Email Trails Show Bankers Behaving Badly 251
An anonymous reader writes "The New York Times is running a pair of stories about U.S. financial institutions being investigated by the Federal government and courts for alleged systemic and illegal activities that helped bring about the housing crisis and collapse of the world economy in 2008. Emails produced during courtroom discovery reveal that insiders at JP Morgan Chase knew that the bundles of securities they were marketing to investors were rotten with bad loans. And emails show the credit rating agency Standard & Poor's (a division of McGraw-Hill) was determined to stop losing deals to its competitors by being too tough on the banks whose products they were evaluating."
Get a rope! (Score:5, Insightful)
Corruption is corruption.
Hang them from the trees on Wall Street as a warning to others.
And stop creating government regulations that give them lots of loopholes to exploit.
They're your ruling class (Score:2, Insightful)
Re:They're your ruling class (Score:5, Insightful)
FWIW, I think that would be a tragedy. They should be tried in court for felony larceny, stripped of their assets and holdings, and imprisoned. I would be happy if this was tried in the ICC at The Hague, as what they did was an international crime.
Re:They're your ruling class (Score:4, Insightful)
It is very common in 3rd world countries, but even in first world nations there are people that have armed guards.
However I suspect the "banker's well trained soldiers" the GP is referring to are the police forces and armies of the United States. As in, bankers buy politicians, which craft laws and direct their military forces to protect the bankers.
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I would be happy if this was tried in the ICC at The Hague, as what they did was an international crime.
I could settle for an old-fashioned tar&feathering. If their security is as bad as you imply, it should be easy&fun.
But I doubt it.
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And stop creating government regulations that give them lots of loopholes to exploit.
Yeap. Better totally deregulate the industry... you see?... no loopholes to exploit
(ducks)
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Re:Get a rope! (Score:5, Informative)
To be frank, deregulation has started in the 80s, with Reagan, Thatcher in the UK, and then continued with Bush senior and Clinton. A key event being the abrogation of the Glass Stingall Act, which separated retail and investment banking. This Act had been put in place after the crisis of 1929, to... avoid a new crisis. Obviously lessons are quickly forgotten when a lot of money are involved. Watch the documentary "Inside Job" for more about this.
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Glass Stegall Act doesn't matter. The rest of the world doesn't have it and it's the investment banks that went down, not mixed businesses. One could argue that diversification helped them avoid trouble.
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To be frank, deregulation has started in the 80s, with Reagan, Thatcher in the UK, and then continued with Bush senior and Clinton. ... Obviously lessons are quickly forgotten when a lot of money are involved.
Deregulation is a secondary issue. *Something* done in 2008 must have still been illegal, but no one is even hinting at trying to prosecute. Hell, look at HSBC that got away with a fine for *blatantly* illegal activities just a few weeks ago.
Laws (and enacting new laws) are useless if they are not being enforced.
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"Deregulation is bad for the economy!"
"Democrats deregulate too, see!"
Fine, but that does not invalidate the point. Regulations slow down some forms of commerce, but they prevent others from abusing the system. So a balance must be struck between slowing down the economy and allowing corruption and abuse.
Re:Get a rope! (Score:5, Interesting)
In all honesty, I have just realized a simple fact, America is a country with 2 economies. The rich people's economy and everybody elses, they follow 100% different rules, their money comes from 100% different sources, they are literally 2 distinct economies. The only way they intermix is that the rich one get's all it's money through tricking and extorting the money from the other one (and others, internationally), and the other one generates money for itself by internally ebbing the money about as well as importing money from other countries through valuable exports. The country's GDP comes from everyone's, however the country's GDP goes to the rich people's.
Viewing them as two totally separate and distinct economies the same way you view america's economy and mexico's economy actually makes a lot more sense...
Re:Get a rope! (Score:4, Interesting)
I think you left out "and producing -actual goods and services- which is the only source of money's value"...
Along the lines of your division into two distinct economies, I now am careful to use the term "making money" only to refer to the activities of engineers, scientists, mechanics, assembly-line workers, and the like. The financial sector, lawyers, politicians, CEOs and similar do not actually "make money"--they "get their hands on money". If everyone, including the media, paused carefully and selected the appropriate term, consistently asking when speaking to engineers, say, "How much money are you expecting to make", versus when speaking to investment bankers, "How much money are you expecting to get your hands on"--we'd go along way not only toward using language accurately but significantly improving society.
Re:Get a rope! (Score:4, Insightful)
That's also why we keep hearing how much the economy is improving and about record profits being made and yet nothing seems different.
It's also how we can hear for years on end how welfare and other 'entitlements' are killing us and how we can't possibly afford them for even one more year, but as soon as a banker's bonus is in jeopardy, we somehow find an extra trillion dollars we can throw at the problem.
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I'm not sure if you're mentally deficient, or just evil. But the world is now stupider for having your words in it. Bravo, Orc... bravo.
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I think Bo's post made sense. Maybe where it rankles a few chains is the fact that he blames Carter. If your hero is a politician I imagine you get offended a lot.
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are you high? he says it like it is.
Govt has the power to corrupt incentive structure in a way that spits in the face of common economic sense like no other entity, govt has the power to provide players with leverage by pushing interest rates down which amplifies the magnitude of malinvestments, govt has the power to force people to invest in 'safe papers' (retirement funds mandated to sit on AAA papers), govt has the power to decide who defines what AAA is in the first place, and govt can provide market wi
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Nice canned response. I'm not saying government doesn't play a role in all of his. Hell, for starters, the FEC being completely captured is exhibit A.
What I *am* saying is, if you think the main cause (or the distant cause) of all this is the CRA, Carter, Fanny and Freddy, then you are retarded. A retarded Orc. Who should stop watching FOX and trolling Breitbart. That is all.
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Yes government has the power to do a lot of bad stuff.
However that doesn't mean they were the prime actors here. Not at all.
FAR MORE of that toxic sludge was sold to private investors (aided by a corrupt ratings process) than ever went to F&F. If it was just F&F Lehmann and Wachovia and Countrywide and Merrill Lynch and Bear Stearns etc etc etc would still be in business and TARP and TARF would not have been necessary at all.
Then there was the whole thing about CDS, naked CDS, and the entire deal wi
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Poppycock. The reason the system blew up is that private lenders were selling MBS securities via unregulated private conduits. Because of this GSE's lost the ability to monitor and control mortgage originators. This contributed to a decline in underwriting standards and was a major cause of the financial crisis.
The default rate of these mortgages is FAR greater than anything F&F participated in.
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Oy, this canard again?
Sorry, no: http://www.ritholtz.com/blog/2009/06/cra-thought-experiment/ [ritholtz.com]
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Wake me up when there's a successful criminal prosecution. Bernie Madoff doesn't count: he targeted the wealthy.
He also doesn't count because he confessed. It's not like they actually caught him. In fact the SEC actively avoided catching him until he showed up and said yeah, it's a Ponzi scheme.
What a surprise! (Score:5, Insightful)
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Obviously, you haven't been watching Fox News. They have assured me that it was the evil government, and not base greed and the free market, that caused the crash.
Re:What a surprise! (Score:4, Interesting)
Obviously, you haven't been watching Fox News. They have assured me that it was the evil government, and not base greed and the free market, that caused the crash.
Didn't you hear? It was Bill Clinton's army of crafty welfare negroes who somehow managed to sucker the brightest lights on Wall Street, despite having minimal prior experience with anything other than check-cashing joins and sleazy rent-to-own financing schemes... Makes perfect sense!
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So instead you parrot propaganda from Fox News?
Really useful. Go look at some charts and figures, Fannie and Freddie did not bring this about, most of these loans were too big.
Re: What a surprise! (Score:5, Informative)
Hell, the definition of "sub-prime" is "Freddie and Fannie won't touch this".
Freddie and Fannie didn't insure a single one of these mortgages. Their problem is that they got suckered into backing their prime mortgage insurance business with investments that had been rated AAA by S&P.
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During the run up to the crash the balance sheets of Freddie and Fannie actually shrunk because they could not compete with the private lenders.
Not only that, but F&F don't resell mortgages, so any bad loans don't destabilize the rest of the financial system.
The idea that they had anything to do with this is flat out preposterous.
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You are incorrect in several ways.
1. The bulk of MBS etc. were sold to private parties, not F&F.
2. Because of this the GSEs had no influence in lending standards. Because of the profitability of these private sales it turned into a race to the bottom.
This isn't the first time this sort of thing has happened. During the 1880's and 1920's there were similar crashes due to mortgage securitization.
3. Derivatives based on these MBS's (F&F did not participate in these in any way) levered up the effects of
Re:What a surprise! (Score:5, Insightful)
"When the people at the top of our complex financial system, with the trust and responsibility placed on them to safeguard the well-being of the whole community, behave in such an anti-social manner they belong behind bars."
Hey now, it's not like they were downloading a bunch of academic journals or something!
We need some perspective here.
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I've wondered a few times whether Mr. Swartz should have created something like "Information Liberation Inc." or something to that effect. Perhaps if he had engaged in his actions as a company instead of an individual, he could have avoided being labeled a felon and thrown in prison.
I mean, Carmen Ortiz let it work for St. Jude's. And GlaxoSmithKline. And Forest Laboratories.
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Now we can see who sits in the cockpit of the "invisible hand". When the people at the top of our complex financial system, with the trust and responsibility placed on them to safeguard the well-being of the whole community...
The mechanism operates just as intended. Bankers are not really there to "safeguard" our community and it is foolish to expect them to do so.
If they are punished for bad behavior, they will (mostly) stop behaving badly. If they are rewarded for bad behavior, they will behave worse and worse until they are punished
Even if they aren't sociopaths, that is a normal reaction.
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Deja vu (Score:3)
The Jack Handey Corollary (Score:3)
Not exactly news (Score:5, Interesting)
And I wouldn't blame a few individual bankers, I think this was coordinated a bit higher up. American banks had been selling way too many loans, and when they saw this was becoming a huge problem that might bring down the entire American economy, they made the brilliant move of packaging these loans in nice AAA investment vehicles and selling them to the rest of the world. Now it became a global crisis instead of an American one.
Not a very moral or honest thing to do, but it sure was ingenious.
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It was the biggest Ponzi scheme in history--all done with the blessing of the biggest banks in the world, cheering politicians, and a gullible public that bought into the idea that less regulation and oversight would somehow not incentivize corruption and fraud.
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Egan-Jones (small rating agency that is paid not by sellers but by buyers) which is famous for its harsh ratings recently got hit by the SEC with 18 month ban on govt ratings because of formalities.
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So it's all politicians fault for putting pressure on the poor bankers? Nice try.
I just read on the news they're preparing to sue Moody's. Do you fancy your crow rare or medium?
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So it's all politicians fault for putting pressure on the poor bankers?
Whether or not the politicians have any fault, the bankers did wrong and knew it at the time. Either that, or they were stunningly stupid. Take your pick.
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I dont' think that anything was coordianted "higher up" than those finiancial institutions who made profit from the whole fiasco.
Re:Not exactly news (Score:4, Insightful)
And I wouldn't blame a few individual bankers, I think this was coordinated a bit higher up.
Who or what was coordinating it? The Bavarian Illuminati? An invisible man living in the sky? His Noodlyness? Inquiring minds want to know.
My impression of the whole mess:
1. It was fraud on a massive scale.
2. It was very very profitable to engage in. Anyone at a major bank who had even remotely suggested that this was a bad idea tended to be first laughed out of the room and then fired shortly thereafter.
3. For the last 15-20 years at least, the SEC and the Feds basically made the decision to look the other way with regards to Wall St crimes. The Bush administration in particular was notoriously lax, but Obama has done nothing to put a stop to it.
4. When it hit the fan, all the people involved got bailed out because the US Treasury Department was either (a) in on it, or (b) was scared of what would happen to the economy if that didn't happen.
None of this required any kind of coordination, all it took was somebody committing this kind of fraud and getting away with it. As a rule, if left unchecked crooked business drives out honest business because the crooks have higher profit margins.
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In the 1990's there was a suggestion that over the counter derivatives (CDS, MBS included) be regulated by the then head of the CFTC, Brooksley Born.
This got slapped down hard by Greenspan, Summers, Rubin etc.
Regulated derivatives like options are far less profitable and far more transparent so of course the issuers of the OTC derivatives don't want that.
Regulation is still needed. People in the industry will tell you that the games are still going on.
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Reform (Score:4, Insightful)
I'd be for creating banks in the other 49 states (beside North Dakota), and returning all of the 10th Amendment violations like Sallie May, Freddie Mac, and the education loans to the states where the people/places in question reside.
The federal government could then assume a more legitimate oversight role.
Are you going to alter the net corruption of the overall system? Unlikely. Can you ACTUALLY DO SOMETHING OTHER THAN THROW WORDS AT 'TOO BIG TO FAIL'? I daresay you can.
But your Ruling Class Overlords will not be separated from power by less than a crowbar, and maybe a little heavy PETN.
Re:Reform (Score:5, Interesting)
"...anybody who wants to see anything different has got to tell me how we de-centralize."
It's starting, and slowly gaining momentum. Support any efforts in your state or local government to re-assert sovereignty. CO and WA are actively defying federal drug laws. Twenty six states sued to block Obamacare and many governors are actively resisting its implementation. Several states have passed resolutions asserting that the NDAA won't be enforced in their states. With all of the anti-gun hysteria, we're seeing states and even county LEOs claiming that they will stop any new gun control laws being forced on their citizens. Something really interesting is that several county LEOs are claiming that they will actively thwart federal LEOs from enforcing the laws in their jurisdictions.
Maybe if we could elect some courageous state AGs, they could prosecute these banking slime on charges of fraud, forgery, perjury, etc.
I like the idea of state banks. Until fractional reserve banking is banned, I think that's the best way to restore the money power to the people.
F*** the federal government's "oversight" role. They have the FDIC, OTS, OCC, SEC, FBI, CFTC, etc. etc. and they not only failed to stop the Wall St. fraud factory and thwarted any investigation and prosecution, they actively conspired to facilitate and cover up the frauds. There is little hope of positive change at the federal level.
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Look, anybody who wants to see anything different has got to tell me how we de-centralize.
Something the Occupy Wall St folks did was organize a "Move your Money Day", which was a mass effort to have people close out their accounts at the big banks and put the money into local banks and credit unions. They claim to have pulled $50 million out of the big banks and put it into small banks. These were the same people talking about "Too Big to Fail" - they were actually trying to decentralize, exactly as you suggested.
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Did a re-fi on the property a couple years ago, and here is this memo from Freddie Mac on how happy they are to carry the mortgage. I'm all: "Wut?"
You so funny.
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You are right.
And considering modern currency and banking is just accounting (no gold backing for example), this current privilege granted to banks is just that: a privilege. With no legitimacy.
There are plenty of other ways to create money, for example give it to citizen (it should amount to some 5% of money volume increase per year).
Until scores of these douchbags go to prison (Score:2, Insightful)
and do hard time, nothing will change.
Unfortunately, Obama has proved a friend to the wealthy and powerful, so don't hold your breath.
Standard & Poors should downgrade the dollar (Score:2)
Standard and Poor may not have acted quickly on downgrading these bad loans (they ALL were reluctant to downgrade them, S&P were losing business because they weren't keen to give them good ratings!). The reason S & P are currently under attack is simple:
They downgraded the dollar because Congress wouldn't tackle the government debt. As soon as they did that, the Fed started threatening them with prosecution over bad ratings.
The current deal with the Republicans in Congress includes a raising of the
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Egan-Jones, a small competitor to the big three, recently got hit with a 18month ban on govt ratings.
What about Caveat Emptor? (Score:5, Insightful)
Look, at the height of madness, these derivatives which no one could possibly understand, derivatives so complex even God Almighty could not understand were given the same rating as US Treasury bonds or just a microscopically lower ratings. If these banks really believed the ratings by S&P they would have bought them at the same yields as US Treasury bonds, (or microscopically higher yeilds). But these derivatives were yielding a full percent, and then they were shooting up.
Why? These bastards knew, no matter, what lipstick S&P and Moody's slap on these beasts they are pigs. If small investors were taken in, that lone retiree conserving his/her nest egg, despairing at the ridiculously low interest rates they were getting, buying one lone bond for 12000$ and losing it all, they have my full sympathies, and wish they would be able to take on these bastards and send them to jai.
But, the buyers were the big guys. Why are they buying bonds, whose rating was paid for by the sellers?. Why can't they come up with a plan to pay for the ratings themselves? The bankers could have decided the buyers of bonds would chip in a few dollars and create an agency that will never be paid by the sellers of bonds and would be totally funded y the buyers of the bonds. They still have not done it.
What is playing out in the courts is something like a lovers spat or falling out between the thieves.
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The car's engine is breaking down and needs a change...
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I am no fan of S&P rating agency and what they did was horrendous. There was clear conflict of interest in rating a bond/secutiry/instrument and getting paid by the sellers of the very same instruments. But on the other hand the people who were "duped" by the practice are not tiny small investors, without the means to do independent verification or the means to do due diligence on the rating agencies. Heck, the very same big banks that claim to be "duped" by the inflated ratings given by S&P actively participated in the very same rating rigging scheme. They know very well every body is doing it. These banks that bought the bonds were also repacking the very same bonds and putting them back on the market, and they paid the very same rating agency the very same "commissions" to get them inflated too.
All quite true. It's important to understand the the most important modality of Wall Street greed is *individual* greed. Generally speaking, each employee has massive incentive to game the system in order to get a huge bonus at the end of the year. If his gaming of the system subsequently blows up his employer, or the US financial system, the worst that happens is that he gets fired - but he gets to keep bonuses reaped to date. This asymmetry explains much Wall Street behavior... make hay while the sun
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Egan-Jones is a small ratings agency that is paid by the buyers. It's famous for harsh ratings and coincidentally got hit by the 18month ban on govt bond ratings few weeks ago.
Why are investment banks allowed to rate product? (Score:5, Insightful)
Someone who sells ratings should not also be buying and selling these products. Of course there is a huge perverse incentive here.
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Investment banks don't rate their own products.
They pay ratings companies to rate them.
Do you see the difference?
If you do please let me know what it is.
Perspective (Score:5, Interesting)
Let's remember, these "smoking gun" emails are the result of exhaustive, comprehensive searches of EVERY ingoing and outgoing email from the respective organizations. In a large enough company I can guarantee you I can find emails that "prove" almost anything relating to thier business, their customers, etc.
That some employees expressed doubts or questioned the value of the products or services their company offers means very little if they are not the decision-makers.
Anyone surprised that a salesman at an investment house might be selling something they either don't understand or personally see the value in shouldn't be investing in the stock market. Would you be surprised to find out the guy selling you a Chevy Volt doesn't believe it is the best car in the world? What a salesman says to a customer is not neccessarily what he believes in his heart or in his mind.
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Sorry to be so pessimistic... (Score:2)
But we get the [rollingstone.com] point [pbs.org].
It's very well established that banks committed fraud. It's very well established that the US Government protected these very institutions when they were knowledgeable of the fraud being committed.
It's also very well established that no one's going to criminal court. Wall Street and Washington D.C. have been coupled together in such an orgy of conspiracy that neither will willingly do anything to jeopardize their sybiotic relationship.
(a division of McGraw-Hill) (Score:2)
No Invisible Hand Here (Score:2)
The thing is, if we allowed the free market to work, then AIG, JP Morgan, Morgan Stanley, and all the big banks who participated in this would have evaporated overnight and regional banks who acted responsibly would have stepped in to fill the void. But the free market was not allowed to do its thing and we have a doubling down on crony capitalism that will fail again, bigger.
A lot of people like to pretend there's an all-powerful government out there that can suppress any dissent, but we've all seen the l
Time for revolution? (Score:2)
People are People (Score:4, Insightful)
The sad truth is people are corrupt. We all are. It's a part of human nature. What we need to start doing is accepting that people in power are going to abuse it, and put in blocks, checks to keep that from happening. The truth is, people need to be regulated. They need to be checked that they are doing what they are supposed to.
Too big to fail? Not to big to jail.
This also shows what the government thinks of everyone but the rich and corporations. They will bend over backwards to bail out the rich and the corporations while fucking the rest of us in the ass. The economy has been in the shitter but the people the caused it live like kings.
Wish some good would come of this, but our government won't do anything about it.
The economy crashed in 2008? (Score:2)
As far as I could tell (as an about to graduate or just graduated CS major) the economy crashed somewhere around 2000/2001 and never really did recover. It's only been downhill since. That's what I remember hearing in the media at the time too. The economy was crashing. It was only after the housing market did it's thing that suddenly history was rewritten and the crash didn't happen until later. I guess the world just cares more about realestate agents than geeks.
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Hard on the edges, soft in the middle ... the "2000 to 2013" "economic minimum" which actually had several ups and downs, including three biggies.
Re:News for Nerds??!! (Score:5, Funny)
It mentions email, and email is very techy. You need computers and stuff.
Re:News for Nerds??!! (Score:4, Interesting)
Obviously you don't appreciate how many nerdy quants there were on Wall Street painting over these bag-of-shit securities packages with a fresh coating of technical bullshit to make them look like roses.
Re:News for Nerds??!! (Score:5, Insightful)
Given that the dumb fuckers who get caught passing a few thousand in bad checks tend to do more time than the smart fuckers who get caught passing a few billion in bad securities tend to do more time, I'd say that the quants are on to something...
(Can you imagine what would happen to sentencing guidelines if we decided 'fuck this shit' and started punishing large scale fraud with the same sorts of time-per-thousand-dollars-stolen that we do for blue-collar economic crimes?)
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Can you imagine what would happen to sentencing guidelines if we decided 'fuck this shit' and started punishing large scale fraud with the same sorts of time-per-thousand-dollars-stolen that we do for blue-collar economic crimes?
I'd imagine that they'd come up with a less-than-ten-word mantra to make it sound like a very bad idea to enough people. Actually, it seems like two word catchphrases are bigger these days. Death panels, job creators...
There are also probably real reasons why that would be a bad idea, ones that would not be brought up in the campaign to defeat such a bill. Such as "some scapegoat would always take the fall rather than the real criminals, as already happens, because our justice system sucks compared to
Re:News for Nerds??!! (Score:4, Funny)
Re:News for Nerds??!! (Score:5, Informative)
Those "bag-of-shit" securities were, in very large part, guaranteed by the US Gov't. That Wall Street Banks offered crap investment opportunities that no one understood is nearly as bad as the so-called investors who bought them with an equal lack of understanding, and don't get me started on people who "bought" homes they could never, ever make the payments on that formed the basis for the "bag-of-shit" investments no one understood.
That they were "highly-rated" by the security analyst firms means very little - I'll leave you with this sage advice from that classic film "Tommy Boy" [youtube.com]
Re:News for Nerds??!! (Score:4, Insightful)
Look, if I lend a thousand dollars to a homeless guy on the street corner, and he never pays me back, whose fault is it really? I mean, I can start jumping up and down and getting mad about it, but when it comes down to it it's the lender's responsibility to evaluate the debtor's ability to repay.
Or, I guess, you could lend money to people who you know full well can never repay it, and then sell off the debt to somebody else after obfuscating it as "AAA-rated investment grade CDO tranches"; that sounds really sustainable, too.
Re:News for Nerds??!! (Score:4, Insightful)
This ^^ +1000
And tell me, who is likely to *know* who is able to afford the loan better?
A) The bank who has collective experience in the thousands of man-years in making loans and seeing the trends of who pays and who doesn't and what kind of debt load is reasonable. An institution who has NO OTHER job than to manage money, cash-flow and manage risk from loans and investment?
or
B) Sammy Homeowner who simply wants a house. He's not very sophisticated - he couldn't even calculate how his loan should work out in interest and principle. He works hard, but also wants all the good stuff, and his loan officer is telling him - "This is a great deal! You'll love it. It will be great. Here, just sign right here."
If you pick B, can I have what you're smoking - it's really incredible stuff.
The banks knew who was likely to not repay - they are vastly more sophisticated than virtually *ANY* home-owner getting a loan.
I'd agree the person taking the loan should have used more diligence - but the disparity is staggering. Blame ought to be apportioned 10:1 to the Bank.
Re:News for Nerds??!! (Score:4, Insightful)
If you buy a home, it's worth doing your homework. I delayed buying a home for well over 5 years, because the market was obviously a bubble. When everyone is talking about flipping X, and making "money for nothing", get out of that immediately. Doesn't matter if it's stock, houses, bonds, whatever. If you buy a house, you know you are going to pay X. If you can't pay X realistically on a long term basis, don't buy it. And there is a reason for the old rule of thumb of buying a house at 2.5 times your annual income. I knew people that when with interest only mortgages, ARMs, etc. They knew they were not making the best decision. But they couldn't see any other way to "get the house they always wanted".
Everyone involved went full retard. Consumers bought mortgages they knew they couldn't afford. Banks issued mortgages they knew were bad ideas. Investment companies packaged those bad idea mortgages into bundles of "really bad idea, now in bulk". Investors bought those bad idea mortgages. And then the government bailed them out. Which again, bad idea.
Only folks that got a beating were the ones that were reasonably smart and stayed within their means.
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No. If I buy a home, I'm paying a broker or a real-estate agent to do my homework for me. That's why I pay him the big bucks - because he knows the laws and regulations already. I shouldn't be the one calculating how much down payment I will need to avoid mortgage insurance, and how much interest I will owe over the life of the loan - that's why I'm paying thousand of dollars in fees to the other guy to do it!
I'm sorry, but at the point a broker or loan officer is giving out NINJA loans, he's engaging in
Re:News for Nerds??!! (Score:4, Interesting)
Joe Sixpack: Yanno guy, I don't think I can afford a $500,000 house on a police officer's income.
Scamming Broker: Don't worry about it. Housing prices keep going up. Sure, the interest payments on this mortgage are going to balloon in five years, but that's why you refi in four years instead.
Joe: Are you sure about this? I'm a little worried. What if I can't refi?
Broker: Don't worry about it. We've been doing this for years. I'm a certified professional. You're paying me thousands of dollars because I know what I'm doing. Trust me, you will be okay.
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Is it still Joe's fault for believing the certified professional from which he sought advice?
And by the way, the security ratings mean quite a lot, actually. Many investors, such as pension funds, are only legally allowed to buy AAA-rated debt. The demand for AAA-rated debt is quite large, which is why they were able to sell so many toxic MBS/CDO. The demand for less-than-AAA-rated debt is MUCH smaller, and certainly not big enough to absorb all those toxic mortgages. Had the ratings agencies done their job (all of them, not just one or two), Wall Street would have been unable to sell toxic CDOs, which means they were unable to buy/sell toxic MBS, which means they were unable to buy toxic mortgages from scammers, which means the scammers were never able to lend money to people for toxic mortgages.
Investors should be able to count on the debt ratings. They're baked into laws, after all. The problem is that the people bundling the CDOs were the ones who paid for the ratings agencies to rate their debt. This creates a conflict of interest - the ratings agencies don't want to rate the debt too low or they'll lose market share to their competitors when all the firms on Wall Street go there for the better ratings. Instead, ratings should be paid for by investors, not the people peddling the debt.
Re:News for Nerds??!! (Score:5, Informative)
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Now if only that were part of the story, then it'd be suitable for placement here (though it could be in TFA, which of course I haven't read, in which case the summary is off-topic).
This story is just for invoking the rage of Slashdotters, as so many stories of late (by which I mean the past few years, at least) are. Nerds are, on the whole, highly-intelligent idealists. We love to tell others how things should be done, especially when they're outside the field of technology, so we don't have to worry about
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Add to that the hatred of the rich and distrust of banks, with a bit of conspiracy theory for flavor
Not hatred of the rich, hatred of greed and selfishness (and there is no groupthink about this, there are a lot of slashdotters who are fine with greed and selfishness, let alone obscene amounts of money). It's rage about the fact that bankers defrauded America, almost brought he entire economy down, and were rewarded for their evil deeds. Rage against the fact that CEOs get huge multimillion dollar bonuses f
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As someone who has been through an E-Discovery process (lawsuit by a patent troll we were fighting) there is amazing forensic analysis technology that goes into collecting and collating emails, IM's, and documents.
Unless there's a crime involved. Then the FBI just comes in and starts ripping hard drives out of chassis with an "amazing forensic" tool, also known as a hammer.
Never underestimate the computing ignorance of our grade-F government.
They don't use a hammer, that could damage the drives. If the drives in are in servers, you can just pull them out.
Anyways, they don't carry a hammer, it gets in the way of them carrying some sort of automatic weapons you see in the photos and videos. Because you know, them HD's are dangerous, they spin fast.
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As someone who has had the FBI in for an investigation, what you are saying is not entirely true. They came in, did images of drives on the servers, confiscated only a handful of laptops, and carefully inventoried everything. They were pleasant to deal with, and left our infrastructure intact. Our issue was with an employee engaging in poor beahvior, and we chose to be cooperative. Perhaps that is the difference...how you treat them.
Re:News for Nerds??!! (Score:4, Insightful)
Even in the *best* case, if true - it indicates a *HUGE* issue.
The FBI should be professional no matter if you cooperate or not. Sure, they *can* be a dick if they want, but it's bad all the way around if they are.
It is, essentially, a violation of the constitutional rights of the accused - in that they are treated differently under the law. [Some nicely, some not.] Proving it in court is a far more difficult matter, however.
That law enforcement doesn't see it as a problem, indicates a serious flaw in their understanding of their responsibilities and have thrown away their honor.
It is, IMO, because of this kind of mind-set that the public starts to lose their respect for law-enforcement and see them as opportunistic thugs. Then the system breaks down - people feel they'll just do whatever they can, if they can get away with it. When people start shooting cops, they don't care much because the cops only care for their "friends" ... and since the cops aren't their friends, whatever bad things happen are just too bad - they're getting back what they did to the public.
It's not right for the public to feel that way - any more than the cops are right to do what they do - but it certainly makes the breakdown of respect more understandable.
So, being thugs and treating some defendants nicely and others like crap really, ultimately costs law enforcement a lot. It also costs society a lot too.
But I really, really hate "explanations" like the parent, because they seem to justify that kind of behavior. IMO, if you can't treat all your "customers" with respect you need to find another job. That doesn't mean you have to love them all - that's pretty hard - but you can at least do your job well and with respect for those you work around/ or with, and interact with.
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Why only decimate them? [wikipedia.org]
Are you sure you want to kill only 1 in 10?
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Decimate is an English word, not a Latin word. It means "to reduce drastically especially in number", that it was derived from a Roman practice and a Latin word doesn't change the commonly used definition that is hundreds of years old.
Do you also think that a symposium can only mean a drinking party?
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Part of the point of decimation was that the 9 would have to kill the 1 themselves, and it would be someone they knew well. Bankers, lacking the inherent empathy and kindness of the deadly roman legions would remain entirely unaffected by the experience.
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It's better to leave them alive after stripping them of their money.
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At the same time, the actual loans covered by the CRA were not a problem. Many sources back this up, including this [washington...endent.com]:
[director of the Federal Reserve’s consumer and community affairs division Sandra Braunstein] cited a Federal Reserve Board analysis which found that, in 2006, CRA-covered banks operating in CRA-targeted neighborhoods accounted for just six percent of the risky, high-cost loans largely responsible for the housing crisis.
So what you're saying is, the CRA made loans not covered by the CRA to default. Does that make any sense? I don't think it does. It sounds more like the "wishful blaming" that those responsible began doing once their expensive lies were exposed.