Bankers Who Committed Fraud to Get Bigger Bonuses

icedancer2theend said:
you assert that the sub-prime loans that were bundled, didn't contain loans made to those who were a part of a mandate to fulfill a quota of minority mortgage lending.
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Sorry -- I made no such assertion.

In case you are wondering, here is an actual assertion:


if the CRA was to blame, the housing boom would have been in CRA regions; it would have made places such as Harlem and South Philly and Compton and inner Washington the primary locales of the run up and collapse. Further, the default rates in these areas should have been worse than other regions.​


Here is another:


What occurred was the exact opposite: The suburbs boomed and busted and went into foreclosure in much greater numbers than inner cities. The tiny suburbs and exurbs of South Florida and California and Las Vegas and Arizona were the big boomtowns, not the low-income regions. The redlined areas the CRA address missed much of the boom; places that busted had nothing to do with the CRA.​


I stand by these assertions because these are actually made in the post we are discussing.

They are not invented assertions that you can pretend I made.
 
bravo said:
So you learned a few new facts, did you....
I especially liked this line......

Phil Gramm - the fire breathing free-marketer, Texas senator, and then-chairman of the U.S. Senate Committee on Banking, Housing and Urban Affairs (and loving husband of Wendy) - rode to the rescue, propelled by a sea of more than $300 million in lobbying and campaign contributions. In 1999, in the ultimate proof that money is power, U.S. President Bill Clinton signed into law the Gramm-Leach-Bliley Financial Services Modernization Act, at once doing away with Glass-Steagall and the 1956 BHC Act, and crowning Citigroup Inc. (NYSE:C) as the new "King of the Hill.

Notice the spin, Clinton (D), was the President that signed the bill into law, but Phil Gramm (R) and his wife, come across as the bad guys, no one else......yet during the G. Bush admin., everything that happened was Bush's fault as President and no one from Congress, totally controlled by Democrats before the crash, was blamed for anything....

Don't find that odd at all do you......
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Gramm and his missus profited immensely from the laws they brought in, as did all the lobbyists that worked so hard to get the Glass-Steagall act repealed. Here is another article in Forbes magazine by Shah Gilani about Goldman Sachs, you would do well to read it.

http://www.forbes.com/sites/shahgil...-more-than-a-travesty-of-a-mockery-of-a-sham/
 
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icedancer2theend said:
And like those who wish to sweep under the rug how interference on one hand led to manipulation on the other- you assert that the sub-prime loans that were bundled, didn't contain loans made to those who were a part of a mandate to fulfill a quota of minority mortgage lending. i.e. "redline" borrowers. In other words, because banks had to make risky loans they created a market place to profit from them.
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This is an excerpt form Shah Gilani's article in Forbes which may help you to understand.

Goldman Sachs isn’t the only bank to rip-off its clients and America. But because it is the best at what it does it is the most profitable bank in the world, for now.
Regular, old everyday trading is the key to Goldman’s success.What does that mean? I’m not talking about Goldman’s “big short” and how it bet massively against the subprime mortgage market while simultaneously selling huge quantities of designed-to-fail mortgage securities to its own customers.

And I’m not talking about how Goldman gamed AIG, the largest and certainly biggest too-big-to-fail insurance company in the world, into writing hundreds of billions of dollars of credit default swaps on subprime and AAA-rated mortgage pools for its own benefit. Then with its contracted ability to call on AIG for more collateral in the event of AIG’s downgrade helped to drive AIG’s downgrade and trigger the cash capital calls that sank AIG while (get this) simultaneously profiting on the rising price of the credit default swaps Goldman itself bought on (you guessed it) AIG.
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http://www.forbes.com/sites/shahgil...-more-than-a-travesty-of-a-mockery-of-a-sham/
 
sedan said:
Sorry -- I made no such assertion.

In case you are wondering, here is an actual assertion:


if the CRA was to blame, the housing boom would have been in CRA regions; it would have made places such as Harlem and South Philly and Compton and inner Washington the primary locales of the run up and collapse. Further, the default rates in these areas should have been worse than other regions.​


Here is another:


What occurred was the exact opposite: The suburbs boomed and busted and went into foreclosure in much greater numbers than inner cities. The tiny suburbs and exurbs of South Florida and California and Las Vegas and Arizona were the big boomtowns, not the low-income regions. The redlined areas the CRA address missed much of the boom; places that busted had nothing to do with the CRA.​


I stand by these assertions because these are actually made in the post we are discussing.

They are not invented assertions that you can pretend I made.
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Not so- all they needed were "minorities" to apply in order to "prove" there was no redlining- not addresses. This made it possible for low income individuals to buy far above their means creating "toxic" assets that were then bundled.
 
icedancer2theend said:
Not so- all they needed were "minorities" to apply in order to "prove" there was no redlining- not addresses. This made it possible for low income individuals to buy far above their means creating "toxic" assets that were then bundled.
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Obviously you are unaware of the expression "putting the cart before the horse"
 
Aoxomoxoa said:
Obviously you are unaware of the expression "putting the cart before the horse"
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No, Tom, I am not unaware. The point you are either missing due to determined or actual blindness, is that legislation designed to force banks to lend to the poor led to banks pushing for legislation that allowed them to hedge their risks via profits- that's what banks are in business to do. If legislation like Glass-Steagall were left in place and government did not intervene for "the poor" forcing banks to lend to them, NONE of the housing mess would have happened.
 
icedancer2theend said:
No, Tom, I am not unaware. The point you are either missing due to determined or actual blindness, is that legislation designed to force banks to lend to the poor led to banks pushing for legislation that allowed them to hedge their risks via profits- that's what banks are in business to do. If legislation like Glass-Steagall were left in place and government did not intervene for "the poor" forcing banks to lend to them, NONE of the housing mess would have happened.
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First of all, no bank or other financial institution was ever forced to make loans to anyone:


The Community Reinvestment Act of 1977 seeks to address discrimination in loans made to individuals and businesses from low and moderate-income neighborhoods. The Act mandates that all banking institutions that receive Federal Deposit Insurance Corporation (FDIC) insurance be evaluated by Federal banking agencies to determine if the bank offers credit (in a manner consistent with safe and sound operation as per Section 802(b) and Section 804(1)) in all communities in which they are chartered to do business. The law does not list specific criteria for evaluating the performance of financial institutions. Rather, it directs that the evaluation process should accommodate the situation and context of each individual institution. Federal regulations dictate agency conduct in evaluating a bank's compliance in five performance areas, comprising twelve assessment factors. This examination culminates in a rating and a written report that becomes part of the supervisory record for that bank.

The law, however, emphasizes that an institution's CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution. An institution's CRA compliance record is taken into account by the banking regulatory agencies when the institution seeks to expand through merger, acquisition or branching. The law does not mandate any other penalties for non-compliance with the CRA.​


Second, to suggest that banks were somehow motivated by the CRA to make risky loans is plainly ludicrous. I hate to break this to you, but financial institutions lobbied fiercely to repeal Glass-Steagall from the day it was passed until the day it was finally repealed. Passing CRA did nothing to alter this basic dynamic. And when they finally got what they wanted it wasn't the CRA-accredited institutions who made the vast majority of high-risk loans -- those were made by private lenders who were not constrained by the rather sensible CRA requirements.
 
sedan said:
First of all, no bank or other financial institution was ever forced to make loans to anyone:


The Community Reinvestment Act of 1977 seeks to address discrimination in loans made to individuals and businesses from low and moderate-income neighborhoods. The Act mandates that all banking institutions that receive Federal Deposit Insurance Corporation (FDIC) insurance be evaluated by Federal banking agencies to determine if the bank offers credit (in a manner consistent with safe and sound operation as per Section 802(b) and Section 804(1)) in all communities in which they are chartered to do business. The law does not list specific criteria for evaluating the performance of financial institutions. Rather, it directs that the evaluation process should accommodate the situation and context of each individual institution. Federal regulations dictate agency conduct in evaluating a bank's compliance in five performance areas, comprising twelve assessment factors. This examination culminates in a rating and a written report that becomes part of the supervisory record for that bank.

The law, however, emphasizes that an institution's CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution. An institution's CRA compliance record is taken into account by the banking regulatory agencies when the institution seeks to expand through merger, acquisition or branching. The law does not mandate any other penalties for non-compliance with the CRA.​


Second, to suggest that banks were somehow motivated by the CRA to make risky loans is plainly ludicrous. I hate to break this to you, but financial institutions lobbied fiercely to repeal Glass-Steagall from the day it was passed until the day it was finally repealed. Passing CRA did nothing to alter this basic dynamic. And when they finally got what they wanted it wasn't the CRA-accredited institutions who made the vast majority of high-risk loans -- those were made by private lenders who were not constrained by the rather sensible CRA requirements.
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In the past Fannie Mae prohibited the lenders it was dealing with to engage in the practice of red lining. Red Lining meant that a bank would refuse to finance a home purchase in neighborhoods it consider high risk even if the prospective borrowers were themselves good credit risks. In part, this was because the bank did not want, in the event of default and foreclosure, to become the owner of property in a risky neighborhood. The deeper roots of the problem go back to the Community Reinvestment Act of 1977.

In the 1990's under the administration of Franklin Raines, a Clinton Administration appointee, Fannie Mae began to demand that the lending institutions that it dealt with prove that they were not redlining. This meant that the lending institutions would have to fulfill a quota of minority mortgage lending. This in turn meant that the lending agencies would have to lower their standards in terms of such things as down payments and the required incomes. These subprime borrowers would be charged a higher interest rate. Having put the lending agencies into the position of granting subprime mortgages Fannie Mae then had to accept lower standards in the mortgages it purchased. That set the ball rolling. If a bank granted a mortgage to a borrower that was not likely to successfully pay off the mortgage then all the bank had to do was to sell such mortgages to Fannie Mae. The banks typically earned a loan origination fee when the mortgage was granted. The lending agencies could then make substantial profits dealing in subprime mortgages.
 
Aoxomoxoa said:
Gramm and his missus profited immensely from the laws they brought in, as did all the lobbyists that worked so hard to get the Glass-Steagall act repealed. Here is another article in Forbes magazine by Shah Gilani about Goldman Sachs, you would do well to read it.

http://www.forbes.com/sites/shahgil...-more-than-a-travesty-of-a-mockery-of-a-sham/
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Bill Clinton "brought the laws in".....he was president, he signed the legislation.....

If Bush was responsible for all that happened during his administration, the fucking Clinton is too.....

Thats the point....

If you want to saddle Gramm with the laws enacted, then by all means admit that the Democrats that dominated the entire Congress during the Bush years are responsible for the laws they passed.....and failed to pass.....
 
bravo said:
Bill Clinton "brought the laws in".....he was president, he signed the legislation.....

If Bush was responsible for all that happened during his administration, the fucking Clinton is too.....

Thats the point....

If you want to saddle Gramm with the laws enacted, then by all means admit that the Democrats that dominated the entire Congress during the Bush years are responsible for the laws they passed.....and failed to pass.....
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This should be required viewing for all.

 
sedan said:
Think about this for a second.
big-bank-theory-chart.jpg
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thanks... that is a great chart.
 
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