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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/m...2009/watch.html
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mortgage fraud Liars' loans
#1
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Posted 2009-April-15, 07:32
Peter . . . . AKQ . . . . K = 3 points = 1 trick
"Of course wishes everybody to win and play as good as possible, but it is a hobby and a game, not war." 42 (BBO Forums)
"If a man speaks in the forest and there are no women around to hear is he still wrong?" anon
"Politics: an inadequate substitute for bridge." John Maynard Keynes
"This is how Europe works, it dithers, it delays, it makes cowardly small steps towards the truth and at some point that which it has admonished as impossible it embraces as inevitable." Athens University economist Yanis Varoufakis
"Krypt3ia @ Craig, dude, don't even get me started on you. You have posted so far two articles that I and others have found patently clueless. So please, step away from the keyboard before you hurt yourself." Comment on infosecisland.com
"Doing is the real hard part" Emma Coats (formerly from Pixar)
"I was working on the proof of one of my poems all the morning, and took out a comma. In the afternoon I put it back again." Oscar Wilde
"Assessment, far more than religion, has become the opiate of the people" Patricia Broadfoot, Uni of Gloucestershire, UK
"Of course wishes everybody to win and play as good as possible, but it is a hobby and a game, not war." 42 (BBO Forums)
"If a man speaks in the forest and there are no women around to hear is he still wrong?" anon
"Politics: an inadequate substitute for bridge." John Maynard Keynes
"This is how Europe works, it dithers, it delays, it makes cowardly small steps towards the truth and at some point that which it has admonished as impossible it embraces as inevitable." Athens University economist Yanis Varoufakis
"Krypt3ia @ Craig, dude, don't even get me started on you. You have posted so far two articles that I and others have found patently clueless. So please, step away from the keyboard before you hurt yourself." Comment on infosecisland.com
"Doing is the real hard part" Emma Coats (formerly from Pixar)
"I was working on the proof of one of my poems all the morning, and took out a comma. In the afternoon I put it back again." Oscar Wilde
"Assessment, far more than religion, has become the opiate of the people" Patricia Broadfoot, Uni of Gloucestershire, UK
#2
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Posted 2009-April-15, 10:15
The Grand Design, reflected in the face of Chaos...it's a fluke!
#3
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Posted 2009-April-17, 06:50
Below is a quote from William K. Black's recent article in The Huffington Post
- the 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
Peter . . . . AKQ . . . . K = 3 points = 1 trick
"Of course wishes everybody to win and play as good as possible, but it is a hobby and a game, not war." 42 (BBO Forums)
"If a man speaks in the forest and there are no women around to hear is he still wrong?" anon
"Politics: an inadequate substitute for bridge." John Maynard Keynes
"This is how Europe works, it dithers, it delays, it makes cowardly small steps towards the truth and at some point that which it has admonished as impossible it embraces as inevitable." Athens University economist Yanis Varoufakis
"Krypt3ia @ Craig, dude, don't even get me started on you. You have posted so far two articles that I and others have found patently clueless. So please, step away from the keyboard before you hurt yourself." Comment on infosecisland.com
"Doing is the real hard part" Emma Coats (formerly from Pixar)
"I was working on the proof of one of my poems all the morning, and took out a comma. In the afternoon I put it back again." Oscar Wilde
"Assessment, far more than religion, has become the opiate of the people" Patricia Broadfoot, Uni of Gloucestershire, UK
"Of course wishes everybody to win and play as good as possible, but it is a hobby and a game, not war." 42 (BBO Forums)
"If a man speaks in the forest and there are no women around to hear is he still wrong?" anon
"Politics: an inadequate substitute for bridge." John Maynard Keynes
"This is how Europe works, it dithers, it delays, it makes cowardly small steps towards the truth and at some point that which it has admonished as impossible it embraces as inevitable." Athens University economist Yanis Varoufakis
"Krypt3ia @ Craig, dude, don't even get me started on you. You have posted so far two articles that I and others have found patently clueless. So please, step away from the keyboard before you hurt yourself." Comment on infosecisland.com
"Doing is the real hard part" Emma Coats (formerly from Pixar)
"I was working on the proof of one of my poems all the morning, and took out a comma. In the afternoon I put it back again." Oscar Wilde
"Assessment, far more than religion, has become the opiate of the people" Patricia Broadfoot, Uni of Gloucestershire, UK
#4
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Posted 2009-April-17, 07:41
More info from a credible source (the one on the left (of the screen))
http://www.youtube.c...h?v=e02loKMuJFw
http://www.youtube.c...feature=related
http://www.youtube.c...h?v=e02loKMuJFw
http://www.youtube.c...feature=related
The Grand Design, reflected in the face of Chaos...it's a fluke!
#5
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Posted 2009-April-17, 08:18
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! "
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! "
Peter . . . . AKQ . . . . K = 3 points = 1 trick
"Of course wishes everybody to win and play as good as possible, but it is a hobby and a game, not war." 42 (BBO Forums)
"If a man speaks in the forest and there are no women around to hear is he still wrong?" anon
"Politics: an inadequate substitute for bridge." John Maynard Keynes
"This is how Europe works, it dithers, it delays, it makes cowardly small steps towards the truth and at some point that which it has admonished as impossible it embraces as inevitable." Athens University economist Yanis Varoufakis
"Krypt3ia @ Craig, dude, don't even get me started on you. You have posted so far two articles that I and others have found patently clueless. So please, step away from the keyboard before you hurt yourself." Comment on infosecisland.com
"Doing is the real hard part" Emma Coats (formerly from Pixar)
"I was working on the proof of one of my poems all the morning, and took out a comma. In the afternoon I put it back again." Oscar Wilde
"Assessment, far more than religion, has become the opiate of the people" Patricia Broadfoot, Uni of Gloucestershire, UK
"Of course wishes everybody to win and play as good as possible, but it is a hobby and a game, not war." 42 (BBO Forums)
"If a man speaks in the forest and there are no women around to hear is he still wrong?" anon
"Politics: an inadequate substitute for bridge." John Maynard Keynes
"This is how Europe works, it dithers, it delays, it makes cowardly small steps towards the truth and at some point that which it has admonished as impossible it embraces as inevitable." Athens University economist Yanis Varoufakis
"Krypt3ia @ Craig, dude, don't even get me started on you. You have posted so far two articles that I and others have found patently clueless. So please, step away from the keyboard before you hurt yourself." Comment on infosecisland.com
"Doing is the real hard part" Emma Coats (formerly from Pixar)
"I was working on the proof of one of my poems all the morning, and took out a comma. In the afternoon I put it back again." Oscar Wilde
"Assessment, far more than religion, has become the opiate of the people" Patricia Broadfoot, Uni of Gloucestershire, UK
#6
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Posted 2009-April-17, 08:39
A recent article, Pirates of the Caribbean, points directly at the duplicity of politicans.
(I'm not sure for how long access to the newspaper file remains public.)
(I'm not sure for how long access to the newspaper file remains public.)
Peter . . . . AKQ . . . . K = 3 points = 1 trick
"Of course wishes everybody to win and play as good as possible, but it is a hobby and a game, not war." 42 (BBO Forums)
"If a man speaks in the forest and there are no women around to hear is he still wrong?" anon
"Politics: an inadequate substitute for bridge." John Maynard Keynes
"This is how Europe works, it dithers, it delays, it makes cowardly small steps towards the truth and at some point that which it has admonished as impossible it embraces as inevitable." Athens University economist Yanis Varoufakis
"Krypt3ia @ Craig, dude, don't even get me started on you. You have posted so far two articles that I and others have found patently clueless. So please, step away from the keyboard before you hurt yourself." Comment on infosecisland.com
"Doing is the real hard part" Emma Coats (formerly from Pixar)
"I was working on the proof of one of my poems all the morning, and took out a comma. In the afternoon I put it back again." Oscar Wilde
"Assessment, far more than religion, has become the opiate of the people" Patricia Broadfoot, Uni of Gloucestershire, UK
"Of course wishes everybody to win and play as good as possible, but it is a hobby and a game, not war." 42 (BBO Forums)
"If a man speaks in the forest and there are no women around to hear is he still wrong?" anon
"Politics: an inadequate substitute for bridge." John Maynard Keynes
"This is how Europe works, it dithers, it delays, it makes cowardly small steps towards the truth and at some point that which it has admonished as impossible it embraces as inevitable." Athens University economist Yanis Varoufakis
"Krypt3ia @ Craig, dude, don't even get me started on you. You have posted so far two articles that I and others have found patently clueless. So please, step away from the keyboard before you hurt yourself." Comment on infosecisland.com
"Doing is the real hard part" Emma Coats (formerly from Pixar)
"I was working on the proof of one of my poems all the morning, and took out a comma. In the afternoon I put it back again." Oscar Wilde
"Assessment, far more than religion, has become the opiate of the people" Patricia Broadfoot, Uni of Gloucestershire, UK
#7
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Posted 2009-April-17, 16:37
pdmunro, on Apr 15 2009, 08:32 AM, said:
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/m...2009/watch.html
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/m...2009/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
#8
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Posted 2009-April-17, 16:52
pigpenz, on Apr 17 2009, 05:37 PM, said:
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.
The growth of wisdom may be gauged exactly by the diminution of ill temper. — Friedrich Nietzsche
The infliction of cruelty with a good conscience is a delight to moralists — that is why they invented hell. — Bertrand Russell
The infliction of cruelty with a good conscience is a delight to moralists — that is why they invented hell. — Bertrand Russell
#9
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Posted 2009-April-17, 19:18
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"?
"Injustice anywhere is a threat to justice everywhere." Black Lives Matter. / "I need ammunition, not a ride." Zelensky
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