You mean bankers and loan officers intentionally misled potential customers into agreeing to loans that were completely outside of their best interest in order to immediately sell that loan off for a counter-intuitively determined value that actually encouraged getting people into those clusterfark loans in the first place? And that they happily duped the lesser educated and economically downtrodden to make their bundles of cash? And that they did so in a systemic fashion that higher level administrators and executives were not only aware of but actively promoted?

No, I'm not shocked.

/And to quote TDS... 'And they sent Martha Stewart to prison?'

Mentat: And with that, I would like to introduce the Fark Poltics Tab Trolls!

THIS IS ALL RICHARD MENTOR JOHNSON'S FAULT!!!!!1!

Mentat: The fraud is so rampant and well documented that no rational person can ignore it.

And with that, I would like to introduce the Fark Poltics Tab Trolls!

I'm happy our DA is finally going after them.

Also, the problem is not even the predatory greed. That's only a moral quandary.

The problem is that these businesses took on huge, negligent amounts of risk with shareholder and customer money. The repackaging, selling and insuring and swapping of these junk assets increased that risk exponentially and drove this from poor people getting screwed to almost bringing down he world economy.

And ultimately that's the problem. They were much more culpable in almost burning the whole forest down, while doing so with others investments. Poor peoples assets aren't that large and would have just been a bump in the road if not for the big guys wheeling and dealing and screwing it all up.

Mentat: The kicker to the whole mess:

By 2006, the bankers knew the game was up. The housing market was already starting to peak, they were running out of borrowers, and they were one year from 2007 ARM's readjusting to higher rates. And yet, 2006 and 2007 sets records for mortgages issued. Like addicts, they couldn't stop. Their entire industry was predicated on the idea that housing prices would keep going up and that you would never see a systematic failure of the market. It was suicidal to continue at that pace, but it was suicidal to stop.

Not helping matters was our great Galtian overlord Alan Greenspan fanning the flames.

It's still the libruls' fault!

/conservative logic

Mentat: The fraud is so rampant and well documented that no rational person can ignore it.

And with that, I would like to introduce the Fark Poltics Tab Trolls!

Thank you Mentat!

This is obviously the work of Obammysocialistfascistbabyeatingmuslimfartbogo and the evil libruls. In other news, you're mother's a whore.

Back to you Mentat.

I got one lady calling me to refinance a loan that had a balance of 65K on it. I told her it was not worth 3K to finance a loan that was almost paid for. She blurted out, "Don't you want a new kitchen?!?"

Absolutely shameless people. They should be hung out to dry.

Not that there aren't concering aspects of that article (the 7x commission for subprime, if true and not affected by other factors in particular), the following sentence destroys any credibility of the article:

"The bigwigs of the corporations knew this, but they figured we're going to make billions out of it, so who cares? The government is going to bail us out. And the problem loans will be out of here, maybe even overseas."

NO FINANCIAL BIGWIGS anticipated the bail out. To suggest so is so utterly ridiculous it makes anything else you say suspect. The banks thought prices would continue to go up, or at least not decline. Just like every borrower/buyer in the USA from 2003 to 2007. And just like people who bought homes during the bubble, every bank got burned too.

Yet what is scandalous is the basic unfairness of what has transpired. The federal government rescued highly paid bankers from their reckless decisions. It protected bank shareholders and creditors. But it mostly turned a cold shoulder to some of the most vulnerable and least sophisticated people in America. Last year alone, banks seized more than one million homes.

Not scandalous at all. The government provided financing to financial institutions to save the economy, not to save bankers. Providing banks loans was just the most efficient and least expensive way to prevent a depression. Millions of main street jobs were rescued by the government. Bank shareholders and creditors, as well as bank execs, got an undeserved benefit, but that was a small price to pay for averting economic catastrophe and saving millions of jobs. People whine about TARP because they are too farking stupid to realize that it was put in place for their benefit, not some wall street banker.

Also, homeowners who were foreclosed upon didn't really lose that much, particularly if they only put 5% down. Because they borrowed the money to buy the house in the first place! And if the federal government provided direct financing to all the underwater borrowers who couldn't make payments, they'd have suffered significantly more losses than they did/will on TARP, not to mention the complexities involved in such a program.

Kristof is smart enough to know these things and it is shameful and scandalous that he repeats these lies.

Sometimes you have to stand on principal. TARP should have never been allowed. These companies should have been allowed to fail.

Sometimes you do. But letting millions more lose their jobs so some bank execs could deservedly lose theirs goes beyond standing on principle It's cutting off your nose to spite your face, IMO.

The worst part of the farkin mess is the moral hazard of the thing.

The bankers knew full well that these instruments were poisonous but still played hot potato with them amongst themselves as they implicitly understood that they would be bailed out by taxpayers if they got burned.

How could they not know? The relationship between the big trading banks and government is so incestuous and the "too big to fail" metric is so obvious that even the average investor understood that the bailout was a fait accompli.

And nothing has changed. The bankers still understand that they are able to extract usurious profits from sovereign debt despite the unlikely hood of that debt every being repaid because their profits will capitalized and their losses will be socialized.

This is not rocket science and anyone who thinks the people who worked interchangeably at Goldman Sachs, the Fed, the Treasury and regulatory bodies were unaware of this is either a fool or a shill.

/probably both

Want a mortgage?

Contents Under Pressure: I got one lady calling me to refinance a loan that had a balance of 65K on it. I told her it was not worth 3K to finance a loan that was almost paid for. She blurted out, "Don't you want a new kitchen?!?"

Absolutely shameless people. They should be hung out to dry.

Has a similar experience buying my first/current house in 2000.

Mortgage shopping, went to CTX (Centex's finance arm, though not the builders of my house). Was looking for a 97% LTV, had the down payment ready to go. (Ended up doing a 95% elsewhere but that's a less cool story, bros).

She quoted me rates for 100% and 103% LTV. When I replied "I've already got 3% to put down", she said (exact quote) "Wouldn't it be nice to buy a big screen TV with cash at closing?"

I replied "Not if I'm paying interest on it for 30 years" and left.

Al Hashshashin: The worst part of the farkin mess is the moral hazard of the thing.

The bankers knew full well that these instruments were poisonous but still played hot potato with them amongst themselves as they implicitly understood that they would be bailed out by taxpayers if they got burned.

There's other swaths of moral hazard to consider:

1) Often times loans were originated by a third-party broker. Once the loan is funded, the broker has his commission and has absolutely no downside if the loan can't get paid back.

2) Conventional wisdom said banks hate foreclosing because money is lost. But during the bubble, when prices were going up 5-10% a year, it became possible to make money on a foreclosure.

Debeo Summa Credo: Sometimes you have to stand on principal. TARP should have never been allowed. These companies should have been allowed to fail.

Sometimes you do. But letting millions more lose their jobs so some bank execs could deservedly lose theirs goes beyond standing on principle It's cutting off your nose to spite your face, IMO.

TARP was the only responsible thing to do. But then we should have followed up with breaking those "too big to fail" entities into smaller companies that COULD fail without destroying the world's economy. And we didn't do that, so we're farked.

When you can get around half of the fking country to vote against their own best interests, tricking them into bad loans is childs play.

Warlordtrooper: Debeo Summa Credo: Not that there aren't concering aspects of that article (the 7x commission for subprime, if true and not affected by other factors in particular), the following sentence destroys any credibility of the article:

"The bigwigs of the corporations knew this, but they figured we're going to make billions out of it, so who cares? The government is going to bail us out. And the problem loans will be out of here, maybe even overseas."

NO FINANCIAL BIGWIGS anticipated the bail out. To suggest so is so utterly ridiculous it makes anything else you say suspect. The banks thought prices would continue to go up, or at least not decline. Just like every borrower/buyer in the USA from 2003 to 2007. And just like people who bought homes during the bubble, every bank got burned too.

Yet what is scandalous is the basic unfairness of what has transpired. The federal government rescued highly paid bankers from their reckless decisions. It protected bank shareholders and creditors. But it mostly turned a cold shoulder to some of the most vulnerable and least sophisticated people in America. Last year alone, banks seized more than one million homes.

Not scandalous at all. The government provided financing to financial institutions to save the economy, not to save bankers. Providing banks loans was just the most efficient and least expensive way to prevent a depression. Millions of main street jobs were rescued by the government. Bank shareholders and creditors, as well as bank execs, got an undeserved benefit, but that was a small price to pay for averting economic catastrophe and saving millions of jobs. People whine about TARP because they are too farking stupid to realize that it was put in place for their benefit, not some wall street banker.

Also, homeowners who were foreclosed upon didn't really lose that much, particularly if they only put 5% down. Because they borrowed the money to buy the house in the first place! And if the federal government provided direct financing to all the underwater borrowers who couldn't make payments, they'd have suffered significantly more losses than they did/will on TARP, not to mention the complexities involved in such a program.

Kristof is smart enough to know these things and it is shameful and scandalous that he repeats these lies.

Sometimes you have to stand on principal. TARP should have never been allowed. These companies should have been allowed to fail.

No.

They should have been nationalized, saved via TARP and then systematically broken up and sold off to reintroduce competition and advert risk in the industry. THAT's the freaking governments job when it comes to a point where it's backing pirate capital like it's some sort of GSE.

But, but socialism!

Nope, nothing of the sort. The banks killed themselves, the government is just a investor of last resort coming to pick them to the bone to pay for what they forced on the citizens. THATS why people are pissed about TARP.

The government backed these too big to fail private companies and then walked away. They're still there, and still doing what they were before the collapse without punishment. They shouldn't even exist, but letting them fail wasn't an option for anyone that values not causing a catastrophic implosion of modernity.

Al Hashshashin: The worst part of the farkin mess is the moral hazard of the thing.

The bankers knew full well that these instruments were poisonous but still played hot potato with them amongst themselves as they implicitly understood that they would be bailed out by taxpayers if they got burned.

How could they not know? The relationship between the big trading banks and government is so incestuous and the "too big to fail" metric is so obvious that even the average investor understood that the bailout was a fait accompli.

And nothing has changed. The bankers still understand that they are able to extract usurious profits from sovereign debt despite the unlikely hood of that debt every being repaid because their profits will capitalized and their losses will be socialized.

This is not rocket science and anyone who thinks the people who worked interchangeably at Goldman Sachs, the Fed, the Treasury and regulatory bodies were unaware of this is either a fool or a shill.

/probably both

The government basically said if you can grow a business until it's to big to fail, your automatically a GSE and have nothing to worry about.

There's laws in Dodd-Frank bill that if this ever happens again, thats the plan of action. Fire the board, fire the executive management and recoup the losses to the taxpayer by dissolving the shareholders. It's why the industry and the GOP HATTTEEEE it so much. No more socialized losses for their cronies, and looking at Europe, it could be sooner than later.

Debeo Summa Credo: NO FINANCIAL BIGWIGS anticipated the bail out. To suggest so is so utterly ridiculous it makes anything else you say suspect. The banks thought prices would continue to go up, or at least not decline. Just like every borrower/buyer in the USA from 2003 to 2007. And just like people who bought homes during the bubble, every bank got burned too.

Are you saying that some guy with no college education and a half dozen credit chargeoffs to his name (meaning, me circa 2001) knew more than all the financial bigwigs?

C'mon, the whole thing was obvious and I was warning people about this back then. I wrote letters to the attorney general and secretary of state for Indiana about the predatory practices and how developers were feeding an inevitable collapse by foisting off designed-to-fail mortgages off onto unsuspecting banks. I didn't know about credit default swaps, securitized mortgages and all the other fancy stuff but this was pretty damned obvious even at that time.

Here is the magic question that no single representative trying to push an ARM onto me in 2001 could answer: "If you are going to keep building starter homes and they are going to be cheaper with new appliances, new roofs and new carpeting, why would someone looking for a starter home buy my house that has appreciated in value but has older appliances, an older roof and older carpeting?"

They knew EXACTLY what they were doing. I knew half of what they were doing, and I was just a mostly-broke loser looking with mild interest at model homes. Unfortunately, my friends all laughed at my broke, ignorant ass and bought houses anyway with ARMs. Many of them lost their homes (they all managed to rent other homes though so they are OK). I didn't know about bailouts at the time, but knowing what I know now about the financial industry, yeah there were folks involved that knew that the government would step in rather than let it all collapse, and so weren't too concerned with the societal fallout of their misdeeds.

Yep yep.

There is one small benefit among all the wretchedness of this ongoing crisis: it has raised awareness of the idea of "moral hazard".

It's real name is "perverse incentive", and previously, few people thought about it the idea. Indeed, they simply equated moral with legal, assuming that legal behavior is the same thing as socioeconomically constructive behavior. I remember my college sociology textbook specifically mentioning that most ballast citizens do not recognize the difference. Now that's changing, as we see that banks' behavior was (in principle) legal -- yet disastrous.

Approves:



/Seriously, it took this long?

My wife and I were discussing the collapse of the housing market as early as late 2005 early 2006. Anyone who says this was unforseeable was either willfully ignorant or completely clueless, there is no in between.

To suggest the banks didn't know about this is just ignorant or self-serving. You could feel the desperation if you refinanced after the start of the collapse. We had a loan officer offer us 245k on a loan that we only needed 225k, we had to literally get loud with her to get her to stop. She was being pressured by her higher ups (this was Wells Fargo) to push bigger and bigger loans. It was crazy.

Nope, the banks did this and then got payola for their troubles and will just ramp it up again.