Obama turned Justice Department into his own extortion machine

[BurnItDwn]

When are the executions of said bankers? Will the executions be public?

 

[norseamd]

It's not even a question if the CRA was an issue because it flat out wasn't. The reason that so many bad loans were made was because the big banks were buying them up as fast as they could to print out more mortgage-backed securities. The loan originators got a fat ass fee and didn't have to keep the loan on the books for more than a few weeks or months. This meant the loan originator had zero risk and made more money the more loans they could make. The big boys knew they were selling shit but they sliced and diced it in such a way that no one could tell that it was shit.

This isn't my speculation or a guess, it is factual history.

That basically lines up perfectly with the storyline of The Big Short.

 

[Darwin333]

The blame shouldn't be laid solely at the feet of bankers but it should be laid substantially at their feet due to the absolutely massive fraud they were engaging in. There is never one cause to anything but there is often a primary cause and in this case that was the banks, and unregulated shadow banking in particular. To deny this is to be in denial.

One major group that is not blamed but should be is everyday normal, greedy people without great wealth though. What people often forget is that it takes two to tango in creating a fraudulent mortgage: the bank to supply it and the person to sign it. I'm sure some people who didn't understand what they were signing and were victims, but plenty more did know and signed it anyway because they thought they could flip the house.

The banks committed a lot of fraud, but so did a lot of regular citizens.

I don't argue that one bit but one side of the transaction are trained experts and the other side is your average dumbass regular joe. Who should be held more accountable? Besides, if it was just the liar loans the destruction of our economy would have been a fraction of what it was. It was the even better trained experts buying up every bad loan they could get their hands on, bundling them up into uber complicated securities, selling them as AAA rated investments and leveraging the fuck out of them. Without that last fraudulent step the hit to the overall economy would have easily been bearable.

 

[fskimospy]

I don't argue that one bit but one side of the transaction are trained experts and the other side is your average dumbass regular joe. Who should be held more accountable? Besides, if it was just the liar loans the destruction of our economy would have been a fraction of what it was. It was the even better trained experts buying up every bad loan they could get their hands on, bundling them up into uber complicated securities, selling them as AAA rated investments and leveraging the fuck out of them. Without that last fraudulent step the hit to the overall economy would have easily been bearable.

No argument here that the bankers are far more accountable, I was just mentioning that the role of every day fraudsters in this catastrophe is often overlooked.

 

[werepossum]

It's not even a question if the CRA was an issue because it flat out wasn't. The reason that so many bad loans were made was because the big banks were buying them up as fast as they could to print out more mortgage-backed securities. The loan originators got a fat ass fee and didn't have to keep the loan on the books for more than a few weeks or months. This meant the loan originator had zero risk and made more money the more loans they could make. The big boys knew they were selling shit but they sliced and diced it in such a way that no one could tell that it was shit.

This isn't my speculation or a guess, it is factual history.

The CRA is what started it though. When the GSEs began taking non-conforming loans and no longer required such "out-dated metrics" as income verification, employment verification, and credit history, lenders were free to make junk loans across the board. I don't blame the CRA because those lenders did not HAVE to make those loans, but let's not ignore that one small piece of the puzzle either.

Edit: The other part of this is that the loans themselves were a small part of the crash. Houses are inherently worth a substantial amount. Derivative bonds based on those loans' returns on the other hand, not so much. A crash such as we had required widespread bad loans AND widespread derivative bonds AND removal of the separation between banking types. Without all the pieces, we have only a normal recession.

 

[werepossum]

No argument here that the bankers are far more accountable, I was just mentioning that the role of every day fraudsters in this catastrophe is often overlooked.

But Darwin's larger point is that many (probably most by far) of those people are not fraudsters, but merely too stupid (or just unsophisticated) to understand that they could not repay their loans. The others . . . well, likely they all lost those houses quickly anyway.

 

[Darwin333]

The CRA is what started it though. When the GSEs began taking non-conforming loans and no longer required such "out-dated metrics" as income verification, employment verification, and credit history, lenders were free to make junk loans across the board. I don't blame the CRA because those lenders did not HAVE to make those loans, but let's not ignore that one small piece of the puzzle either.

Edit: The other part of this is that the loans themselves were a small part of the crash. Houses are inherently worth a substantial amount. Derivative bonds based on those loans' returns on the other hand, not so much. A crash such as we had required widespread bad loans AND widespread derivative bonds AND removal of the separation between banking types. Without all the pieces, we have only a normal recession.

Come on, CRA had nothing to do with the creation of mortgage backed securities and that is what caused the insane amount of bullshit loans to be made. Not only did it create a huge demand but it made making bad loans extremely profitable. The CRA didn't ever make bad loans profitable and they didn't require that banks create mortgage backed securities and then start demanding any and all bad loans they could buy up.

 

[Darwin333]

But Darwin's larger point is that many (probably most by far) of those people are not fraudsters, but merely too stupid (or just unsophisticated) to understand that they could not repay their loans. The others . . . well, likely they all lost those houses quickly anyway.

Exactly, the fraud that was committed on the borrowers side was punished because those people lost a ton of money, either directly or through loss of equity or both and a ton of them lost their homes. While everyone else involved in the fraud kept most of, or all, of their gains. The originators got to keep the insane amount of cash they made during the boom, the execs selling bullshit securities got to keep the insane amount of money they made from selling said bullshit securities and the biggest guys that ran their companies into the ground to the point of requiring the biggest government bailout ever even got huge golden parachutes.

 

[IronWing]

The CRA is what started it though. When the GSEs began taking non-conforming loans and no longer required such "out-dated metrics" as income verification, employment verification, and credit history, lenders were free to make junk loans across the board. I don't blame the CRA because those lenders did not HAVE to make those loans, but let's not ignore that one small piece of the puzzle either.

Edit: The other part of this is that the loans themselves were a small part of the crash. Houses are inherently worth a substantial amount. Derivative bonds based on those loans' returns on the other hand, not so much. A crash such as we had required widespread bad loans AND widespread derivative bonds AND removal of the separation between banking types. Without all the pieces, we have only a normal recession.

The GSEs were very late to the subprime game. I hold them accountable for jumping in at a time that anyone with a brain knew that it was a bubble. The entry of the GSEs probably extended the bubble by a year or two as they brought fresh capital to the market but they certainly weren't the driver. My guess is that the GSEs' shareholders were demanding returns like they were seeing with the other mortgage lenders and pushed the GSEs to get in.

 

[ivwshane]

The CRA is what started it though. When the GSEs began taking non-conforming loans and no longer required such "out-dated metrics" as income verification, employment verification, and credit history, lenders were free to make junk loans across the board. I don't blame the CRA because those lenders did not HAVE to make those loans, but let's not ignore that one small piece of the puzzle either.

Edit: The other part of this is that the loans themselves were a small part of the crash. Houses are inherently worth a substantial amount. Derivative bonds based on those loans' returns on the other hand, not so much. A crash such as we had required widespread bad loans AND widespread derivative bonds AND removal of the separation between banking types. Without all the pieces, we have only a normal recession.

You could say the CRA allowed banks to make crappy loans by hiding their activity through the guise of making loans more accessible to minorities but you can't say it caused them to do what they did. There were no requirements for them to lower their standards. The banks would have never made such loans had there not been the option to repackage them and sell them to willing buyers (who then resold them).

 

[Thump553]

Banks and more particularly bankers got off incredibly easy. Not a single banker was ever charged with a crime, much less convicted.

OP does have a point with his January 20th comment-the bankers are looking forward to the good old bad days yet again once Trump repeals every restriction he can get his hands on. Some populist he is.

 

[agent00f]

The GSEs were very late to the subprime game. I hold them accountable for jumping in at a time that anyone with a brain knew that it was a bubble. The entry of the GSEs probably extended the bubble by a year or two as they brought fresh capital to the market but they certainly weren't the driver. My guess is that the GSEs' shareholders were demanding returns like they were seeing with the other mortgage lenders and pushed the GSEs to get in.

The GSE were very late to the subprime game because the very definition of *sub* - *prime* is unable to meet standards of GSE's. That's obvious enough by definition but nobody's ever accuse folks throwing out accusations they read on fox/breitbart of being educated enough to know what they're talking about.

 

[MooseNSquirrel]

Yeah? Well it was a Democratic Congress that forced these banks to give loans to people undeserving of them. Also, I'm glad you like them getting these fines because the shareholders aren't paying for them. These hefty extortions are being passed directly to consumers. That's Obama's "Fuck you very much" gift to consumers.

Thats been debunked so many times its incredible people still bring this crap up. Honestly, you have no business criticizing anyone at this point. Youre just another shill repeating fake news and opinion as fact

The banks were all happy when they were collecting their origination fees for bad loans and handing out bonuses left and right.

WSJ hates the democrats and Obama and loves the big banks. Where was their investigative reporting when the crisis was developing?

Nowhere. They were too busy pushing right wing agendas and touting bad science as credible evidence for anything that doesn't fit their profit first agenda. Fuck the WSJ and their idiotic editorial board. They are worthless.

Do you work for them? That would make a lot of sense. They are, after all, the smartest guys in the room.

 

[Dari]

Agreed, but look at it this way. These mega banks were in large part responsible for the depth and severity of the crash. Instead of being held liable, they were judged "too big to fail" and bailed out, allowing them to snap up smaller players for a song and become even bigger. Now that they are safely funded - for which Obama deserves some credit - they finally are being punished as punishment for their part.

I cannot be comfortable using pseudo-Justice even for this, but I can certainly see the poetic justice.

What happened was the government encouraged some of the firms that were at the heart of the financial crisis to be bought by other firms. For example, the government gave their blessings to BoA buying Merrill Lynch and Countrywide. Without BoA doing this, things would've been much much worse. Keep in mind that this was at a time when BoA was celebrated for NOT being a part of the Wall Street club. How did Obama thank BoA for being party to saving capitalism? By suing them for massive fraud committed by those bought firms. Obama fucked BoA so hard his dick was piercing their entrails. I think he got almost $20B out of them. All this for BoA stepping to the place and buying these two firms that had caused so much grief and weren't worth much anyway. In the end, BoA got suckered by Wall Street and Obama.

 

[Dari]

One last thing. People here harping about the bundling of mortgages into various exotic securities can do so now because we all saw the outcome. Before the crisis, everyone thought CDOs were revolutionary. Now we know the math was imperfect. Hindsight is 20/20 but, before the autopsy of the financial crisis, no one suspected the quants of being on the wrong side of history. You absolutely cannot blame finance for that. As with most things, the mistakes were never intentional. For example, bundling a bunch of high risk loans with some low risk ones were, according to the math, sound over the long run. If the bankers or the quants knew these were going to blow up they would've stopped selling them. The true blame lays at the foot of stupid borrowers, inept regulators and greedy/selfish politicians. Bankers simply did what they've always done, make money for their owners. They owe no one any apology whatsoever. If anyone should be remorseful, it's government for laying the groundwork for what became a catastrophe. I understand that we are only 7 years removed from the crisis so people here are bias in their thoughts and think with only emotions. But, let's not forget that, today, most economic historians blame government for the mess that was the Great Depression. History will prove the bankers right again.

 

[IronWing]

They owe no one any apology whatsoever.

Yes, yes they do.

 

[Triloby]

When are the executions of said bankers? Will the executions be public?

A good ol' tarring and feathering will do just fine!

 

[werepossum]

Come on, CRA had nothing to do with the creation of mortgage backed securities and that is what caused the insane amount of bullshit loans to be made. Not only did it create a huge demand but it made making bad loans extremely profitable. The CRA didn't ever make bad loans profitable and they didn't require that banks create mortgage backed securities and then start demanding any and all bad loans they could buy up.

Sure they did. Previously, there was no incentive to make bad loans because non-conforming loans were unsaleable. Since the GSEs would not buy the loans, banks charged higher interest rates. But once the GSEs began buying loans without rigid compliance, banks were able to make such loans and immediately hand the risk to the GSEs - at a profit - while avoiding those awkward dressing-downs in front of Congress for not meeting their HUD targets. I wouldn't argue it was THE cause, but it was a piece of the puzzle.

This stands out to me because when the Fannie Mae director (IIRC) defended the practice of dropping such "outdated metrics" as income and employment verification and credit history, that's when I knew that those people predicting a crash and recession were correct. If the federal government is guaranteeing loans without any assurance that those loans can even possibly be paid back, the system has to crash. We are seeing the same thing now with student loans.

 

[werepossum]

You could say the CRA allowed banks to make crappy loans by hiding their activity through the guise of making loans more accessible to minorities but you can't say it caused them to do what they did. There were no requirements for them to lower their standards. The banks would have never made such loans had there not been the option to repackage them and sell them to willing buyers (who then resold them).

The latter was my point. The GSEs bought loans without traditional due diligence. That doesn't excuse the lenders from making bad loans, but it did offer them an easy way to hit HUD targets while making a profit.

Had either the lenders or the GSEs limited this practice to hitting HUD targets in markets where those targets are difficult to hit, it would have been a mere blip, not even a minor recession.

 

[werepossum]

One last thing. People here harping about the bundling of mortgages into various exotic securities can do so now because we all saw the outcome. Before the crisis, everyone thought CDOs were revolutionary. Now we know the math was imperfect. Hindsight is 20/20 but, before the autopsy of the financial crisis, no one suspected the quants of being on the wrong side of history. You absolutely cannot blame finance for that. As with most things, the mistakes were never intentional. For example, bundling a bunch of high risk loans with some low risk ones were, according to the math, sound over the long run. If the bankers or the quants knew these were going to blow up they would've stopped selling them. The true blame lays at the foot of stupid borrowers, inept regulators and greedy/selfish politicians. Bankers simply did what they've always done, make money for their owners. They owe no one any apology whatsoever. If anyone should be remorseful, it's government for laying the groundwork for what became a catastrophe. I understand that we are only 7 years removed from the crisis so people here are bias in their thoughts and think with only emotions. But, let's not forget that, today, most economic historians blame government for the mess that was the Great Depression. History will prove the bankers right again.

I really don't think so. Certainly government has its share of the blame. We all do. But everybody knows why the GSES stopped requiring those "outdated metrics", just like everyone knows that once lenders stopped such basic measures, there were no low risk loans. Remember that government never required these measures, or even recommended them. Had lenders used them only when necessary, there would have been no crash.

Let's also not forget that much of what government did was in response to big banks spending millions lobbying for government to do those things. Greedy/selfish politicians? Banks spent millions getting those politicians elected. Inept regulators? Banks spent millions lobbying politicians to regulate with a hands off light touch. Abolish Glass-Steagall? Banks spent millions lobbying for just that. Same with stupid borrowers. People did not just one day decide to take out ruinous interest-only loans or balloon payment loans or adjustable rate loans that even without interest hikes adjusted to non-feasible payment levels; lenders convinced them that these things were prudent, sensible, common practice. Borrowers paid way too much for houses because lenders used tame appraisers to certify that false worth.

I would not argue that bankers were THE cause of the collapse, and I dislike the ridiculous charges being used. But bankers were certainly A cause for the collapse, and compared to most of us, got off pretty darned lightly. Now it's time to pay the bill for your share.

 

[IBCTamil]

I am going to tell about indian Politics, Current activities in india is Demonetization, It was announced by prime minister of Modi. Now so many poor people affected but in future it will good for indian's

 

[norseamd]

I am going to tell about indian Politics, Current activities in india is Demonetization, It was announced by prime minister of Modi. Now so many poor people affected but in future it will good for indian's

Please, and Im begging you please, Indian Demoonetization is an absolutely huge issue, and so please make a new thread for it. Otherwise it will only get crowded out by the rest of the discussion in this thread.

 

[theeedude]

You are going to see what a real "own extortion machine" DOJ looks like under Trump. But I bet the Republican concern trolls won't be out in force like they are to defend Wall Street crooks.

 

[BurnItDwn]

A good ol' tarring and feathering will do just fine!

Tarring and feathering has the unfortunate downside of leaving them alive.
They need to be made dead.

 

[Darwin333]

The CRA is what started it though. When the GSEs began taking non-conforming loans and no longer required such "out-dated metrics" as income verification, employment verification, and credit history, lenders were free to make junk loans across the board. I don't blame the CRA because those lenders did not HAVE to make those loans, but let's not ignore that one small piece of the puzzle either.

Edit: The other part of this is that the loans themselves were a small part of the crash. Houses are inherently worth a substantial amount. Derivative bonds based on those loans' returns on the other hand, not so much. A crash such as we had required widespread bad loans AND widespread derivative bonds AND removal of the separation between banking types. Without all the pieces, we have only a normal recession.

That was my point, the bad loans themselves would have hurt the economy a fraction of as much. It was the MBS that they leveraged through their asses. And yes, I didn't mention it but the repeal of Glass-Stegal was also a huge factor, had that not been repealed then this huge detonation of our economy wouldn't have been possible. We could have let the investment firms go under and not have to deal with "too big to fail" bullshit, bullshit that we not only didn't fix but in fact made even worse. It's amazing how short Glass-Stegal was and how very freaking long Dodd Frank is yet the former would prevent another similar FUBAR situation and the latter doesn't even come close.