CDZ Video on the 2008 Mrtgage Market Collapse and How it was Fixed

[FA_Q2]

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

I agree 110%. Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

And derivatives are simply insane.

Oh it is much worse than that. It isn't a Casino.
The key word here.... LEVERAGE.
And the government gave these investment banks taxpayer dollars, virtually for free, $trillions over several decades.
What is leverage?
Well let's say you know some good properties, that are sure to turn a profit. They are all worth $100 million, potential profit is $20 million.
But you only have $1 million. If you get investors to line up with you... you have divide that $20 million between all of them, and potentially they will get more of it than you since it is their money you are risking.
But wait...
There is SUPER FEDMAN to the rescue... "we will give you taxpayer money so you don't have to get investors!!".... Yay!!! ... GO SUPER FEDMAN!!!
So you take $99 million of taxpayer dollars at 1%... you made $20 million, and only have to give the government back $990,000 in interest.
So you keep $19 million.
LET'S DO THIS AGAIN!!!
And again, and again, and again.
And that is still happening today...and while Obama was President it happened at record amounts.

I assume you mean Bush, not Obama.
.

Oh hell no.
All of this began before Bush. And really Bush, himself, had little to do with it. He knew nothing. If there was ever a manchurian President, it was Bush.
Bush would sign whatever Cheney, advisors, and the FED wanted him to because he figured they knew what they were doing.
Obama was different. I absolutely believe he knew what had happened in the past, as equally well as what happened while he was President. Including providing $70 Billion PER MONTH in taxpayer dollars for direct debt buyout including the debt holders profits, leverage money and slush money. The result was record rise and record profits for the VERY SAME PEOPLE who created the mortgage crises. Meanwhile people lost everything, they got nothing. But the people who held the mortgages got it all. Including 100% of their profits.

Obama was different. I absolutely believe he knew what had happened in the past, as equally well as what happened while he was President. Including providing $70 Billion PER MONTH in taxpayer dollars for direct debt buyout including the debt holders profits, leverage money and slush money.

Nobody used taxpayer dollars for any "direct debt buyout" under Obama.

But the people who held the mortgages got it all. Including 100% of their profits.

Banks lost hundreds of billions of dollars on crappy mortgages.

I seem to be missing the hundreds of billions that were missing in profits.

The losses in 2008 did not even take half the profits of the year before or after. Those banks that went out of burliness (like WAMU) did so because they were over leveraged in mortgages, most of them not crappy at all but rather because crappy when the entire market collapsed. Of course, JP Morgan simply bought WAMU and became even larger.

 

[Toddsterpatriot]

Except it wasn't fixed. The root problem is still the 'Too Big to Fail Banks', and they still stand; how much will it cost tax payers to save them from their freaking stupidity another time?

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

That will not fix it. The only thing that will fix it is letting them stand. We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

I would not mind banks having to actually hold the debt they incur though rather than repackaging it and selling it off. Particularly to the government.

We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

Exactly!!
And never mind that cascading bank failures would have cost trillions in actual losses, compared to tens of billions in profits thru bank TARP.

What kind of shit are you talking about? Tens of $billions in profit.
After all said and done the balance of the buy backs was about $4.3 billion, or a 0.6 percent return. Counting in inflation the taxpayers lost money.
Nothing changes the FACT that 10 MILLION people lost their homes, TELL THEM THEY MADE A PROFIT MORON!.. while the central banks were not only protected from what would have been their $Billions in losses, they were bailed out...and allowed to keep the profits off of some of those very homes. THEN they were given $billions and $billions and $billions of leverage money so they could boost the markets.
AND... nothing changes the fact that the wealth gap grew at a faster pace and wider gap under Obama than any other time in history. While 10,000,000 people lost everything. The very people that caused then to lose everything made $millions in profits and bonuses in the same time period.

What kind of shit are you talking about? Tens of $billions in profit.

I'm talking about finance, banking and history. Sorry you know so little about them.

After all said and done the balance of the buy backs was about $4.3 billion, or a 0.6 percent return

Buy backs? I'm talking, specifically, about bank TARP. It was hugely profitable. And it worked.

Nothing changes the FACT that 10 MILLION people lost their homes,

Yup. It hurts when bubbles pop.

TELL THEM THEY MADE A PROFIT

People who lost homes didn't make a profit, idiot!

while the central banks were not only protected from what would have been their $Billions in losses,

Central banks were protected? What are you babbling about?

 

[FA_Q2]

Except it wasn't fixed. The root problem is still the 'Too Big to Fail Banks', and they still stand; how much will it cost tax payers to save them from their freaking stupidity another time?

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

That will not fix it. The only thing that will fix it is letting them stand. We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

I would not mind banks having to actually hold the debt they incur though rather than repackaging it and selling it off. Particularly to the government.

We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

Exactly!!
And never mind that cascading bank failures would have cost trillions in actual losses, compared to tens of billions in profits thru bank TARP.

Those tens of billions should have been directed elsewhere rather than to the institutions that created the fallout.

Those tens of billions should have been directed elsewhere rather than to the institutions that created the fallout.

Why would that have been better?

Cascading bank failures are no good for anyone.

Because that is how the free market works. You cannot remove inefficient and bad business by telling them that they can do anything they want without repercussions. Capitalism REQUIRES bad business to actually go out of business.

What you have right now is the same exact situation except the banks are now larger and more pervasive. How has that fixed anything at all?

 

[FA_Q2]

The system was in collapse. Moral Hazard was unavoidable.

It should have taught us a lesson, but it clearly didn't.

No, it was not unavoidable. At least not unavoidable in the form of bailing out the banks.

 

[Mac1958]

The system was in collapse. Moral Hazard was unavoidable.

It should have taught us a lesson, but it clearly didn't.

No, it was not unavoidable. At least not unavoidable in the form of bailing out the banks.

Credit was frozen solid. GE was having trouble floating paper to pay its bills. Goldman was teetering. Morgan was teetering. It was all spreading and it was coming down.

There would have been no cash in the ATMs, there would have been no food on the shelves. There would have been a run on every bank in the country.

I can tell you exactly where I was standing when I got SCARED for the first time. It was when I heard that money market funds had "broken the buck", when the entire financial system was collapsing so quickly that a money market share dropped below a dollar. There were no other choices, and it had to be done NOW.

We did what we had to do. It was no time for either ideology or finger-pointing.
.

 

[Toddsterpatriot]

I agree 110%. Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

And derivatives are simply insane.

Oh it is much worse than that. It isn't a Casino.
The key word here.... LEVERAGE.
And the government gave these investment banks taxpayer dollars, virtually for free, $trillions over several decades.
What is leverage?
Well let's say you know some good properties, that are sure to turn a profit. They are all worth $100 million, potential profit is $20 million.
But you only have $1 million. If you get investors to line up with you... you have divide that $20 million between all of them, and potentially they will get more of it than you since it is their money you are risking.
But wait...
There is SUPER FEDMAN to the rescue... "we will give you taxpayer money so you don't have to get investors!!".... Yay!!! ... GO SUPER FEDMAN!!!
So you take $99 million of taxpayer dollars at 1%... you made $20 million, and only have to give the government back $990,000 in interest.
So you keep $19 million.
LET'S DO THIS AGAIN!!!
And again, and again, and again.
And that is still happening today...and while Obama was President it happened at record amounts.

I assume you mean Bush, not Obama.
.

Oh hell no.
All of this began before Bush. And really Bush, himself, had little to do with it. He knew nothing. If there was ever a manchurian President, it was Bush.
Bush would sign whatever Cheney, advisors, and the FED wanted him to because he figured they knew what they were doing.
Obama was different. I absolutely believe he knew what had happened in the past, as equally well as what happened while he was President. Including providing $70 Billion PER MONTH in taxpayer dollars for direct debt buyout including the debt holders profits, leverage money and slush money. The result was record rise and record profits for the VERY SAME PEOPLE who created the mortgage crises. Meanwhile people lost everything, they got nothing. But the people who held the mortgages got it all. Including 100% of their profits.

Obama was different. I absolutely believe he knew what had happened in the past, as equally well as what happened while he was President. Including providing $70 Billion PER MONTH in taxpayer dollars for direct debt buyout including the debt holders profits, leverage money and slush money.

Nobody used taxpayer dollars for any "direct debt buyout" under Obama.

But the people who held the mortgages got it all. Including 100% of their profits.

Banks lost hundreds of billions of dollars on crappy mortgages.

I seem to be missing the hundreds of billions that were missing in profits.

The losses in 2008 did not even take half the profits of the year before or after. Those banks that went out of burliness (like WAMU) did so because they were over leveraged in mortgages, most of them not crappy at all but rather because crappy when the entire market collapsed. Of course, JP Morgan simply bought WAMU and became even larger.

I seem to be missing the hundreds of billions that were missing in profits.

You have a link for that nifty chart?

In the United States banks reported $510 billion in write-downs by the end of 2008, and they face an additional $550 billion in 2009 and 2010, the fund said. In the countries of the euro zone, banks reported just $154 billion in write-downs by the end of last year and still face $750 billion in projected write-downs, the fund said.

I.M.F. Puts Bank Losses From Global Financial Crisis at $4.1 Trillion

 

[Toddsterpatriot]

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

That will not fix it. The only thing that will fix it is letting them stand. We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

I would not mind banks having to actually hold the debt they incur though rather than repackaging it and selling it off. Particularly to the government.

We should have never bailed the banks themselves out. They will change their behavior in a hurry should they actually reap what they sow.

Exactly!!
And never mind that cascading bank failures would have cost trillions in actual losses, compared to tens of billions in profits thru bank TARP.

Those tens of billions should have been directed elsewhere rather than to the institutions that created the fallout.

Those tens of billions should have been directed elsewhere rather than to the institutions that created the fallout.

Why would that have been better?

Cascading bank failures are no good for anyone.

Because that is how the free market works. You cannot remove inefficient and bad business by telling them that they can do anything they want without repercussions. Capitalism REQUIRES bad business to actually go out of business.

What you have right now is the same exact situation except the banks are now larger and more pervasive. How has that fixed anything at all?

You cannot remove inefficient and bad business by telling them that they can do anything they want without repercussions.

And when even prudently run businesses are crushed by panic and a liquidity squeeze?
Let 'em all die?

 

[ding]

PBS did a great series on this the Ascent of Money.

It was a systemic failure. People should have gone to jail.

 

[Toddsterpatriot]

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

I agree 110%. Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

And derivatives are simply insane.

Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

What about mortgages? Should they be allowed to write mortgages?

 

[Mac1958]

What about mortgages? Should they be allowed to write mortgages?

Write mortgages? Sure, banks have almost always done that. Write them using prudent standards, and hold on to them for the duration.

Securitize them into hyper-complicated CMO's and even more hideous CDO's, have them somehow magically blessed with Treasury-level ratings, watch companies like AIG take risk off of everyone's balance sheets by writing CDS's with zero (0) reserve requirements, watch synthetics come in to make a big casino out of everything, and occasionally team up with hedge fund managers like John Paulson to create steaming piles of garbage, sell them to clients, and then bet against them for a few billion in profit?

No. No way. No damn way. No way in hell.
.

 

[Toddsterpatriot]

What about mortgages? Should they be allowed to write mortgages?

Write mortgages? Sure, banks have almost always done that.

Securitize them into hyper-complicated CMO's and even more hideous CDO's, have them somehow magically blessed with Treasury-level ratings, watch companies like AIG take risk off of everyone's balance sheets by writing CDS's with zero (0) reserve requirements, and occasionally team up with hedge fund managers like John Paulson to create steaming piles of garbage, sell them to clients, and then bet against them for a few billion in profit?

No. No way. No damn way.
.

Securitize them into hyper-complicated CMO's and even more hideous CDO's

Slicing crappy mortgages into pieces leaves you with crappy mortgages.

have them somehow magically blessed with Treasury-level ratings,

Yeah, the ratings agencies were awful!

watch companies like AIG take risk off of everyone's balance sheets by writing CDS's with zero (0) reserve requirements

How much did they insure? 1% of the mortgages? Less?

and occasionally team up with hedge fund managers like John Paulson to create steaming piles of garbage, sell them to clients, and then bet against them

You understand how synthetics work, right?

If you sell one, there is no second step needed to "bet against them", right?

 

[Mac1958]

What about mortgages? Should they be allowed to write mortgages?

Write mortgages? Sure, banks have almost always done that.

Securitize them into hyper-complicated CMO's and even more hideous CDO's, have them somehow magically blessed with Treasury-level ratings, watch companies like AIG take risk off of everyone's balance sheets by writing CDS's with zero (0) reserve requirements, and occasionally team up with hedge fund managers like John Paulson to create steaming piles of garbage, sell them to clients, and then bet against them for a few billion in profit?

No. No way. No damn way.
.

Securitize them into hyper-complicated CMO's and even more hideous CDO's

Slicing crappy mortgages into pieces leaves you with crappy mortgages.

have them somehow magically blessed with Treasury-level ratings,

Yeah, the ratings agencies were awful!

watch companies like AIG take risk off of everyone's balance sheets by writing CDS's with zero (0) reserve requirements

How much did they insure? 1% of the mortgages? Less?

and occasionally team up with hedge fund managers like John Paulson to create steaming piles of garbage, sell them to clients, and then bet against them

You understand how synthetics work, right?

If you sell one, there is no second step needed to "bet against them", right?

AIG insured about $80 billion as I recall, a small part of the overall market. But it was more than large enough to take them down, make them go hat in hand to the Feds, and feed the panic and frenzy and exacerbate the entire mess significantly. So the figure could have been any number for what it caused. It wasn't about the number, it was about the timing, the panic, the momentum of the disaster, and the balance sheets of the "insured".

What is your point?
.

 

[Oddball]

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

I agree 110%. Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

And derivatives are simply insane.

Until we go back to money of substance and privatize the creation of credit, the banks will run the entire economy....In fact, that's the point of the Fed and fiat money.

 

[Toddsterpatriot]

What about mortgages? Should they be allowed to write mortgages?

Write mortgages? Sure, banks have almost always done that.

Securitize them into hyper-complicated CMO's and even more hideous CDO's, have them somehow magically blessed with Treasury-level ratings, watch companies like AIG take risk off of everyone's balance sheets by writing CDS's with zero (0) reserve requirements, and occasionally team up with hedge fund managers like John Paulson to create steaming piles of garbage, sell them to clients, and then bet against them for a few billion in profit?

No. No way. No damn way.
.

Securitize them into hyper-complicated CMO's and even more hideous CDO's

Slicing crappy mortgages into pieces leaves you with crappy mortgages.

have them somehow magically blessed with Treasury-level ratings,

Yeah, the ratings agencies were awful!

watch companies like AIG take risk off of everyone's balance sheets by writing CDS's with zero (0) reserve requirements

How much did they insure? 1% of the mortgages? Less?

and occasionally team up with hedge fund managers like John Paulson to create steaming piles of garbage, sell them to clients, and then bet against them

You understand how synthetics work, right?

If you sell one, there is no second step needed to "bet against them", right?

AIG insured about $80 billion as I recall, a small part of the overall market. But it was more than large enough to take them down, make them go hat in hand to the Feds, and feed the panic and frenzy and exacerbate the entire mess significantly. So the figure could have been any number for what it caused. It wasn't about the number, it was about the timing, the panic, the momentum of the disaster, and the balance sheets of the "insured".

What is your point?
.

AIG insured about $80 billion as I recall, a small part of the overall market. But it was more than large enough to take them down,

Yes, it took AIG down like Hillary at a 9/11 memorial.
But compared to the 19 million subprime loans on the books of Fannie and Freddie......almost unnoticeable.

What is your point?

Blaming AIG's credit default swaps on MBS for the crisis or the bubble is silly.
And most people don't have a clue about synthetic securities.

 

[Toddsterpatriot]

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

I agree 110%. Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

And derivatives are simply insane.

Until we go back to money of substance and privatize the creation of credit, the banks will run the entire economy....In fact, that's the point of the Fed and fiat money.

privatize the creation of credit,

What do you mean?

 

[Mac1958]

What about mortgages? Should they be allowed to write mortgages?

Write mortgages? Sure, banks have almost always done that.

Securitize them into hyper-complicated CMO's and even more hideous CDO's, have them somehow magically blessed with Treasury-level ratings, watch companies like AIG take risk off of everyone's balance sheets by writing CDS's with zero (0) reserve requirements, and occasionally team up with hedge fund managers like John Paulson to create steaming piles of garbage, sell them to clients, and then bet against them for a few billion in profit?

No. No way. No damn way.
.

Securitize them into hyper-complicated CMO's and even more hideous CDO's

Slicing crappy mortgages into pieces leaves you with crappy mortgages.

have them somehow magically blessed with Treasury-level ratings,

Yeah, the ratings agencies were awful!

watch companies like AIG take risk off of everyone's balance sheets by writing CDS's with zero (0) reserve requirements

How much did they insure? 1% of the mortgages? Less?

and occasionally team up with hedge fund managers like John Paulson to create steaming piles of garbage, sell them to clients, and then bet against them

You understand how synthetics work, right?

If you sell one, there is no second step needed to "bet against them", right?

AIG insured about $80 billion as I recall, a small part of the overall market. But it was more than large enough to take them down, make them go hat in hand to the Feds, and feed the panic and frenzy and exacerbate the entire mess significantly. So the figure could have been any number for what it caused. It wasn't about the number, it was about the timing, the panic, the momentum of the disaster, and the balance sheets of the "insured".

What is your point?
.

AIG insured about $80 billion as I recall, a small part of the overall market. But it was more than large enough to take them down,

Yes, it took AIG down like Hillary at a 9/11 memorial.
But compared to the 19 million subprime loans on the books of Fannie and Freddie......almost unnoticeable.

What is your point?

Blaming AIG's credit default swaps on MBS for the crisis or the bubble is silly.
And most people don't have a clue about synthetic securities.

I didn't blame the CDSs alone for the crisis. They were a piece of the puzzle. As were the phantom AAA ratings, the shit CDOs and CMOs, Greenspan refusing to regulate derivatives, highly questionable behavior by the banks, and several other actions that didn't have to happen.

If you're going to represent something I'm saying, please use quotes instead of fabricating positions.
.

 

[Natural Citizen]

Except it wasn't fixed. The root problem is still the 'Too Big to Fail Banks', and they still stand; how much will it cost tax payers to save them from their freaking stupidity another time?

The root cause is our Keynesian monetary policy.

 

[Oddball]

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

I agree 110%. Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

And derivatives are simply insane.

Until we go back to money of substance and privatize the creation of credit, the banks will run the entire economy....In fact, that's the point of the Fed and fiat money.

privatize the creation of credit,

What do you mean?

People who own the given property create the debt instruments instead of banks

Auto manufacturers create their own finance contracts.

Landowners/homeowners create their own real estate contracts.

And so on.

No creating money out of thin air for the bankseters to then collect interest on.

 

[Toddsterpatriot]

Until we bring back something pretty damn similar to Glass Steagall, banks will continue to have outsized influence in our economy.
.

I agree 110%. Banks should not be allowed to take the peoples savings and play with it at the Wall Street Casino.

And derivatives are simply insane.

Until we go back to money of substance and privatize the creation of credit, the banks will run the entire economy....In fact, that's the point of the Fed and fiat money.

privatize the creation of credit,

What do you mean?

People who own the given property create the debt instruments instead of banks

Auto manufacturers create their own finance contracts.

Landowners/homeowners create their own real estate contracts.

And so on.

No creating money out of thin air for the bankseters to then collect interest on.

People who own the given property create the debt instruments instead of banks

So if I sell my home, I have to hold the note...…...I don't get my money in a lump sum?

Auto manufacturers create their own finance contracts.

You want auto companies to borrow billions from the banks, and then turn around and finance the buyers?

No creating money out of thin air for the bankseters to then collect interest on.

Banks don't create money out of thin air (except central banks, of course).

Every dollar JPMorgan lends to you, they have to borrow from someone else.

 

[JimBowie1958]

People who own the given property create the debt instruments instead of banks

That is like saying that the Realtor you hired to buy a home is representing you instead of the seller. A thin fig leaf at best, IMO.

Banks need the collateral to make the mortgage, and they cannot do that without a buyer wanting to buy a home, so it is kind of a mutual suicide pact.