Except all the risks were laid out in front of the investors, and they didn't care. For Congress to regulate that, the congress would have to be experts on new financial instruments, you know that will never happen.
Apparently, no one understood the risks of collateralized mortgage obligations, not the originators, not the loan packagers and certainly not the end consumers who hold the CMO's in their accounts and who were told by their brokerages that they were a low risk alternative to stocks. The deals got so complicated and diffused that there are houses in foreclosure today where the mortgage holder can't even be determined. If you want to assign blame, look at who got the most profit from fee's. Just like Ken Lay, you can't put 10 million in your pocket and say, "I wasn't responsible for understanding this".
I actually have a little experience with this, worked for a bank doing mortagage deals to build up sales on the open market, however this was commercial re. the bank I worked for owned one of the larger residential mortgage companies in this area (tex) and the bank I worked for kept tight screws on the mortgage company because the bank I worked for funded their operations. I also did some credit work on a couple of a couple of independent mortgage companies. I know only one thing I can add to this conversation, those lenders (really sales people) made tons of money. it was in their best interest to book and move. I believe a mortgage only had to show a few months of good pay history before it got rap in an investment and sold on the open market.
I am sure the investors weren't complaining when they got high yield returns from those notes. People will always chase profits, if not sub prime, then something else.
You know, just Google Subprime Mortgage Scandal and you can read all day. I've been keeping up with it because I own a bunch of CMO's though almost exclusively Fannie May and Ginnie May insured and so far seem to be holding their marketable value (according to my brokerage's website valuations) and paying their interest income. You know Deep, when my broker bought these for my account I didn't even get a prospectus and I wouldn't have understood the implications if I had. How would I have known if in my package of 1000 mortgages, I had Ballon Mortgages, Liar Loans, Option ARM's, Piggy Backed down payment loans, Teaser Rate Loans or Stretch Loans.? Once these loans went through the original lenders, to the major banks to the borkerage houses to the local brokers and then to the end holder they become sanitized. Just like any other crime family, the Justice department is going to start rolling up the food chain till the CEO of Citicorp ends up holding the bag.
do you just like to sound really dumb? are you secretly laughing your ass off as you write posts like that knowing people will take the bait?
He's done his schtick on here for years. I like how other members pat him on the head when he does say something politicaly relevant. Quite amazing the grip tj has on them.
Hum.... AP Poll: To fix economy, get out of Iraq The heck with Congress' big stimulus bill. The way to get the country out of recession — and most people think we're in one — is to get the country out of Iraq, according to an Associated Press-Ipsos poll. Pulling out of the war ranked first among proposed remedies in the survey, followed by spending more on domestic programs, cutting taxes and, at the bottom end, giving rebates to poor people in hopes they'll spend the economy into recovery. http://news.yahoo.com/s/ap/20080208/ap_on_bi_ge/stimulus_ap_poll
Who deserves most of the blame for the economy's troubles? More than half — 56 percent — pointed the finger at mortgage lenders. Just like Jesus did.
