The States: At Least Michigan is Better Than Indiana

[mookie1995]

This is good stuff here.

Clown and others are failing to mention that banks didn’t necessarily “buy” the abs, but were writing them. When glass steagall went away banks were allowed to own investment banks, which created and traded these instruments. The banks therefore had investment divisions where these things “securitized debt” were on their books waiting to be sold. As they became worthless the holding company was seeing their assets fall, which put their balance sheets at risk, prompting the gov to send them a blank check.

 

[TalonsUpPuckDown]

Re: The States: At Least Michigan is Better Than Indiana

This is a great post, welcome to the political threads.

Not sure I'm ready for the big leagues with you folks, I just happen to have a little firsthand experience in this mess. At one point I found myself in the office of corporate counsel for one of the largest brokerage houses every to go bankrupt. We were negotiating an exit package on a custom system for underwriting small business commercial loans. The system was intended to leverage consumer lending practices that were generating previously unheard of levels of revenue. Turns out these jackarses were going to try doing the same thing in commercial lending that was going on in consumer lending. I remember asking people, "WTH is a no-doc loan and why would you ever lend money to a borrower who didn't provide paperwork?" Fortunately the bubble burst before this thing saw the light of day.

I will leave the professional debating to the professionals

 

[Kepler]

Re: The States: At Least Michigan is Better Than Indiana

Not sure I'm ready for the big leagues with you folks

Have you read us? We're idiots. Anybody with the least real knowledge can put us down without a sweat.

But it's considered cheating to comment on things you actually know about. The art form we celebrate is to PIOOYA the way we do. I encourage you to chime in whenever you want.

 

[TalonsUpPuckDown]

Have you read us? We're idiots. Anybody with the least real knowledge can put us down without a sweat.

But it's considered cheating to comment on things you actually know about. The art form we celebrate is to PIOOYA the way we do. I encourage you to chime in whenever you want.

LOL. I “read you” every day. Thanks for the invite, I promise to stick my toe in the deep end every so often.

 

[Rover]

Re: The States: At Least Michigan is Better Than Indiana

These books are excellent. Also recommend The Greatest Trade Ever by Gregory Zuckerman.

The debate on whether homeowners are culpable in all this is laughable. The gravy train was in danger of coming off the tracks when lenders started running out of prospective buyers who qualified for loans under traditional underwriting rules. The only solution was to find more "customers" who had no business being approached in the first place. These guys were aggressively marketing to these "customers" with pitches that were market tested to maximize the loan amounts in every case. Countrywide was nothing more than a direct marketing organization whose sole purpose was to originate as many loans as possible to keep feeding the tranches. Not only were they lending money without requiring documentation, they were falsifying income in many instances in order to qualify their "customers" for higher lending limits.

In the face of this onslaught it's the fault of the "customer" for not having the financial sophistication to tell a bunch of rich people offering them free money "Thanks, but no thanks, I don't want to be responsible for an economic catastrophe." Yeah, sure...

Appreciate the insider perspective but anybody saying homeowners have no responsibility is a nimrod. If something is either 1) too good to be true, or 2) you don't understand it, DON'T SIGN UP FOR IT!!!! People will try to get you to buy stuff you don't need for your entire life. If you're a sucker, you're a sucker. Again, point out to me where somebody was forced to take out a loan they couldn't afford. I'm guessing you can't. Its very similar to casinos. They're peddling a product that they say is good for you. You can either completely take their word for it that they totally have your best interests in mind, or you can say hmmm...I don't understand high stakes poker well enough to ante up for thousands of dollars so maybe I'll skip it. I think the concept is called free will. You have the ability to walk out of the place.

At some point in time people need to be responsible for their actions and realize they don't always get a do over for bad decisions. If you used your house as a piggy bank, or thought you could live in a penthouse condo at the Ritz on 50K a year salary it is not the government's job to save you from yourself. Otherwise you will just keep getting snookered by every con artist you come across.

 

[dxmnkd316]

Re: The States: At Least Michigan is Better Than Indiana

My stance has always been there is three equal shares of the blame pie: government for allowing it to happen, the banks for being predatory and making bad loans, and the borrowers for taking on something that was too good to be true.

 

[mookie1995]

Re: The States: At Least Michigan is Better Than Indiana

Appreciate the insider perspective but anybody saying homeowners have no responsibility is a nimrod. If something is either 1) too good to be true, or 2) you don't understand it, DON'T SIGN UP FOR IT!!!! People will try to get you to buy stuff you don't need for your entire life. If you're a sucker, you're a sucker. Again, point out to me where somebody was forced to take out a loan they couldn't afford. I'm guessing you can't. Its very similar to casinos. They're peddling a product that they say is good for you. You can either completely take their word for it that they totally have your best interests in mind, or you can say hmmm...I don't understand high stakes poker well enough to ante up for thousands of dollars so maybe I'll skip it. I think the concept is called free will. You have the ability to walk out of the place.

At some point in time people need to be responsible for their actions and realize they don't always get a do over for bad decisions. If you used your house as a piggy bank, or thought you could live in a penthouse condo at the Ritz on 50K a year salary it is not the government's job to save you from yourself. Otherwise you will just keep getting snookered by every con artist you come across.

good luck getting AOC to sign off on re-instituting debtors prison

 

[unofan]

My stance has always been there is three equal shares of the blame pie: government for allowing it to happen, the banks for being predatory and making bad loans, and the borrowers for taking on something that was too good to be true.

Yet 90% of the consequences fell on homeowners with another 9% going to the government. The banks barely felt anything.

 

[dxmnkd316]

Re: The States: At Least Michigan is Better Than Indiana

I’m not saying everyone got a fair shake coming out of it.

 

[mookie1995]

Re: The States: At Least Michigan is Better Than Indiana

Yet 90% of the consequences fell on homeowners with another 9% going to the government. The banks barely felt anything.

ken griffin feels a new bed under his bottom at night

 

[Rover]

Re: The States: At Least Michigan is Better Than Indiana

Yet 90% of the consequences fell on homeowners with another 9% going to the government. The banks barely felt anything.

I usually agree with you but this statement just isn't true. The people who wrote the mortgages initially got off because they all went back to their jobs as door greeters at Wal-Mart while those companies went out of business, leaving bad loans in their wake. The ratings agencies who everybody trusted to independently evaluate the debt got off completely scot free which was total bullsh*t. The govt was turning over anyway as Bush was termed out and Paulson was going to hit the door with him as well as the GOP already lost their majority in Congress 2 years earlier. That left the banks holding the bag for everybody else. They paid back billions more than they were given for the bailout and then forgave billions more in loans. Then the legislation passed after the crisis targeted them (and the derivatives market aka those AIG frauds). Now the banks got what they deserved, but they also paid the highest price out of any of the institutions involved. I'm not aware of any legislation or penalties affecting the ratings agencies and one can argue they were as much at fault as anybody else.

 

[ScoobyDoo]

Re: The States: At Least Michigan is Better Than Indiana

Yet 90% of the consequences fell on homeowners with another 9% going to the government. The banks barely felt anything.

Same thing with the tax cuts. I'd sure like to live in a country that gave a fair shake to the middle class.

 

[trixR4kids]

Re: The States: At Least Michigan is Better Than Indiana

Giving equal blame to idiot homeowners as those who clearly knew better and had more power at a higher level in this mess is as ludicrous as Brent’s bothsideisms.

The dumb homeowners were a very small part of the equation too, if anything people made the calculated risk of using their put option and not paying significantly more than the house was worth after its value cratered through no fault of their own.

 

[unofan]

I usually agree with you but this statement just isn't true. The people who wrote the mortgages initially got off because they all went back to their jobs as door greeters at Wal-Mart while those companies went out of business, leaving bad loans in their wake. The ratings agencies who everybody trusted to independently evaluate the debt got off completely scot free which was total bullsh*t. The govt was turning over anyway as Bush was termed out and Paulson was going to hit the door with him as well as the GOP already lost their majority in Congress 2 years earlier. That left the banks holding the bag for everybody else. They paid back billions more than they were given for the bailout and then forgave billions more in loans. Then the legislation passed after the crisis targeted them (and the derivatives market aka those AIG frauds). Now the banks got what they deserved, but they also paid the highest price out of any of the institutions involved. I'm not aware of any legislation or penalties affecting the ratings agencies and one can argue they were as much at fault as anybody else.

Only one person went to jail for the whole thing despite massive fraud, and he was a mid level lackey. I know you work in finance, but you can't honestly believe the banks paid their fair share. That's horse hockey.

 

[ScoobyDoo]

Re: The States: At Least Michigan is Better Than Indiana

Only one person went to jail for the whole thing despite massive fraud, and he was a mid level lackey. I know you work in finance, but you can't honestly believe the banks paid their fair share. That's horse hockey.

At least we nailed Martha Stewart.

 

[The Rube]

Re: The States: At Least Michigan is Better Than Indiana

Giving equal blame to idiot homeowners as those who clearly knew better and had more power at a higher level in this mess is as ludicrous as Brent’s bothsideisms.

The dumb homeowners were a very small part of the equation too, if anything people made the calculated risk of using their put option and not paying significantly more than the house was worth after its value cratered through no fault of their own.

Don't bring me into this crap.
I'm with dx in this discussion, as to blame, for the record.

 

[trixR4kids]

Re: The States: At Least Michigan is Better Than Indiana

Don’t bring me into this but also both sides

 

[The Rube]

Re: The States: At Least Michigan is Better Than Indiana

Don’t bring me into this but also both sides

I got brought into it, not by choice, so figured I'll state my opinion.

Edit: before the housing collapse, I was seeing crappy houses in Robbinsdale going for $250K...and thought....no. No. NO. There's something wrong here. And then boom.

 

[TalonsUpPuckDown]

Re: The States: At Least Michigan is Better Than Indiana

Appreciate the insider perspective but anybody saying homeowners have no responsibility is a nimrod. If something is either 1) too good to be true, or 2) you don't understand it, DON'T SIGN UP FOR IT!!!! People will try to get you to buy stuff you don't need for your entire life. If you're a sucker, you're a sucker. Again, point out to me where somebody was forced to take out a loan they couldn't afford. I'm guessing you can't. Its very similar to casinos. They're peddling a product that they say is good for you. You can either completely take their word for it that they totally have your best interests in mind, or you can say hmmm...I don't understand high stakes poker well enough to ante up for thousands of dollars so maybe I'll skip it. I think the concept is called free will. You have the ability to walk out of the place.

At some point in time people need to be responsible for their actions and realize they don't always get a do over for bad decisions. If you used your house as a piggy bank, or thought you could live in a penthouse condo at the Ritz on 50K a year salary it is not the government's job to save you from yourself. Otherwise you will just keep getting snookered by every con artist you come across.

It’s nothing like casinos. And I can’t find anyone who bought a loan they couldn’t afford because everyone could initially afford the ARMs they were sold. See, that’s the targeted marketing I referred to earlier – it was a big part of the scam. It wasn’t until the teaser periods ended and rates ticked up that the house of cards came tumbling down.

Real life scenario: A Jamaican immigrant working two housecleaning jobs making roughly $55k/year is sold a third condo on a 2/28 hybrid ARM by a guy at Countryside who collects a bonus of $500-1500 per origination based on the size of the loan paid for by a Wall Street shop that collects hundreds of thousands of these exact same loans and pushes them off as CDOs in order for each broker in the firm to pocket a year-end bonus in excess of $56M.

Go ahead and argue the Jamaican immigrant is equally to blame as the Countrywide originator and Wall Street fat cat. I, however, think blame is unequal among the three. But, before the nimrod label sticks to me, the victim in all this was/is you and me, not any of the three players in this story.

 

[trixR4kids]

Re: The States: At Least Michigan is Better Than Indiana

There’s also a difference between zero culpability and equal culpability.