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Blowing the Whistle on the Mortgage Bubble

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Re: Blowing the Whistle on the Mortgage Bubble

#151

Post by illuminate »

wcgortel wrote: post #106
nicholasjarnold wrote: post #93

Earlier quoted context omitted.

I cannot express how angry reading comments like this makes me. Clearly many of these guys at the top (bank CEO's, fund managers, ect.) were systematically defrauding everyone in order to turn a larger profit. Call me naive, but isn't this shit (the massive fraud perpetrated on us by banks) supposed to result in hefty jail sentences?

I mean, you're justified in a way. I don't think it's fraud though. Consumers are equally complicit. What I mean by that is that as the buyer of a product, you usually would go out and read the reviews, kick the tires, etcetera. At this time, many buyers of investments didn't do that at all. Our sales guys didn't understand the product for sure, but if they had a customer who asked the right question they would have…

"At this time, many buyers of investments didn't do that at all."

All consumers are all the "buyers" of junk mortgages in the end, but there's no way that we knew how junk they were when the executives were willfully defrauding us.

Re: Blowing the Whistle on the Mortgage Bubble

#152

Post by illuminate »

danielweber wrote: post #94
wcgortel wrote: post #88

Earlier quoted context omitted.

I sent a similar email to the CEO of my bank in 2007 -- there was a product I was involved in that (it was clear) was not understood by our sales force or by our investors. I'll spare the details, but I was called into his office and reminded that the "e" in email stands for "evidence."

It's no much that ignorance is rewarded, as that spreading information is punished.

Willful ignorance was rewarded in huge, HUGE bonuses.

Re: Blowing the Whistle on the Mortgage Bubble

#153

Post by gtrubetskoy »

JackFr wrote: post #125
gtrubetskoy wrote: post #114

Earlier quoted context omitted.

Taken out of the context of a loan, you're right. But borrowing is a special case. Because if the responsibility were entirely on the borrower, then it would be advantageous to the bank that you lie on the application. Then they could take all your material possessions as soon as you fail to make a payment and send you to prison to boot. (Which is not far from what happened with the mortgage crisis.) This is how loan…

You are either trolling or grossly misinformed about a number of things. Your belief is that by intentionally misrepresenting yourself to a bank and obtaining a loan you otherwise would not have been able to obtain, that is, willfully and knowingly entering into a contract in bad faith -- you are the victim of a crime. That is ludicrous at its face. If someone issues you a loan in good faith, and you cannot repay, it…

If someone issues you a loan in good faith, and you cannot repay, it is indeed their loss. They have not committed crime however.

What I said is that it is a crime if at the time of issuance the lender has reasons to believe you cannot repay the loan. That is a crime, and that is a form of extortion (or loan sharking).

Re: Blowing the Whistle on the Mortgage Bubble

#154

Post by xxchan »

eli_gottlieb wrote: post #144
josefresco wrote: post #31

Earlier quoted context omitted.

This is an important point, and one that I personally believe explains why we didn't see prosecutions at the highest level. Geithner was instrumental in guiding Obama away from this heavy handed approach, as he recognized (I think quite accurately) that confidence was really the only thing keeping the system from crashing completely. If Obama had given execs the kind of treatment Larry Summers and the other half of h…

Geithner was instrumental in guiding Obama away from this heavy handed approach, as he recognized (I think quite accurately) that confidence was really the only thing keeping the system from crashing completely. Which means that system deserved to crash, die, burn to ashes, and leave us clean ground on which to rebuild.

Thought I appreciate the sentiment "just do the right thing and let the chips fall where they may" and try to live my life according to it, on a scale of countries and when hundreds of million of people lives would be affected, it's simply irresponsible and stupid.

Re: Blowing the Whistle on the Mortgage Bubble

#155

Post by JackFr »

gtrubetskoy wrote: post #153
JackFr wrote: post #125

Earlier quoted context omitted.

You are either trolling or grossly misinformed about a number of things. Your belief is that by intentionally misrepresenting yourself to a bank and obtaining a loan you otherwise would not have been able to obtain, that is, willfully and knowingly entering into a contract in bad faith -- you are the victim of a crime. That is ludicrous at its face. If someone issues you a loan in good faith, and you cannot repay, it…

If someone issues you a loan in good faith, and you cannot repay, it is indeed their loss. They have not committed crime however. What I said is that it is a crime if at the time of issuance the lender has reasons to believe you cannot repay the loan. That is a crime, and that is a form of extortion (or loan sharking).

No.

People who misrepresented themselves engaged in fraud. There is no requirement for the bank to assume bad faith on the part of the lender.

If a bank made a loan to someone who could not repay it, they are likely to take a loss. The fraud, where it happened, was when the bank sold this loan. At that point, the idea of 'willful blindness' and 'prudent man' came into play, when banks materially misrepresented the loans they were selling as having been prudently underwritten. But the victim was the buyer of the loan, not the borrower.

Re: Blowing the Whistle on the Mortgage Bubble

#156

Post by dmix »

aethertap wrote: post #84
dmix wrote: post #79

Earlier quoted context omitted.

Shadowstats has been discredited so many times that not even libertarians (such as myself) would go near that as a reliable source.

Could you post some links to this? I haven't seen it and would be interested to read more.

It mostly comes down to the fact that shadowstats keeps their data behind a paywall and it has very little peer review.

http://voxrationalis.wordpress.com/2011/05/15/the-absurdity-...

Also MIT collects a large amount of data using online prices to determine inflation rates http://bpp.mit.edu/usa/

So the inflation calculations might indeed be inaccurate but there isn't much solid data to back it up.

I personally find it better to focus on issues that have lots of data such as the debt crisis [1], the growing costs of SS and medicare and the harmful effects of industry/government collusion [2] which are all very real and can be proven.

[1] http://www.amazon.com/Endgame-Debt-Supercycle-Changes-Everyt...

[2] http://i.imgur.com/XwyV4yi.jpg

Re: Blowing the Whistle on the Mortgage Bubble

#157

Post by aliston »

snowwrestler wrote: post #148
snowwrestler wrote: post #142

Earlier quoted context omitted.

Neither participates in the competitive bidding process that sets the interest rates. Social Security gets special bonds not available on the open market, and the Fed buys Treasuries from primary dealers at market rates (since the whole point is to inject money into the private economy).

Replying to myself since I can't reply directly to you. Social Security gets special bonds specifically to avoid the bond market distortions you describe. They have been purchasing these bonds in high volume for decades prior to the financial crisis, and marketable Treasury rates were much higher for most of that time. In addition, in 2011, SS tax receipts dropped below expenditures for the first time since 1983, so…

I'm not trying to be an ass, but I'm actually legitimately curious where our misunderstanding is.

My understanding is that, all other things being equal, when government/government controlled agencies purchase government debt ("cause"), the result ("effect") is lower interest rates. Here it is, directly from the head of the Fed regarding the rationale behind QE2:

"What we're doing is lowering interest rates by buying treasury securities and, by lowering interest rates, we hope to stimulate the economy to grow faster." - Ben Bernake

This is the fundamental idea behind reserve banking -- the central bank controls interest rates by manipulating the money supply via the purchase of government bonds:

"When the Central Bank cuts the target rate, they must simultaneously increase the monetary base by buying government securities. The growth of the monetary base creates a surplus in the banks, the supply of funds overnight increases, the demand falls and the overnight rate falls.

...

By controlling overnight interest rates, the central bank will affect the interest rates with longer maturity." - Essentials of Macroeconomics

Is there anything in the above that you disagree with?

Re: Blowing the Whistle on the Mortgage Bubble

#158

Post by 1123581321 »

deveac wrote: post #39
martinced wrote: post #15

"industry insiders were ringing the alarm bells" Just as today many economists are ringing the alarm bells: the governments public debt issues (both in U.S., Japan and many countries in the Eurozone) are going to end up very badly. Many central banks (including in the U.S.) have basically become bad banks. Anyone holding medium and long-term public government debt (like many insurance products) are basically bankrupt…

>"The problem of socialism is that at one point you run out of other people's money". And that's where we're arriving now. Ugh. I try my best not to be snarky on here, but here is the wiki explaining what socialism is: http://en.wikipedia.org/wiki/Socialism Don't worry, you don't have to read past the first sentence to reveal your complete and utter misunderstanding of the term. The trend, over the years, has been ov…

I wish you wouldn't have been snarky. The next time you write a post like this, I suggest explaining what is socialism in your post, how it differs from what the person described, and providing them with a word that better fits what they were saying.

Also, I don't see why if using the correct word is called "accurate," then using the wrong word is called "dogma" instead of "inaccurate." Your implication was that someone who uses the word socialist when they mean to use another word isn't thinking for themselves, I suppose, but you don't actually have any reason to think that, and even if you did, you would still want to stick to educating them instead of snarkily insulting them.

Finally, I'd like you to imagine what Hacker News would be like if people corrected technical ignorance with "CS 101. It ain't that difficult." It's a completely unhelpful thing to say. If you believe someone should actually take a 100-level political science class, then please be helpful and suggest a free university course.

I do believe you meant to help so I hope you'll incorporate these suggestions the next time you correct a political post.

Re: Blowing the Whistle on the Mortgage Bubble

#160

Post by shawn-butler »

ChuckMcM wrote: post #126
Irregardless wrote: post #55

My reaction while reading most of this was "Why didn't any of you try harder to let someone know? Why didn't you email everyone? Why didn't you call all the people you emailed? Wasn't there ANYONE important who would listen!?" After reading the whole thing, I was a little shocked to realize the answer is "No, there was no one important who would listen." The accountant who essentially documented the impending collaps…

"After reading the whole thing, I was a little shocked to realize the answer is 'No, there was no one important who would listen.'" There is a scene in the Fifth Element where Gary Oldman knocks a glass off the table to demonstrate how destruction is "good" for the world because it gives all the support actors a chance to play their role. Its a pretty chilling example when you realize that there are people who actual…

And after reading your entry I viewed the photos of all these bloodsuckers and ethical CEOs enjoying Sean Parker's dbag-fuelled taxidermy party at Davos.

Morality and ethics don't count for anything in a contemporary society where punishment for misdeeds exists only for those who cannot afford to buy their freedom.

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