madasiwannabe

FBI Investigates Victims of the Financial Fallout

apppro is correct about Pershing, but they were not alone. When the backstop was announced, the risk went to zero and rewards through the roof for another group; bond and securities brokers like PIMCO. Drive down credibility, drive down ratings, drive up returns. Pure Ponzi; get the markets addicted to credit and then milk them for all the interest they can get. Gross and Ackman announced they made $10 Billion when Paulson stepped in. The biggest one day profit for both companies.

The common thread is Greenspan. He created the mess through policy and then gets a job as a consultant with both Pershing and PIMCO. PIMCO sponsors CNBC programming and for their investment, they get all the airtime they want. Sounds like the perfect place for the FBI to start looking.

PIMCO is drooling right now because they know the bailout will adversly effect the government's ability to attract additional investors (someone has to buy the bonds to pay for the plan). That means even more money. Seen this coming from miles away.

FBI Investigates Victims of the Financial Fallout

The whole GSE takeover was a smoke screen to divert attention away from the other 50% of the mortgage market. The reason the banks are holding to maturity is because they couldn't get them past Fannie and Freddie screeners. That's why their default rates are 1/5th of the industry average. The whole MBS market is exactly what took down the S&L's. We learned nothing.

I'm sure the originators wrote BS contracts so they could get their commissions, but the banks are not totally victims either. They never took the time to look at the loans or provide any oversight to the LLC trusts that sprang up to get into the cash stream. Many of these guys are now gone and we the taxpayers are getting stiffed with the bill.