Where's the Occupy nutjobs on this?

[sanfran22]

http://nation.foxnews.com/fannie-mae...bscene-bonuses

Hmmmmm, these organizations didn't lead us straight off the cliff I guess.

[pghin08]

They were giving out crappy loans like Halloween candy.

[sanfran22]

They were giving out crappy loans like Halloween candy.

Gov't backed crappy loans to boot....awesome.

[pghin08]

Gov't backed crappy loans to boot....awesome.

Totally dumb, but this is what a lack of regulation gets you. Subprime loans and subprime MBS's are about the biggest argument I've ever seen for greater financial regulation.

[sanfran22]

Totally dumb, but this is what a lack of regulation gets you. Subprime loans and subprime MBS's are about the biggest argument I've ever seen for greater financial regulation.

While I don't agree on sweeping financial regulations, In this case if you are going to push and back these types of loans, you probably should pay attention....(ahemmmm Barney Frank.....)

[pghin08]

While I don't agree on sweeping financial regulations, In this case if you are going to push and back these types of loans, you probably should pay attention....(ahemmmm Barney Frank.....)

But if you are trying to get to the core of the issue, you have to address why these loans and these securities ever existed to begin with.

At its core, the banks got greedy. The subprime mortgage crisis existed based off the fact that people thought that housing prices would never fall. Banks that packaged these crappy loans into mortgage backed securities knew exactly what they were doing (hence them starting to purchase credit default swaps, though many did too late). They fooled the ratings agencies (not hard to do) by using their own rules against them.

As an example, many MBS's were rated (Junk-AAA) based off their average FICO score. All a brokerage firm like Morgan Stanley had to do was to package a few loans to those who had high FICO scores with a bunch of people that had awful FICO scores, and since the median FICO score was in range, they could still rate it AAA even though like 80% of the MBS was subprime. And that's a pretty docile example of some of the things these firms did. All while Moody's and S&P were too stupid or cowardly to call the banks out on this.

Meanwhile, while housing prices were rising, these banks (thinking housing prices wouldn't fall), were leveraging themselves on a MASSIVE scale, because naturally, the more the housing market went up, the more they were making. Potential subprime mortgage delinquencies weren't the most important thing to brokerage firms when they were making record profits in the middle of the last decade. What they were allowed to do was at its kindest, dumb, and at its worst, blatant fraud.

The stock market is pretty regulated. There's a certainly level of both honesty and liquidity. I KNOW what GE's stock price is. The bond market is a far more massive and far more opaque beast. The ratings agencies that are built to analyze these things failed, and failed massively. Naturally, when you have a system of finance where the smartest people don't work for these ratings agencies, they work for Goldman Sachs. No one ever leaves Yale and thinks "Man, I hope I get that job at S&P." These agencies feed on Wall Street rejects. Which is another problem in and of itself.

Sorry, I know this post was a bit tangential, but it felt good.

[Star_Cards]

I'd assume this would not be okay in the eyes of the occupy wall street people.

[duane1969]

I'd assume this would not be okay in the eyes of the occupy wall street people.

Or at least the ones who didn't benefit from the bad loans...

[pspstatus]

This is just as rediculous as the bonuses bank executives gave themselves after the bailouts. Further proof that both sides of the equation suck.

[duane1969]

This is just as rediculous as the bonuses bank executives gave themselves after the bailouts. Further proof that both sides of the equation suck.

Yeah but for the most part the banks have paid back what they recieved.