In this scene from the movie The Big Short you will find a very clear and very interesting description of how the big bankers created the financial and economic crash of 2008.
And now for something completely different.
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Goldman Sachs sold truly crappy CDO’S and guaranteed that they were solid gold.
Then it shorted them.
Their punishment for unscrupulous, fraudulent business practices? It was made whole by us as money bailing out AIG was passed through. It made GS whole. Not even a trim around the ears.
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And circling vultures cause dead cattle.
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So you approve of the actions by GS? Did you make out like a bandit on this deal?
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Nope,
But the investment bankers were the vultures, they didn’t kill the cattle.
The Fed and Fannie Mae and Freddie Mac did that. They fueled the Housing Bubble with Mortgage Backed Securities. CDOs and Credit Default Swaps were simply tools for managing the risk.
Once the cow is dead you can’t blame the vultures for circling.
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@Tabor
Total revisionist history bullshit. The “free market” caused this crash. Pure and simple. A relatively harmless downturn in home prices triggered the collapse of the all the creative and criminal financial products sold by Wall Street. Credit Default Swaps SHOULD have been a tool for managing the risk but that is not how they were used. You know that but pretend you don’t. Again.
The housing bubble was fueled by huge pools of money looking for a home from under taxed wealthy people and from foreigners with mountains of dollars earned through our trade deficits that they needed to invest. Fannie Mae and Freddie Mac were bit players by comparison to Wall Street Banks and Hedge Funds.
The article below should put an end to your revisionist history but, as you show all the time, evidence that does not support your beliefs never seems to matter.
https://www.theatlantic.com/business/archive/2011/12/for-the-last-time-fannie-and-freddie-didnt-cause-the-housing-crisis/250121/
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Thanks, that was bugging me enough to be serious…..
The culpability is on both sides however, Regan/HW/Clinton/W, ALL had a hand in creating the ability for greed to do what greed does….
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Did you read the last three paragraphs of your own cite?
Fannie and Freddie didn’t hold a major share of the debt because they sold it, as mortgage backed securities, as fast as they made the loans.
A similar process could create a bubble in almost any mortgagable good. If you created a source of easy and cheap loans for boats, you would get a boat bubble. As the prices of boats rose due to the artificial demand for boats, investors would start buying them to ‘flip’ even if they never put a boat in the water.
Anything spurred by easy and cheap credit would do. And successive administrations of both parties pushed home ownership for political gain for 30 years, with only Ron Paul screaming out the warning.
From 2003
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@Tabor
I read the article and understood it. You choose not to. Whatever Freddie and Fannie did, they were bit players. They were not the major source of the easy money. In fact, they had higher standards of what they would handle than the Big Boy banks. And, it was the criminal over selling of Credit Default Swaps by the major investment banks not the mortgage backed securities themselves that caused the house of cards to collapse.
I know the actual history does not fit your preconceived ideas of the magic of markets and the evils of government, but get over it.
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We know there were many parties, specifically the heads of Fannie, that were thieves. Their bonuses and pay structures were based on volume.
But that does not excuse criminal behavior by the big mortgage brokers (they were the majority by far of shady lending and not under any federal guidelines for low income business), investment bankers and the ratings companies.
Fraud is fraud.
That was like excusing a burglary ring because the fence was a crooked cop.
No one was prosecuted. I fault the Obama DOJ for that. Of course, the administration was up to its ass trying to salvage an economy in which we were losing 1 million jobs per month. I guess later the atmosphere with a hostile Congress determined to destroy the president, prosecution was not on a Republican agenda either.
Then statutes of limitations ran out.
To use your analogy, first the cattle were shot And when they were dead and dying, the vultures came in afterwards and reaped the rewards.
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At least Fannie, Freddie and, I believe AIG, repaid the money to the treasury WITH Interest. GS and the other houses and banks took the money and ran because they were too big to fail. Bot not too small to steal.
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