The Last Mystery of the Financial Crisis

[Lakhota]

By Matt Taibbi
June 19, 2013 9:00 AM ET

It's long been suspected that ratings agencies like Moody's and Standard & Poor's helped trigger the meltdown. A new trove of embarrassing documents shows how they did it.

What about the ratings agencies?

That's what "they" always say about the financial crisis and the teeming rat's nest of corruption it left behind. Everybody else got plenty of blame: the greed-fattened banks, the sleeping regulators, the unscrupulous mortgage hucksters like spray-tanned Countrywide ex-CEO Angelo Mozilo.

But what about the ratings agencies? Isn't it true that almost none of the fraud that's swallowed Wall Street in the past decade could have taken place without companies like Moody's and Standard & Poor's rubber-stamping it? Aren't they guilty, too?

Man, are they ever. And a lot more than even the least generous of us suspected.

Much More: The Last Mystery of the Financial Crisis | Politics News | Rolling Stone

Bloated bundled mortgages and crooked ratings agencies by the ones too crooked to fail. Average Americans don't stand much of a chance - even when we know what's going on. We're fucked.

 

[Lakhota]

Home loans didn't bring on the recession; gimmicky financial instruments bloated to 100 times their value are what caused all this pain.

Wall Street turned a few million home-loans into what Warren Buffet called "economic weapons of mass destruction," cratered the global economy and then, when the bubble burst, turned around and insisted on a massive bailout courtesy of the American tax-payer.

Much More: The Absurd Zombie Lie About the Economy Right-Wingers Desperately Cling To -- And Why It's Totally Wrong | Alternet

 

[idb]

...and they're still listened to and treated like Sages.
How do these outfits have any credibility at all?

The answer is that the international financial institutions, political regimes, global corporations and super-wealthy inhabit their own world in which our world is nothing more than a tool.
They are untouchable to us.

Luckily, I have alcohol.....

 

[Lakhota]

...and they're still listened to and treated like Sages.
How do these outfits have any credibility at all?

The answer is that the international financial institutions, political regimes, global corporations and super-wealthy inhabit their own world in which our world is nothing more than a tool.
They are untouchable to us.

Luckily, I have alcohol.....

Amen!

I no longer even trust the stock markets. I believe they are rigged and dominated by high-speed computerized algorithms.

 

[Two Thumbs]

...and they're still listened to and treated like Sages.
How do these outfits have any credibility at all?

The answer is that the international financial institutions, political regimes, global corporations and super-wealthy inhabit their own world in which our world is nothing more than a tool.
They are untouchable to us.

Luckily, I have alcohol.....

Amen!

I no longer even trust the stock markets. I believe they are rigged and dominated by high-speed computerized algorithms.

And yet you will point to them, again, as a sign that obama has done something.



I'll wait until this stuff comes out from an actual news source. RS isn't news, it's propaganda and for all we know, they are following orders.

 

[CrusaderFrank]

By Matt Taibbi
June 19, 2013 9:00 AM ET

It's long been suspected that ratings agencies like Moody's and Standard & Poor's helped trigger the meltdown. A new trove of embarrassing documents shows how they did it.

What about the ratings agencies?

That's what "they" always say about the financial crisis and the teeming rat's nest of corruption it left behind. Everybody else got plenty of blame: the greed-fattened banks, the sleeping regulators, the unscrupulous mortgage hucksters like spray-tanned Countrywide ex-CEO Angelo Mozilo.

But what about the ratings agencies? Isn't it true that almost none of the fraud that's swallowed Wall Street in the past decade could have taken place without companies like Moody's and Standard & Poor's rubber-stamping it? Aren't they guilty, too?

Man, are they ever. And a lot more than even the least generous of us suspected.

Much More: The Last Mystery of the Financial Crisis | Politics News | Rolling Stone

Bloated bundled mortgages and crooked ratings agencies by the ones too crooked to fail. Average Americans don't stand much of a chance - even when we know what's going on. We're fucked.

Fannie and Freddie set the standard for AAA rated paper

 

[CrusaderFrank]

Skimmed the first 2 pages, no mention of Fannie or Freddie...weird

Like discussing physics and not mentioning Einstein, Newton or Hawkings

 

[editec]

This is one of those cases where those who fault GOVERNMENT for the meltdown and those who fault CAPITALISM and GREED are BOTH RIGHT.

Why are there ONLY three bonds rating agencies?

Because the Government says that those three agencies are the only agencies that are approved to rate bonds.

Now how did these bonds rating agencies all get it so terribly terribly wrong?

They got it wrong because, had they gotten it right, they knew they would lose business to their two other competitors (this is where "market" greed plays into the picture)

The meltdown could NOT have happened without both GOVERMENT REGULATIONS and a failure of government to REGULATE too.

The debate about whether a free market could have prevented this mess is ridiculous.

There is not now --nor has there ever been -- anything remotely approaching a free market to pervert.

 

[CrusaderFrank]

Fannie and Freddie gave sub prime loans AAA rating

 

[Bfgrn]

Skimmed the first 2 pages, no mention of Fannie or Freddie...weird

Like discussing physics and not mentioning Einstein, Newton or Hawkings

There’s a dangerous — and misleading — argument making the rounds about the causes of our current credit crisis. It’s emanating from Washington where politicians are engaging in the usual blame game but this time the stakes are so high that we can’t afford to fall victim to political doublespeak. In this fact-free zone, government sponsored mortgage giants Fannie Mae and Freddie Mac caused the real estate bubble and subprime meltdown. It’s completely false. Fannie Mae and Freddie Mac were victims of the credit crisis, not culprits.

Start with the most basic fact of all: virtually none of the $1.5 trillion of cratering subprime mortgages were backed by Fannie or Freddie. That’s right — most subprime mortgages did not meet Fannie or Freddie’s strict lending standards. All those no money down, no interest for a year, low teaser rate loans? All the loans made without checking a borrower’s income or employment history? All made in the private sector, without any support from Fannie and Freddie.

Look at the numbers. While the credit bubble was peaking from 2003 to 2006, the amount of loans originated by Fannie and Freddie dropped from $2.7 trillion to $1 trillion. Meanwhile, in the private sector, the amount of subprime loans originated jumped to $600 billion from $335 billion and Alt-A loans hit $400 billion from $85 billion in 2003. Fannie and Freddie, which wouldn’t accept crazy floating rate loans, which required income verification and minimum down payments, were left out of the insanity.

There’s a must-read study by staff members of the Federal Reserve Bank of New York analyzing the roots of the subprime crisis that came out in March. I don’t think it got much attention then as the conclusions seemed uncontroversial at the time. But now that Washington politicians are trying to rewrite history, it should be mandatory reading for every American interested in knowing how we got here.

The study identifies five causes of the subprime meltdown:
-Convoluted loan products that consumers didn’t understand.
-Credit ratings that didn’t do a good job highlighting the risks contained in subprime-backed securities.
-Lack of incentives for institutional investors to do their own research (they just relied on the credit ratings).
-Predatory lending and borrowing (which I think means fraud perpetrated by borrowers).
-Significant errors in the models used by credit rating agencies to assess subprime-backed securities.

You’ll note in the Fed’s five causes that there’s some culpability for lenders, borrowers, investors and credit raters. There’s no blame for Freddie Mac or Fannie Mae which had little or nothing to do with the entire situation.

Businessweek

 

[The Rabbi]

BigFruckingRetard again gets taken in.
If you expand the time frame a year or two earlier you find FN/FR were buying alt-a paper like nothing else. Further, their own lending standards had tanked to where their A paper was really sub prime.
They were not necessarily culprits, any more than any other lender was a culprit. The real culprit was the Fed, which kept interest rates too long too long and made mortgage lending intensely profitable. Until it wasn't.

 

[Bfgrn]

BigFruckingRetard again gets taken in.
If you expand the time frame a year or two earlier you find FN/FR were buying alt-a paper like nothing else. Further, their own lending standards had tanked to where their A paper was really sub prime.
They were not necessarily culprits, any more than any other lender was a culprit. The real culprit was the Fed, which kept interest rates too long too long and made mortgage lending intensely profitable. Until it wasn't.

Link(s)?

Sure, I understand, it is just like the unemployment situation...

"People are not on unemployment for 2 years because there are no jobs. There are no jobs because people are on unemployment for 2 years."
The Rabbi

 

[Bfgrn]

Fannie and Freddie gave sub prime loans AAA rating

Subprime lending was at its height from 2004 to 2006.

Federal Reserve Board data show that:

• More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

• Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

• Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

Read more here: Private sector loans, not Fannie or Freddie, triggered crisis | McClatchy

 

[The Rabbi]

BigFruckingRetard again gets taken in.
If you expand the time frame a year or two earlier you find FN/FR were buying alt-a paper like nothing else. Further, their own lending standards had tanked to where their A paper was really sub prime.
They were not necessarily culprits, any more than any other lender was a culprit. The real culprit was the Fed, which kept interest rates too long too long and made mortgage lending intensely profitable. Until it wasn't.

Link(s)?

Sure, I understand, it is just like the unemployment situation...

"People are not on unemployment for 2 years because there are no jobs. There are no jobs because people are on unemployment for 2 years."
The Rabbi

Proving your inability to learn, once again.

 

[Edgetho]

Did Rolling Stoned explain what Jamie Gorelick, the one person in American who needs to be executed on general principles alone (she of Reno's and the Rapist Clinton's "Wall" Fame)..... Did they explain what that cvnt was doin sitting on the Board of Fannie Mae collect MILLIONS of Dollars in pay and bonuses?

No? Since 99.99% of you libtards aren't bright enough to connect th dots in a childrens' Comic Book, let me ask you why a fuking lawyer was sitting on the Board of Fannie Mae, at the #2 position?

She had no background in Business. No background in Finance. No background in Banking.

And then there's Franklin Raines. He looted MILLIONS upon MILLIONS of dollars from Fannie.

As did Jamie Gorelick. As did Jim Johnson. As did Tim Howard.

Six times between 2003 and 2006, Republicans tried to rein-in Fannie Mae and Freddie Mac. All six times, dimocrap scum started screaming RACISM!!!! (because of the CRA) and killed every attempt by Republicans to stop the madness.

THE worst Fed Chairman in Galactic History didn't help none, either. I tried to tell people he was an idiot, but they wouldn't listen.

What can you expect from someone married to Andrea Mitchell?

All these people, Raines, Johnson, Howard, Gorelick, Greespawn.....

Every single one of them -- dimocraps.

The scum of the Earth.

And oh, one more thing.... Hank Greenberg, who invented the CDS, swears that if Client #9 hadn't gone after him like Himmler after a Jewish Resistance Fighter, that none of this would have happened. That people who took over AIG after him had no clue what they were doing.

I don't know about that. But I know that the Financial Crisis was not 90% dimocraps' fault. It wasn't 99%.

It was 100% totally, completely and absolutely dimocraps fault. Beginning to end.

I saw it coming. I warned people. I tried to stop them from ruining their lives. But they didn't listen.

Now, many of them have lost everything. Their homes, their wives and husbands, their savings, their retirement, their families, their minds, their jobs.... Everything.

But the top dimocrap scum who orchestrated all this?

They're doing just fine, thank you.

Oh, and no. I really don't feel too awfully sorry for the people that lost everything.

Stupidity pays its own dividend.

 

[Mad Scientist]

I no longer even trust the stock markets. I believe they are rigged and dominated by high-speed computerized algorithms.

Toro will be along shortly to prove how wrong you are.

 

[Bfgrn]

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

Read more here: Private sector loans, not Fannie or Freddie, triggered crisis | McClatchy

 

[Bfgrn]

BigFruckingRetard again gets taken in.
If you expand the time frame a year or two earlier you find FN/FR were buying alt-a paper like nothing else. Further, their own lending standards had tanked to where their A paper was really sub prime.
They were not necessarily culprits, any more than any other lender was a culprit. The real culprit was the Fed, which kept interest rates too long too long and made mortgage lending intensely profitable. Until it wasn't.

Link(s)?

Sure, I understand, it is just like the unemployment situation...

"People are not on unemployment for 2 years because there are no jobs. There are no jobs because people are on unemployment for 2 years."
The Rabbi

Proving your inability to learn, once again.

Translation...Link(s)...

Rabbi: NO

 

[editec]

How quickly the TOPIC DRIFT has destroyed the thread.

This thread is about RATING AGENCIES not Freddie or Fanny or the private banks that created bonds.

This thread asks WHY only three rating agencies and why did they get it SO WRONG?

.

 

[zeke]

Fannie and Freddie gave sub prime loans AAA rating

Subprime lending was at its height from 2004 to 2006.

Federal Reserve Board data show that:

• More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

• Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

• Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

Read more here: Private sector loans, not Fannie or Freddie, triggered crisis | McClatchy

Why you want to bring up facts of the matter? People like Rabid have spent a lot of time and effort making up the fantasy that the entire housing mess was created by Fannie and Freddie.

Then you want to introduce facts into the fantasy. Why? There is not a right winger on here that would know a housing "fact" if it slapped them in the face.

Didn't you know that Franklin Raines (Fannie CEO) wrote every bad mortgage loan out there?

No, this topic has been "discussed" numerous times right here. And no matter what info is presented or even how that info is presented, people like Rabid will come to the wrong conclusion every time. Facts be damned. They even have a group of writers they quote who preserve the fantasy by writing fiction as facts. And the right wingers love that.

Never let fact get in the way of a good lie. That's the right wing mantra.