pdmunro Posted April 15, 2009 Report Share Posted April 15, 2009 Former S & L investigator speaks out William K. Black, a former investigator of the Savings & Loans crisis, has some strong words to say about the present crisis: "calculated dishonesty by people in charge ... make really bad loans ... creates a situation where you have guaranteed record profits in the early years ... that makes you rich, through the bonuses that modern executive compensation has produced ... The FBI publicly warned, in September 2004 that there was an epidemic of mortgage fraud." http://www.pbs.org/moyers/journal/04032009/watch.html Quote Link to comment Share on other sites More sharing options...
Al_U_Card Posted April 15, 2009 Report Share Posted April 15, 2009 More grist for that mill-stone around our necks. http://www.vimeo.com/3261363 Quote Link to comment Share on other sites More sharing options...
pdmunro Posted April 17, 2009 Author Report Share Posted April 17, 2009 Below is a quote from William K. Black's recent article in The Huffington Postthe worse the nonprime loan quality the higher the fees and interest rates, and the faster the growth in nonprime lending and pooling the greater the immediate fictional profits and (eventual) real losses the greater the destruction of wealth, the greater the (fictional) profits, bonuses, and stock appreciation many of the big banks are deeply insolvent due to severe credit losses those big banks and Treasury don't know how insolvent they are because they didn't even have the loan files a "stress test" can't remedy the banks' problem -- they do not have the loan files Quote Link to comment Share on other sites More sharing options...
Al_U_Card Posted April 17, 2009 Report Share Posted April 17, 2009 More info from a credible source (the one on the left (of the screen)) http://www.youtube.com/watch?v=e02loKMuJFw http://www.youtube.com/watch?v=7h8zvnHN96U&feature=related Quote Link to comment Share on other sites More sharing options...
pdmunro Posted April 17, 2009 Author Report Share Posted April 17, 2009 Another part of the mix: fraudulent use of credit default swaps. Am I missing something? I don't read much about this use of CDS's. A quote from http://seekingalpha.com/article/73060-why-...t-default-swaps (with my emphases added): "III. Third, and the most important use of credit default swaps, there is strong incentive to book the next 10 years'profit today. Credit default swaps offer banks with the so-called negative-basis trade another accounting loophole besides the earnings smoother discussed above. Using the same example: Take a CDO with a 50 basis point spread over US Treasures. Banks will buy credit default swaps costing them 20 basis points, but by doing so, even they seem to make less profit (50 vs. now only 30 bp spread), banks can actually book the difference in spread for the whole life of this CDO instantly, something called negative-basis trade. If this CDO life is 10 years, banks can book the whole 10 years of phantom profits this year, even if this CDO defaults sometime in next 10 years. And I don't need to mention its implications for the bonuses of the structured product groups at Wall St firms, or hedge funds with 2/20 fee structure. In other words, who cares whether this CDO defaults next year, let us just realize the next 10 years of bonuses today! " Quote Link to comment Share on other sites More sharing options...
pdmunro Posted April 17, 2009 Author Report Share Posted April 17, 2009 A recent article, Pirates of the Caribbean, points directly at the duplicity of politicans. http://www.theaustralian.news.com.au/files/taxhavens.jpg (I'm not sure for how long access to the newspaper file remains public.) Quote Link to comment Share on other sites More sharing options...
pigpenz Posted April 17, 2009 Report Share Posted April 17, 2009 Former S & L investigator speaks out William K. Black, a former investigator of the Savings & Loans crisis, has some strong words to say about the present crisis: "calculated dishonesty by people in charge ... make really bad loans ... creates a situation where you have guaranteed record profits in the early years ... that makes you rich, through the bonuses that modern executive compensation has produced ... The FBI publicly warned, in September 2004 that there was an epidemic of mortgage fraud." http://www.pbs.org/moyers/journal/04032009/watch.html what about real estate people? I am sure they had to realize they were attempting to sell to people who probably couldnt afford what they were looking at also. They got their money from the houses that they sold and were defaulted on also Quote Link to comment Share on other sites More sharing options...
PassedOut Posted April 17, 2009 Report Share Posted April 17, 2009 what about real estate people? I am sure they had to realize they were attempting to sell to people who probably couldnt afford what they were looking at also. They got their money from the houses that they sold and were defaulted on also Yes, the real estate people pushed the bad paper out the door as fast as they could sell it. But in the past people expected bankers to be more honest than real estate brokers and counted on bankers to keep mortgage fraud in check. Quote Link to comment Share on other sites More sharing options...
Winstonm Posted April 18, 2009 Report Share Posted April 18, 2009 Mr. Black is correct in that the fraud was systemic. The heart of the problem was this: the method of evaluating the value of a loan changed from "can this person pay back this load over 30 years" to "can this loan be structured so it can be serviced for 6 months so I can grap my fee and dump it"? Quote Link to comment Share on other sites More sharing options...
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