With the repeal off Dodd-Frank Bailout 3.0 is on the way. 3.0? The S&L bailout was not as big, but bailout it was.
Now the way they spun the last crash was all the people who defaulted on their mortgages and got foreclosed, surprised the Financial Terrorist Organizations.
Foreclosures were part of their plan from the beginning with sub-prime loans. You think they didn’t know people taking out NINJA loans were likely to default. They’re not stupid, just delusional. And when you win for good ideas and win for bad ideas, no one cared. Revenue was being generated. All hail fee generation.
I was employed by the mortgage division of a major FTO for a number of years. I can’t mention the name, but you’ve heard it, guaranteed. I have ethics and hold up my end of the deal. Not that it was likely to happen, but I can’t legally say anything positive about them. either.
It doesn’t matter. I don’t need to name my former employer. All were up the the same delusional business plan. Lemmings are the true mascot of Wall Street, not bulls and bears. Banksters don’t make money off people making monthly payments and paying off their home. And, they really don’t like having that money tied up for years, when there are so many shifty deals to risk it on.
Banksters make money off of fees for originating loans with fees for selling Mortgage Backed Securities to investor who bear the risk and let their money get tied up. Loans get bundled into securities almost immediately and Banksters just skim a small fraction of the interest for servicing, you know mailing out mortgage bills and dealing with taxes and insurance escrows.
The business model encourages defaults, flipping the property generates the gravy, new fees, and with housing prices always going higher, each flip generates bigger fees, even if you let the property go below market.
Have you spotted the delusion yet? Just because values increased yesterday, says nothing about tomorrow. And they were wrong. They’re OK, you get bonuses for crashing the economy. It’s a win-win situation, whether to make a winning bet, or a losing one you are rewarded. Great work if you can get and have a total lack of morals or ethics. It’s all about the Benjamins baby. Besides, executroids don’t plan on being there long. Take the money and run to the next Bankster is the career path.
How could they possibly sell securities backed by dog shit loans? Primarily because those bonds are rated 90% or better AAA. Solid and secure enough for retirement funds, states, schools, and municipalities to invest in.
That’s insane. AAA rated dog shit loans. The reason is our old friend generating fees. When Banksters slither into Moodys, they get what they want. If Moodys doesn’t give the rating they wanted, they know the sweet fees will slither away to Standard & Poore. Fees mean bonuses and they’ll give any ratings requested. Don’t you wish bumping up your credit score that easy?
When Fanny & Freddy were alone in the mortgage securities game, things were somewhat under control and dog shit loans meant Banksters had to keep loans on the books. The innovation needed was private, unregulated Mortgage Backed Securities. With the collusion of ratings agencies the crash was set in motion, long before 2008.
But some loans were too toxic to package into a AAA MBS. They could invent the private MBS, why not a new fictional product and the Collateralized Debt Obligation was born. A CDO is created by chopping up the dog shit you need a 20 foot pooper scooper and HazMat suit to handle. You spread the bits and pieces among privately traded, unregulated CDOs. To make them more attractive, you wrap the dog shit in cat shit. And by a miracle, owning minced dog shit wrapped in cat shit, is a sure thing AAA rated investment. Of course it is.
They didn’t stop there. Opportunity for fee generation was not tapped out yet. Next come derivatives. Even they don’t know what they are, but they generate fees and are … you guessed it.
Derivatives are like side bets at the craps table. The main action is between the shooter and the house. But somebody will make a bet with the guy next to him, “I bet $_____ the shooter will make his point (roll box cars, whatever) and I’ll give 3 to 1 odds. Then side bets are made on side bets, ad infinitum.
With derivatives, a $100K security could easily have $500 million of sides bets riding on it. Derivatives have no backing like collateral. No worries! It’s all bets on placed on AAA securities and real estate prices always goes up.
But, just to be sure, the third member of the unholy triumvirate makes its appearance. AIG insurance. They happily insured all those bets on dog shit and cat shit wrapped dog shit. Did they know what they were insuring. Yes, but all those lovely fees. Fees mean bonuses.
Now, all the players are in place. Stupidity is at maximum warp. Fat cats are getting fatter and happier. Time for the delusional bubble to burst.
Buyers one day started saying “Seriously, you are asking that, for that!?! You’re crazy.” A delusional bubble breaks bringing the Banksters’ delusional house of cards and the world economy down with.
Detroit bailout? They aren’t car makers any more. They are Banksters who happen to also make cars as a hobby.
Without Dodd-Frank to hold them back, they will return to the same delusional practices that crashed the economy. Oh, they might hold a contest, or hire a consultant to find new aliases for dog shit products, but they will be back. After all, they had to wait a little, but they were rewarded for destroying the economy. Remember win-win is the name of the game. Well, not in Iceland. Someone must have been skimming bribes and Banksters were jailed. But, that could never happen again. Financial Terrorist Organizations own plenty of slaves in government, and the overseers to tell them what to do.
I know how it all happened. I watched the delusions grow more absurd. It’s like watching a train wreck you are powerless to stop. I was out before the crash, outsourcing. But saw it coming. I didn’t realize just how bad fallout from the delusion would be.
I worked 17 years for the unnameable one. Some of that time, I was even management (for purposes of not paying me overtime only). I wrangled computers for them, but had no say in anything, nor managed anything but my incredulity at their delusional business plans.
A brilliant financial mind, (There will be a short interruption while I laugh my arse off…. I’m back, does anyone need time to finish giggling?) now where was I, ah yes a senior executroid had an idea. “The problem with lending money to companies and people is bankruptcy. Countries can’t declare bankruptcy, they’ll have to pay up.” The lemmings stampede South to offer loans to every third world country, secure in the knowledge they can’t go bankrupt.
What he said was correct. But he neglected the part about there is nothing you can do to collect when they don’t pay up. Oops! They didn’t pay.
The stock price tanked CEO and senior executroids got incentive stock options as a ‘reward’. They had to wait a little for their win for losing, but win they did. Years later, they got one of the countries to offer a nickel on the dollar as payback. Most was not cash but ownership of the country’s phone company.
They hailed the 1st executroid’s big win and he got a seat on the board. It’s always win-win in cloud cuckoo land. “It’s safe countries can’t go bankrupt.” was my first “Are they really that fucking stupid?” moment.
It was followed shortly by ( better not use that word again) a batshit crazy scheme. (yes, that was a better choice) The scheme was to increase originations generate … By now y’all can finish the sentence, or you’ve been sleeping in class.
To originate loans you have to beat the competition. Fees go to the victor, the first to approve the loan. The sticky little bit is speeding up the process. Today you can key in an SSN, click submit, and Shazaam credit report and credit score. Then getting a credit report, verifications of income, employment, deposit, etc. was all done by snail mail.
Then by a miracle of lobbying, Fanny and Freddy began accepting the ancestor of the NINJA loan, the NO DOCUMENTATION LOAN. They were lucrative but, they had to be held on the books, couldn’t be sold to investors.
If could, or make it like like you were, 20% down would get you a no documentation loan. Nothing on the application would be verified, write your most creative fiction, it will be accepted.