was interviewed on In the Arena last night.
Obviously, if any bank engaged in outright fraud in creating the securities, the bank should be held accountable. I doubt this happened as a matter of practice.
But your author lumps a number of perfectly legal lending activities – stated income loans, interest only loans, and no/little money down loans into what he calls “systematic corruption” and “fraud.”
After the point of origin lenders, the real problem was with the rating agencies who gave Triple A Ratings to many of these mortgage backed securities using outdated evaluation models that did not take into account the deterioration of loan origination standards. In other words, the rating agencies evaluation model was based on the 30 year mortgage, with 20% down, and a documented borrower income that bore a minimum percentage relationship with his monthly payment.
But, during 2002 to 2006, Country Wide and other lenders began making mortgage loans with little money down and allowed “stated income loans – i.e., the borrower would state his income but the lender would not check it. The crime of the rating agencies was to use the same evaluation model for securities comprised of these mortgages as they did for old time mortgages.
Had the securities not received the Triple A rating, very few of the securities would have been sold and the subprime crisis would not have cast its slings and arrows much beyond the original lenders who deserved the loss.
Sadly, the Second Circuit ruled last week the rating agencies could not be held liable for this ratings sophistry under various securities laws. So now the lenders, the banks who bundled the mortgages securities, and me - who owns one of the banks that bundled the securities - will have to take the fall.
I think I’m going to cancel my subscription to Rolling Stone in protest.
I know a few of you around here dislike Rolling Stone, so just to be upfront, I'm about to post a link from them.
That aside, it looks like the NY Attorney General is looking into the mortgage securitization process of Morgan Stanley, Bank of America, and Goldman Sachs.
and they will do it again until gets caught again, settle out of court again and the vicious circle continues. There should be law limiting out court secret settlements to only one.
was interviewed on In the Arena last night.
Obviously, if any bank engaged in outright fraud in creating the securities, the bank should be held accountable. I doubt this happened as a matter of practice.
But your author lumps a number of perfectly legal lending activities – stated income loans, interest only loans, and no/little money down loans into what he calls “systematic corruption” and “fraud.”
After the point of origin lenders, the real problem was with the rating agencies who gave Triple A Ratings to many of these mortgage backed securities using outdated evaluation models that did not take into account the deterioration of loan origination standards. In other words, the rating agencies evaluation model was based on the 30 year mortgage, with 20% down, and a documented borrower income that bore a minimum percentage relationship with his monthly payment.
But, during 2002 to 2006, Country Wide and other lenders began making mortgage loans with little money down and allowed “stated income loans – i.e., the borrower would state his income but the lender would not check it. The crime of the rating agencies was to use the same evaluation model for securities comprised of these mortgages as they did for old time mortgages.
Had the securities not received the Triple A rating, very few of the securities would have been sold and the subprime crisis would not have cast its slings and arrows much beyond the original lenders who deserved the loss.
Sadly, the Second Circuit ruled last week the rating agencies could not be held liable for this ratings sophistry under various securities laws. So now the lenders, the banks who bundled the mortgages securities, and me - who owns one of the banks that bundled the securities - will have to take the fall.
I think I’m going to cancel my subscription to Rolling Stone in protest.
But the bigger issue is the incestuios relationship of politics and money.
http://4closurefraud.org/2011/02/16/matt-taibbi-of-rolling-stone-why-isnt-wall-street-in-jail/
an update:
http://www.rollingstone.com/politics/blogs/taibblog/obamas-new-sec-chief-in-through-the-revolving-door-20110519
-- Modified on 5/19/2011 7:36:11 AM
Especially thanks to the right-leaning Supreme Court for the Citizens United ruling which permits corporations to buy their own legislators.
bargain, use dues for political campaigns, and vote.
The difference is unions, as groups made up of actual people, have had that right for a long time. I also know that corporations have "rights" that are similar but they have never before been elevated to their current status. As for their power, I recall something Megan Kelly of Fox News said to someone she was interviewing during the whole Wisconsin flap. When he claimed that unless unions lost their collective bargaining rights they would always win future negotiations, Kelly looked puzzled and said: "What ever happened to just saying, 'no?'" The guy had no answer. Subsequent history has born this out. Look at what Cuomo, a Democrat, has done in NY. He has forced the unions to accept deep cuts to balance the budget. And he did it without trying to remove their bargaining rights. Same thing in CT with a Dem. gov. The unions hated it but played along to avoid layoffs. And don't tell me they were in bed with these Dem. governors. They were dragged, kicking and screaming, the whole way.
The democratic governors wanted to solve the budget problem and the Wisconsin governor wanted bust unions same with the Ohio governor. Numbnut in Wisconsin won't even negotiate even when Unions offered concessions.
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