDIC that considered rightfully so
the toxicity "securitized" and resold WITH Fannie Freddie FEDERAL Guarantee..
Oct. 23,2008 (Bloomberg) --
Fannie Mae and Freddie Mac have an ``effective'' federal guarantee, not the
"full faith and credit'' of the U.S. government, Federal Housing Finance Agency
Director James Lockhart said after the hearing.
That does give them effectively a guarantee of the U.S. government.''
Lockhart's Fannie, Freddie Guarantee Remarks Stir Up Confusion - Bloomberg

C) So investors bought these toxic securities mortgages BACKED by Fannie/Freddie that
in turn was GUARANTEED by the Federal Govt.

WHERE is the fraud when investors knowingly bought "bad" mortgages knowing the Federal Govt. would lend them the money?
* House Financial Services Committee Chairman Barney Frank (D-MA) criticized
the President's warning saying:
"these two entities - Fannie Mae and Freddie Mac - are not facing any kind of
financial crisis .The more people exaggerate these problems, the more
pressure there is on these companies, the less we will see in terms of
affordable housing."..
(Stephen Labaton, "New Agency Proposed To Oversee Freddie Mac And Fannie
Mae," New York Times, 9/11/03)

* Senate Committee on Banking, Housing and Urban Affairs Chairman
Christopher Dodd also ignored the President's warnings and called on
him to "immediately reconsider his ill-advised" position. (Eric Dash,
"Fannie Mae's Offer To Help Ease Credit Squeeze Is Rejected,
As Critics Complain Of Opportunism," New York Times, 8/11/07)


"Fraud"???

Did I miss where you used the word "derivatives"? Without that single word, the situation you describe is totally inaccurate. Find out how derivatives fits into the scandal and you find out the truth. "Good Luck".

That's easy!!!
Management

* Bank-owned Life Insurance (BOLI)
* Interest Rate Risk
* Investment Securities
* Liquidity

click to expand or collapse
Financial Markets

* Counterparty Risk
* Securitization
* Trading

BankNet

BankNet
More resources for national banks

Derivatives

A derivative is a financial contract whose value is derived from the performance of underlying market factors, such as interest rates, currency exchange rates, and commodity, credit, and equity prices. Derivative transactions include an assortment of financial contracts, including structured debt obligations and deposits, swaps, futures, options, caps, floors, collars, forwards, and various combinations thereof.

OCC: Derivatives

From the OCC’s Quarterly Report on Bank Trading and Derivatives
Page 9

The notional amount of derivatives contracts held by insured U.S. commercial banks in the third quarter fell by $1.4 trillion (0.6%) to $248 trillion from the second quarter.

Point is I was simplifying in for simpletons!

Derivatives though are the by product!
NOT The cause!
They came about as a result of political decisions to encourage unqualified borrowers
i.e. Democrat poor pimps and this market was greatly expanded because of the risk of unqualified democrat borrowers!

Including derivatives as part of the mess just expands the issue ... and the issue is political meddling all for political power to Democrats just exacerbated the mess!

I know what derivatives are, but notice how you couldn't fit in "Freddie/Fannie"? That's because more than 70% of the mortgage market was moved to Wall Street away from Freddie/Fannie. It was Wall Street that bundled mortgages together, sold them as "securities", and insured them. They knew these mortgages were worthless. The reason none of this was illegal is because of deregulation.

Then those insurance companies went bankrupt because they had to pay out all that insurance money, which, of course, is where the term "derivatives" fits in. Where does Freddie/Fannie fit in? Well, they had problems of their own, but the meltdown was all "Wall Street". It's very recent history. Difficult to rewrite in so short a time.

 

[healthmyths]

Did I miss where you used the word "derivatives"? Without that single word, the situation you describe is totally inaccurate. Find out how derivatives fits into the scandal and you find out the truth. "Good Luck".

That's easy!!!
Management

* Bank-owned Life Insurance (BOLI)
* Interest Rate Risk
* Investment Securities
* Liquidity

click to expand or collapse
Financial Markets

* Counterparty Risk
* Securitization
* Trading

BankNet

BankNet
More resources for national banks

Derivatives

A derivative is a financial contract whose value is derived from the performance of underlying market factors, such as interest rates, currency exchange rates, and commodity, credit, and equity prices. Derivative transactions include an assortment of financial contracts, including structured debt obligations and deposits, swaps, futures, options, caps, floors, collars, forwards, and various combinations thereof.

OCC: Derivatives

From the OCC’s Quarterly Report on Bank Trading and Derivatives
Page 9

The notional amount of derivatives contracts held by insured U.S. commercial banks in the third quarter fell by $1.4 trillion (0.6%) to $248 trillion from the second quarter.

Point is I was simplifying in for simpletons!

Derivatives though are the by product!
NOT The cause!
They came about as a result of political decisions to encourage unqualified borrowers
i.e. Democrat poor pimps and this market was greatly expanded because of the risk of unqualified democrat borrowers!

Including derivatives as part of the mess just expands the issue ... and the issue is political meddling all for political power to Democrats just exacerbated the mess!

I know what derivatives are, but notice how you couldn't fit in "Freddie/Fannie"? That's because more than 70% of the mortgage market was moved to Wall Street away from Freddie/Fannie. It was Wall Street that bundled mortgages together, sold them as "securities", and insured them. They knew these mortgages were worthless. The reason none of this was illegal is because of deregulation.

Then those insurance companies went bankrupt because they had to pay out all that insurance money, which, of course, is where the term "derivatives" fits in. Where does Freddie/Fannie fit in? Well, they had problems of their own, but the meltdown was all "Wall Street". It's very recent history. Difficult to rewrite in so short a time.

Oct. 23,2008 (Bloomberg) --
Fannie Mae and Freddie Mac have an ``effective'' federal guarantee, not the
"full faith and credit'' of the U.S. government, Federal Housing Finance Agency
Director James Lockhart said after the hearing.
That does give them effectively a guarantee of the U.S. government.''
Lockhart's Fannie, Freddie Guarantee Remarks Stir Up Confusion - Bloomberg