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A True Drama of Wall Street

Very insightful and disturbing data ...
And yet there are those naive and ignorant Americans who accept all these chaos and deceit in the name of Capitalism.
Any attempt to correction is viewed as Socialism!!


On Dec 20 06:05 PM RTF 360 wrote:

> www.bloomberg.com/apps...;sid=aGvwttDayiiM&...

>
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> In the past 60 days,the feds just spent (without hearings) 4 times
> as much covering up the banking / credit default swap scandal as
> they did for all the wars and all the social programs in the first
> 75 years of the twentieth century .
>
> The velocity of that change is staggering when presented in graphic
> form
> Source Commodity Research Bureau ISBN 13 978 0 471 78443 2
> The Subprime Lending Bias
> By INVESTOR'S BUSINESS DAILY | Posted Friday, December 19, 2008 4:20
> PM PT
>
>
> Media: If, as they say, it's journalists who write history's first
> draft, then future texts will be riddled with errors about the origins
> of the subprime disaster, teaching future leaders the wrong lessons.

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> Read More: Media & Culture | Economy
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> Just how did Americans come to lose $10 trillion in real estate and
> stock wealth? And why are our children and grandchildren on the hook
> for as much as $8 trillion in federal bailout money? These are some
> of the most important questions of our time. Yet the mainstream media,
> plagued by monopartisan bias, are not providing the public honest
> answers.
> Take, for instance, a recent front-page article in the Washington
> Post, under the headline, "How HUD Mortgage Policy Fed the Crisis."
> The piece correctly fingers HUD for helping fuel risky lending at
> Fannie Mae and Freddie Mac. But the newspaper starts its analysis
> in 2004 (in fact, the first sentence begins, "In 2004 . . . "), making
> it seem as if the Bush administration crafted "affordable housing"
> policy and created the subprime market.www.youtube.com:80/wat...
>
> The Post knows better. The Bush HUD merely continued a politically
> correct policy launched by the Clinton administration. For the first
> time, President Clinton ordered HUD to set quotas for Fannie and
> Freddie to buy huge portions of Community Reinvestment Act loans
> and other low-income mortgages made to borrowers with poor credit.
> The Post failed to mention this key fact.
> By 2000, fully half of the mortgage giants' portfolios consisted
> of these risky loans, most of them subprime mortgages. In effect,
> the Clinton HUD set a time bomb that would explode years later with
> the collapse of home prices, which happened to occur on Bush's watch.

>
> At the same time, HUD pressured the federally subsidized giants to
> lower their loan-to-value ratios and other underwriting requirements
> to accommodate minority borrowers. HUD Secretary Andrew Cuomo even
> admitted that the administration was mandating a policy of "affirmative
> action" lending (his words, not ours).
> And it was Clinton who initially spread the subprime rot to Wall
> Street. To help Fannie and Freddie reach their "affirmative action"
> lending quotas, HUD in 1995 let them get affordable-housing credit
> for buying subprime securities that included loans to low-income
> borrowers.
> Less than two years later, Freddie partnered with Wall Street investment
> banker Bear Stearns to issue the first securitizations of low-income
> CRA loans.
> There's even a press release still available on the Web that memorializes
> the historic deal, which dumped hundreds of millions of dollars in
> the risky loans on the market — a down payment on the hundreds of
> billions that were to follow.
> The Post left all of that out of its story, even though the deal
> marked the beginning of the boom in subprime securities.
> Of course, providing such background to readers would ruin the impression
> that Bush and Republicans were responsible for the crisis, an impression
> the Post and other liberal media elites hope will stick in the public's
> mind and become conventional wisdom. And conventional wisdom, once
> galvanized, is a powerful thing in Washington. Whole agendas and
> coalitions are built around it.
> The Post also provided just one side of the data in its story. The
> paper said that Bush "ratcheted up" the affordable-housing goal for
> Fannie and Freddie, from 50% to 56%. But it left out the fact that
> the previous president, the liberal Democrat, institutionalized the
> quota and ballooned it up to 50%. Which move do you think had a greater
> impact on the subprime market?
> A recent story in the Associated Press was equally tendentious. It
> blamed Bush for not cracking down on loose lending standards that
> had become the norm in the mortgage industry, while completely ignoring
> the systematic dismantling of those standards during the previous
> decade under Clinton.
> "The administration's blind eye to the impending crisis is emblematic
> of its governing philosophy, which trusted market forces and discounted
> the value of government intervention in the economy," wrote AP Washington
> correspondent Matt Apuzzo.
> Reality check: "Government intervention" is what planted the seed
> to this whole crisis. As we've noted, Clinton in 1995 revised CRA
> regulations to pressure banks into adopting "flexible" lending standards
> to increase minority homeownership. In a 1,389-word story, AP cited
> that easily verifiable fact not a single time.
> Make no mistake: It was Clinton who forced banks — most importantly,
> Fannie and Freddie — to go into the subprime market to serve the
> targeted populations that HUD and other Clinton banking regulators
> wanted them to serve.
> In effect, the media are blaming Bush for Clinton policies. Whoever
> controls the debate in Washington controls the truth. Right now,
> it's Democrats and their press courtiers. And so far, they've managed
> to shade the truth about the root causes of this epochal financial
> crisis.
>
> hotair.com:80/archives.../

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> us1.institutionalriska...

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> " I blame the mutation of the securitization industry into a toxic,
> damaging thing on Fannie and Freddie. These organizations lost their
> moral compass and began to do things in the marketplace that eventually
> caused them to get into such difficulties that the CEOs were removed
> and all sorts of new restrictions were placed on the GSEs. Wall Street
> said halleluiah and proceeded to dive headlong into subprime mortgages
> and all the rest. The banks loved it as did the Democrats on the
> Hill, who are always looking to make hay about affordable housing.
> "............
>
> ..........If Wall Street had simply stopped and packaged the subprime
> loans into a conventional pass through security, there would be no
> problem. It would be the world's most boring business. But no, instead
> they created pools of dissimilar collateral and derivatives and then,
> with the full complicity of the rating agencies, sold this stuff
> to adolescents in the investment community, the new rich of Asia
> and the Middle East. And they bought big chunks of this stuff as
> did their banks. But the really incredible thing is that not a few
> of the dealers in New York themselves did not understand this paper
> and a couple eventually went bust because this very paper became
> practically worthless or close to it. They have no idea what it means
> when the Street cannot reverse engineer a deal
>
> Roundtable with Roger Kubarych and Richard Whalen
>
>
> www.tavakolistructured...
>
> JANET TAVAKOLI ...watch the 6 minute video on the 'bail out',you'll
> be glad you did.
>
> The Reckoning - From Midwest to M.T.A., Pain From Global Gamble -
> Series - NYTimes.com
>
>
>
> The Reckoning - How Merrill Lynch Faltered and Fell - Series - NYTimes.com
>
>
>
> Firms underwriting the C.D.O.’s generated fees of 0.4 percent to
> 2.5 percent of the amount sold. So the fees generated on the $316
> billion worth of mortgage- and asset-backed C.D.O.’s issued in 2006
> alone, for example, would have been about $1.3 billion to $8 billion.
>
>
> www.nytimes.com/2008/1...;_r=2&ref=busi...
>
>
>
>
> The Reckoning - From Midwest to M.T.A., Pain From Global Gamble -
> Series - NYTimes.com
>
>
> "You hear about all these millions of dollars that have been lost,
> and you think, that’s got to come out of somewhere.”
> www.nytimes.com/2008/1...;_r=1&sq=janet...
>
>
> A Question for A.I.G. - Where Did the Cash Go? - NYTimes.com

>
>
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> “When investors don’t have full and honest information, they tend
> to sell everything, both the good and bad assets,” said Janet Tavakoli,
> president of Tavakoli Structured Finance, a consulting firm in Chicago.
> “It’s really bad for the markets. Things don’t heal until you take
> care of that.”
>
>
> www.nytimes.com/2008/1...;ref=business&...
>
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> Ms. Tavakoli said she thought that instead of pouring in more and
> more money, the Fed should bring A.I.G. together with all its derivatives
> counterparties and put a moratorium on the collateral calls. “We
> did that with ACA,” she said, referring to ACA Capital Holdings,
> a bond insurance company that was restructured {out of court} in
> 2007.
>
>
>
> Fair Game - They’re Shocked, Shocked, About the Mess - NYTimes.com

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>
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> something more may be at work. And that something centers on trust
> and credibility, which have been lacking in corporate and government
> leadership in recent years.
> www.nytimes.com/2008/1...;scp=4&sq=tava...

>
>
> Is it any surprise that virulent mistrust seems to own the markets
> now?
>
> Janet Tavakoli, a finance industry consultant who is president of
> Tavakoli Structured Finance, said the stock market’s gyrations are
> a result of a severe lack of confidence in the very officials who
> are charged with cleaning up the nation’s mess.
>
> What Ms. Tavakoli means by common sense is a plan that will force
> institutions to get a fix on what their holdings are actually worth.
>
>
> "It is not enough to throw money at a problem; you also have to use
> honesty and common sense," Ms. Tavakoli said. "In fact, if you leave
> out the last two, you are wasting taxpayers' money. If you are going
> to hand out capital, you have to first revalue the assets or take
> over so that you can force a mark-to-market. Force restructurings,
> mark down the assets to defensible levels and let the market clear.

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> HENRY KAUFMAN on the credit crisis
> Says the Fed is responsible for the financial crisis
>
>
> video.aol.com/video-de...
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> Untangling credit default swaps
>
>
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> www.youtube.com:80/wat...