Sabre52
Cave Dweller
Me and my gal, Rosie
Member since August 2005
Posts: 20,466
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Post by Sabre52 on Dec 3, 2011 14:07:06 GMT -5
Man I swear Rich, sometimes you are positively obtuse. I was not standing up for the banks which were equally culpable. I said I was not defending them if you can friggin read. Banks are greedy which is why they went for the Fannie/Freddie mortgage bundling security scam and things like European junk bonds etc. I was also not placing all the blame on the Fed. Was just saying that the Fed has been monkeying with interest rates and artificially holding them down for years now. Not being able to make money on loans or federal Treasury notes etc helped drive the banks into making more and more risky investments to keep their stockholders satisfied by keeping up the bank income streams. The cluster F*ck were in today was the result of Wall Street/ bank greed, Fannie/Freddie's dishonest machinations, the Feds interference with the free market, and the stupidity of folks who buy homes they cannot afford. Of course banks have gotten more conservative now. Now they simply borrow money from the feds at almost zero interest and then use that free money to buy T-bills from the feds at higher interest with no risk. Way easier than making home loans to folks and taking all that mortgage risk. It's a federally supported no risk money machine for the banks. The Feds interference with interest rates is also what drives the wall street profits you hate so much. Every time the Fed prints more money ( which is like a tax on us all, as it's inflationary) Wall Street rejoices and the market goes up. When the Fed holds down interest rates it also forces more investors into the stock market because parking money in CD's at .8% interest doesn't even keep up with inflation so folks have to make risky investment in stocks and such to make decent cash flow. That makes Wall Street real happy too. You're accusing me of being disingenuous while you are being precisely that by trying to place on the blame on banks and wall street while ignoring the bad things being done by our government which enable and exacerbate the situation ..Mel
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Post by parfive on Dec 3, 2011 14:45:05 GMT -5
Quite a circle jerk you got goin’, Mel. First, it was "Not being able to make money on loans or federal Treasury notes etc helped drive the banks into making more and more risky investments to keep their stockholders satisfied by keeping up the bank income streams." Then it becomes "Now they simply borrow money from the feds at almost zero interest and then use that free money to buy T-bills from the feds at higher interest with no risk." So T-bills are no-risk now, but they weren’t back then? 10-year Treasuries: 2000 6.03 2001 5.02 2002 4.61 2003 4.01 2004 4.27 2005 4.29 2006 4.8 2007 4.63 2008 3.66 2009 3.26 2010 3.22 Oh, and the banks didn’t struggle to “keep up” their income streams, not when those income streams friggin’ EXPLODED into the stratosphere. .
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Sabre52
Cave Dweller
Me and my gal, Rosie
Member since August 2005
Posts: 20,466
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Post by Sabre52 on Dec 3, 2011 19:04:43 GMT -5
Again Rich. as I said in my at post, banks are taking a more conservative path "now" days and finding it's easier just to play the T-Bill game, even at the lower interest rates rather than risk investing in mortgages during this failed real estate market. Why do you think it's so much harder to get a bank loan these days? Back then, they were playing fast and loose, not so worried about risk, and fell victim to their own greed by buying toxic assets touted as good buys by Fannie and Freddie and other sellers. It's not a circle jerk on my part, I was just pointing out they just simply changed their game to the safer bet...Mel
PS: The problem with all these articles you dig up as footnotes to support your views is, if you read a lot of financial journals or watch a lot of business TV, you'll see a dozen different experts with a dozen different views on why things happen. I'm not a business expert, though I do a lot of investing as a hobby, but I'm astute enough to understand most things that happen are not due to a single simple reason. I also know enough to realize every person in finance has their own viewpoint shaded by their own biases, theories etc. I prefer to read and watch a lot of different stuff and make up my own mind just as I do when investing. As far as I'm concerned, an article written by any one writer is just that, an article written by a single writer with is own viewpoint or theory. It's not hard truth, it's just their theory as to what is truth, just as you and I have different ideas about what is true or not.
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Post by parfive on Dec 4, 2011 2:08:25 GMT -5
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Sabre52
Cave Dweller
Me and my gal, Rosie
Member since August 2005
Posts: 20,466
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Post by Sabre52 on Dec 4, 2011 10:07:54 GMT -5
You're almost getting the idea Rich but still not quite *L*. Fannie and Freddie did not really sucker any banks. The banks knew what they were getting ( even though many say they did not) as Fannie and Freddie "guaranteed" the toxic mortgage asset bundles. Fannie and Freddie suckered "us, the taxpayers". The banks were covered by the guarantees while the taxpayers get the bailout bill from Fannie and Freddie. The banks get to make the case they were deceived and ask for bailouts too. The taxpayers get the bill for it all. *L* Neat piece of work huh?......Mel
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Post by parfive on Dec 6, 2011 4:09:35 GMT -5
No, I’m not almost getting your spin, Mel. F&F were followers, not leaders, in this mess. They didn’t originate subprime, they weren’t even allowed to guarantee it until they got a waiver in late ‘05. And F&F didn’t invent tranches of tranches, CDS, CDS squared, synthetic CDS and all the other gobbledygook. The banks created this web of crap and touted it and the ratings agencies played right along. Hell, when the banks absolutely positively KNEW it was crap, they’d sell it and then short the customer to boot. I dunno where this banks were deceived idea comes from, but they got bailed out in a lot more directions than just F&F. And yeah, their wholly owned subsidiary came in handy, as usual.
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grayfingers
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Member since November 2007
Posts: 4,575
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Post by grayfingers on Dec 6, 2011 11:24:21 GMT -5
It is obvious that the banks were culpable by offering more and more loans to higher-risk borrowers, including undocumented immigrants. Many also committed mortgage fraud.
Investment banks on Wall Street were culpable for looking for more lucurative investments "with financial innovation such as the mortgage-backed security (MBS) and collateralized debt obligation (CDO), which were assigned safe ratings by the credit rating agencies. In effect, Wall Street connected this pool of money to the mortgage market in the U.S., with enormous fees accruing to those throughout the mortgage supply chain, from the mortgage broker selling the loans, to small banks that funded the brokers, to the giant investment banks behind them. "
I think that Fannie and Freddie were culpable for buying roughly 1/2 of all U.S. mortgages. As were the govt agencies that pushed these lax lending practices. "In 1995, the GSEs like Fannie Mae began receiving government tax incentives for purchasing mortgage backed securities which included loans to low income borrowers. Thus began the involvement of the Fannie Mae and Freddie Mac with the subprime market. In 1996, HUD set a goal for Fannie Mae and Freddie Mac that at least 42% of the mortgages they purchase be issued to borrowers whose household income was below the median in their area. This target was increased to 50% in 2000 and 52% in 2005.[121] From 2002 to 2006, as the U.S. subprime market grew 292% over previous years, Fannie Mae and Freddie Mac combined purchases of subprime securities rose from $38 billion to around $175 billion per year before dropping to $90 billion per year, which included $350 billion of Alt-A securities. Fannie Mae had stopped buying Alt-A products in the early 1990s because of the high risk of default. By 2008, the Fannie Mae and Freddie Mac owned, either directly or through mortgage pools they sponsored, $5.1 trillion in residential mortgages, about half the total U.S. mortgage market. The GSE have always been highly leveraged, their net worth as of 30 June 2008 being a mere US$114 billion. When concerns arose in September 2008 regarding the ability of the GSE to make good on their guarantees, the Federal government was forced to place the companies into a conservatorship, effectively nationalizing them at the taxpayers' expense." Bottom line is that though there were plenty of guilty parties, Fannie and Freddie ended up buying these toxic loans, and they knew what they were.
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Post by parfive on Dec 6, 2011 12:57:52 GMT -5
“ . . . about half the total U.S. mortgage market.”
Good for about 90% these days. ;D
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grayfingers
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Member since November 2007
Posts: 4,575
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Post by grayfingers on Dec 16, 2011 14:03:23 GMT -5
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Post by parfive on Dec 16, 2011 14:33:37 GMT -5
Lemme know when they sue the banksters who led the way.
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Post by jakesrocks on Dec 16, 2011 15:36:42 GMT -5
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Post by texaswoodie on Dec 16, 2011 18:51:45 GMT -5
Yup, and I don't know why Barney Frank is not being investigated as well. He did the exact same thing the CEO's are being charged with.
Curt
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