The People's Bailout

What are they talking about when they say, "As you can see from our test run, the return on investment approaches 30:1. That’s a crazy bargain!"

Is that a joke or are they actually making a return on the investment?

Yeah I can get behind that people should have known.

But in the case of the Mortgage Market prior to the crash I can't - simply because it wasn't an equal/level playing field.

In brief

1) CDOs => Mortgage Origniators no longer held back by their risk levels. CDOs can just offset it.

2) MOs incentives are now drastically different - Incentive now entirely to generate as many mortgages as possible, whatever the risk profile.

3) With no incentive to care who was signing, as long as they signed - MOs sold to people they knew were incapable of understanding the terms, nor ever meet the conditions, creating things like NINJA mortgages/loans.

The MOs held the information advantage, and then abused it (look at the marketing material of the time) while now including people that they KNEW were out of their depth.

It was like stealing candy from a baby.

Edit: Formatting, point placement and flow

Last Tuesday.

Ah sorry - I thought you were using market value as in terms of the original value of the loan. Not its impaired value.

edit: I recall that debt forgiveness to consumers was considered a better form of stimulus - economically speaking.

I believe that the vast majority of student debt is not people going to an Ivy institution. The major concentration of serious debt issues has been in the private-education-as-big-business sector from companies like University of Phoneix and DeVry, whose business models depend on government backed student loans, or loans from private companies that are subsidized/guaranteed by the government (before President Obama signed a law that allowed the government to manage student loans without requiring a private company to act as an intermediary).

http://www.motherjones.com/politics/2011/09/gi-bill-for-prof...

"Last winter, the Department of Veterans Affairs tasked its newly hired blogger, a cantankerous Iraq vet named Alex Horton, with investigating the website GIBill.com, one of many official-looking links that come up when you Google terms like "GI Bill schools." With names like ArmedForcesEDU.com and UseYourGIBill.us, these sites purport to inform military veterans how to best use their education benefits. In reality, Horton found, they're run by marketing firms hired by for-profit colleges to extol the virtues of high-priced online or evening courses. He concluded that GIBill.com "serves little purpose other than to funnel student veterans and convince them their options for education are limited to their advertisers."

http://www.motherjones.com/media/2012/08/explosive-growth-pr...

"The for-profit higher education industry was the target of a bruising report issued last week. Based on a two-year effort, the report detailed high rates of loan default, aggressive recruiting, higher than average tuition, low retention rates, and little job placement assistance. It was spearheaded by Sen. Tom Harkin, D-Iowa, a longtime critic of the industry. (ProPublica has written a number of pieces looking more closely at the explosive growth sector, including questionable recruiting and marketing.)"

And finally -

http://www.motherjones.com/politics/2009/11/university-phoen...

"After federal regulators accused the University of Phoenix of systematic enrollment abuses in 2004, the school's parent company paid out nearly $10 million to resolve the allegations.

Phoenix allegedly had broken the law by tying recruiters' pay to enrollment numbers, U.S. Department of Education investigators found, creating pressure to sign up unqualified students.

In the years since, Phoenix cemented its stature as the nation's largest for-profit school and the single biggest recipient of federal student aid. But some of the school's recruiters have continued to use high-pressure, deceptive tactics, according to a dozen current and former students and two former recruiters who spoke to ProPublica and Marketplace as part of a joint investigation."