Rick Santelli: Critic or P.R. Man?

I saw Mr. Santelli's CNBC rant on Thursday. A “tea party” on Lake Michigan? Rather than inviting them to tea, why doesn't Mr. Santelli call “capitalists” to account? He's happy to throw the mortgage holder into the drink, but is he “carrying the water” for a failed industry? We've heard enough about borrowers, let's consider these facts before we talk about “personal responsibility”:

1. Hold-to-maturity mortgage writers are the only ones left standing.
2. There is a direct, positive correlation between the likelihood a mortgage of any grade will default and the intention of the writer or packager to sell it to a distant investor.
3. Even where borrowers were found to have lied about their incomes, judges have found that mortgage writers were making loans based on collateral, not income.
4. Mortgage writers colluded with crooked and captive appraisers to inflate the prices of that collateral, increasing loan risk.
5. Mortgage writers asked for less and less income documentation, even avoiding documentation to which they had ready access, increasing loan risk.
6. Mortgage packagers regularly ignored instances of mortgage fraud, including fictitious properties and fictitious borrowers.
7. Mortgage writers and packagers barely acknowledged drastic increases in default rates among FICO cohorts and kept lending, faster than ever.
8. The largest mortgage writers and packagers have become insolvent, every CEO lying about his firm's viability until and even after the day it crashed.
9. The largest mortgage writers and packagers have already been forced to pay reimbursements for deceptive loan practices and selling fraudulent loans.
10. Mortgage packagers and reluctant customers have indicated that bond insurance claims on private-label RMBS are uncollectable, clearly implying fraud.
11. Both Fair Isaac and the ratings agencies have been forced to completely overhaul their systems, which hid massive misconduct.
12. Thousands of mortgage-backed securities are inarguably worth less than the underlying credits.
13. The mortgage-backed securities market is now a Market For Lemons, indicating extensive securities fraud.
14. The catastrophic performance, failed structure and unsaleability of thousands of tranches of mortgage-backed securities rated AAA constitutes prima fascie evidence of extensive fraud.
15. We have discovered that every area of the securities industry – from commodities to clearing to CDS – is riddled with record-breaking manipulation, tax cheating and fraud.
16. The proud “capitalists” at banks, broker-dealers and insurance companies have, in a single year, become the biggest recipients of government welfare in human history.
17. The richest, most-powerful capitalists in human history consistently blame everyone but themselves, spinning preposterous tales to excuse their malfeasance and incompetence.
18. The only top executive in the securities industry - the only one - who has accepted full personal responsibility for his actions is Bernie Madoff.

Nassim Taleb said the first sign of recovery would be the ouster of the failed “capitalists”. I agree. Rick calls himself an “Ayn Rander”. He's claimed he wants the whole system to crash. Does he really? Is he really calling out the failed “capitalists” or just singing their tune in a different key? I'm no Ayn Rander, but I would love for Atlas to shrug these jokers into Lake Michigan before it's too late.

Let's see what – or whom – Rick and his crew are really willing to throw overboard.

Comments

[User 361521:]

It all boils down to this,

Families were outbidding each other on homes like the ponzi scheme it truly was.

They ramped up home prices to well over 200% with the intention of moving out every 2 years with another 50% profit.

Now that their scheme has backfired due to the banks realizing these people never really had the income they reported, the government wants to deduct money out of our earnings so we can pay for their outrageously overpriced home mortgages.

Under these conditions the younger generation will not be able to acquire these homes at their current price levels unless they too receive a government bailout.

Incomes simply do not support current housing prices.

Why the government doesn’t want to acknowledge this fundamental problem is beyond me.

They seem happy turning over taxpayer’s hard earned incomes into the hands of unreliable people that have squandered their own money away and are now waiting to be just as foolish with ours.

Rick was against the financial bailout.
www.youtube.com/watch...
Last year before bank bailout

He has no personal motives for his opinion.

Since 2004, CNBC employees have been restricted from buying stocks or bonds.
goliath.ecnext.com/com......

Rick doesn’t work at Wall Street he works at the Chicago Mercantile Exchange

Feb 22 07:47 PM

[logicalthought:]

Sure, the crooked mortgage writers should go to the jail, but that doesn't mean we should bail out the people who bought houses they couldn't afford. I have one four-letter word for those people:

R-E-N-T

Feb 22 08:28 PM

[Rob Delsman:]

Rick Santelli is an Idiot...and does nothing but pander to the wall street sluts

Feb 23 10:16 AM

[User 357021:]

David- Nice try. You missed the point of Rick's rant - It's deep seeded, it's what most normal people think. It's what people who read and understand a little more than we have been fed by MSM and government schols know "Are you listening Mr. President and administration?" Get the Hell out of our lives. We are tired of your meddling. Nothing you have done has ever worked.

Here's the problem with socialism...or what ever you want to call it. When one group of people steals from another group of people to spend it where they see it best, then it's over. Socialism- in any form is great until you run out of people to take money from. It's very simple. Do the math.

FYI, your 18 points are very sweet, but a distraction at best. The real issue is the (Private) Federal Reserve bank. The fractional reserve practices that have been abused since the 1500's. Nixon axed gold in 71 and the paper started to be printed. Why don't you look into that and explain it to the people. President Obama, Mr. Change himself will not change a thing. You see he serves the same master all presidents have served for quite some time...to do otherwise is quite fateful.

What we are seeing is the "people" starting to awaken to the tyranny of the Government. The Government should have been watching the Hen House as the foxes have screwed us for the last 100 years...you think people are gong to believe in them now?

Not.

We must remember that there are more us than THEM.

Feb 23 10:22 AM

[henarl:]

I was completely with you until I got to item #18. Madoff has not "accepted full personal resposibility". How about sending jewelry to his kids and who knows how much of his ill gotten gains he has stashed in foreign accounts. Also, he must have paid off the judge who allowed him to still live in luxury in his penthouse suite. Accept full resposibility? - no way!

Otherwise an excellent enumeration of the corrupt capitalist financial sector's contribution to our present situation. The government and many individual borrowers cannot escape a full share of the blame tho and should not be held harmless.

Feb 23 02:17 PM

[Tesa:]

David Bailey, you are absolutely right. Defrauding people is how the wall street makes its money and they rant to maintain the power to fund themselves. Mr. Santelli just rants to extract more cash from the system for himself not understanding that without the bail out he would have been out of a job.

Feb 23 02:21 PM

[Steve Owen:]

"The proud “capitalists” at banks, broker-dealers and insurance companies have, in a single year, become the biggest recipients of government welfare in human history."

That's a fact! And, it's time to get AIG, AT&T, and GE off the dole... nothing ever happens anymore without a government infusion or tax rebate. It became indemnic in our society long before the financial crisis and local economic development efforts and Chambers of Commerce are largely to blame. Our crisis goes far beyond the current economic situation... it is moral and systemic.

Almost everything you said is right, David. I did not see Rick's program, so I cannot know how on topic you are, but, as an appraiser who quit doing work for mortgage brokers five years ago, I can tell you you are on the right track. The number of honest people in the mortgage slicing and dicing business is too small to be statistically significant.

Still, that does not let the borrowers off the hook. They come in many different shapes and sizes, but I'm convinced that most of them knew what they were doing... and what they were doing was gambling that rates would continue to stay low and prices would always go up. That's the way it works, you make the wrong bet you lose... and it is a necessary part of a free society. Sorry, but they already received tax write-offs from their housing purchase... they don't need more of the taxpayer's money just because they bought more house than they can afford.

Feb 23 02:31 PM

[jksisco:]

Government loosening the reins on interest rates and the repeal of Glass-Steagall unleashed pure capitalism with all of it's upside and downside. The smartest people in the room made the most money, so what else is new? "Irrational exuberance" pretty much sums it up. The world is not fair, even though, we would like it to be. The problem we face now is whether the Government will do too much or too little, over-reach or step-in where needed?

Feb 23 03:02 PM

[DuffBeer:]

Have a fund raiser. Next time the liberals,socialist and anti's get togather
and have a party as they did in Denver,Grant Park (election night),DC or last night at the Oscars--- pass the hat,dig deep into your pockets and spread your wealth to those you wish to take care of or causes you want to fund.
It will make you feel good that you are actually doing something to help your
financial ,personal and political views or causes.
Now get busy and start planning your party. Pay for it yourself .We are tried of paying for your handout programs.
I buy my own beer always have,
Cheers DuffBeer

Feb 23 04:41 PM

[dlaw:]

Thank you all for your comments.

I just want to reiterate the point - a point that seems to get lost somehow - that bankers are in the business of judging whether the people they lend to are good risks. That's what the business of banking is. I just cannot understand why anyone would believe the lame story that the bank losses came from borrower "lies".

When you check out a borrower, you can check his employment information on any credit reporting agency. Lenders who didn't do that did not want to know. They wanted to sell MBS. Everything the banks were doing points in one direction: securities fraud. Every result of their actions is totally consistent with securities fraud.

But I guess for some people it's always going to be the government and the little guy who are to blame.

Finally, I want to make clear that obviously I don't think Bernie Madoff has taken enough resopnsibility for what he did.

But at least he admitted it.

Feb 24 02:59 AM