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Roll call for House bill on housing bailing out

Discussion in 'Sports and News' started by poindexter, May 8, 2008.

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  1. poindexter

    poindexter Well-Known Member

    People did walk in and lie about their income.

    The ones defrauded were the bag holders at the end of the line, who bought tranches of mortgage-backed securities expecting an income stream based on payments made. Income securities fully rated AAA by the rating services (another despicable participant in this mess).
     
    poindexter, May 9, 2008
    #13
  2. The Big Ragu

    The Big Ragu Moderator Staff Member

    Oh.

    I don't quite see it that way. You buy mortgage-backed securities in a risky subprime market and, you get paid a higher yield based on the risk involved. You are getting paid more money to take on risk. You make the investment knowing that there is nothing backing those loans except people's signatures. When you get stuck holding a bunch of defaults, it seems disingenuous of me to cry, "no fair!" What did you think you were getting those huge yields for?

    It's no different than the junk bonds and LBOs in the late 80s. You're getting double digit yields to buy a risky security. No one forced you to buy it. You should have looked at what you were buying and understood exactly what it was. On a common sense level, pretty much everyone knows nobody gives you money for nothing. That should send up your radar and get you to think about what you are buying.

    Either way, it's just funny that the bottom line of what you just said is that Bear Stearns and Merrill Lynch and Citigroup were the ones defrauded. People usually don't shed too many tears for them.
     
    The Big Ragu, May 9, 2008
    #14
  3. Ben_Hecht

    Ben_Hecht Active Member


    And these cycles will never end, because it's too easy to make a score during madness-of-crowds time, and with a smart lawyer, you're in like Flynn . . .
     
    Ben_Hecht, May 9, 2008
    #15
  4. Baron Scicluna

    Baron Scicluna Well-Known Member

    Loved the first home on the link. Buyer spent $1.2 million and put $200 grand into it. Now they can't even get $700 grand for it.

    There's a few people taking a huge hit here.
     
    Last edited by a moderator: Dec 15, 2014
    Baron Scicluna, May 9, 2008
    #16
  5. poindexter

    poindexter Well-Known Member

    I don't quite see it that way. You buy mortgage-backed securities in a risky subprime market and, you get paid a higher yield based on the risk involved. You are getting paid more money to take on risk. You make the investment knowing that there is nothing backing those loans except people's signatures. When you get stuck holding a bunch of defaults, it seems disingenuous of me to cry, "no fair!" What did you think you were getting those huge yields for?

    A couple of points:
    I really don't see any of the bagholders crying "no fair".

    These bagholders bought securities rated "AAA" by the ratings agencies. I've read a lot about the ratings of these securities. Entire tranches reviewed and rated in a day. No review of the underwriting. Flawed methodology (looked at pre-payment risk; not risk of loss due to lowering housing prices/defaults).

    A teacher's pension fund in Switzerland was relying on the rating. They didn't buy "liar loan" MBSs.
     
    poindexter, May 9, 2008
    #17
  6. poindexter

    poindexter Well-Known Member

    FBI discusses mortgage fraud

    http://www.fbi.gov/publications/fraud/mortgage_fraud07.htm
     
    poindexter, May 14, 2008
    #18
  7. Pancamo

    Pancamo Active Member

    Did BOA buy Countrywide's servicing portfolio? If so, it isn't a worthless asset.
     
    Pancamo, May 14, 2008
    #19
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