[cinives]

Mortgage originators instead can hold onto the loans. But that requires lots of cash

And there's the whole problem in a nutshell.

[AdamSelene235]

If the loans conform to the standards of government-sponsored enterprises such as Fannie Mae and Freddie Mac, those organizations can buy them.

So, the "good paper" comes from the highly leveraged entity incapable of issuing financial statements for years on end.

[NVDave]

I’ve been telling the people here who have been claiming that I was a doomer-gloomer on the real estate market to “follow the money” into the debt markets and they’d see what I saw.

What we’re now seeing was what I’ve been saying for the last six months. When you followed the money from the real estate borrower’s pocket, through the mortgage broker, to the bank writing the mortgage, to the bond companies to the investment banks, hedge funds, etc buying the bonds.... you saw a really huge under-estimation of the risk involved.

Now the risks are coming true, and the situation is turning out even worse than I feared: I didn’t know (and couldn’t, not being on Wall St. directly) the level of margin lending for funds involved in the mortgage market, and the extent of the derivatives in the mortgage lending market.

Things are going to get ugly. Real ugly.

[Petronski]

There be goldbuggery afoot.

[Altura Ct.]

Cramer on CNBC had a meltdown today in relationship to all of this.

Shouting Quotes:

“HE HAS NO IDEA HOW BAD IT IS OUT THERE. HE HAS NO IDEA. HE HAS NO IDEA. I’VE TALKED TO THE HEADS OF ALMOST EVERY SINGLE ONE OF THESE FIRMS IN THE LAST 72 HOURS AND HE HAS NO IDEA!!!”

“AND BILL POOLE HAS NO IDEA WHAT IT’S LIKE OUT THERE!!”

“THESE FIRMS ARE GOING TO GO OUT OF BUSINESS!!!!!”

“THIS IS A DIFFERENT KIND OF MARKET AND THE FED IS ASLEEP AND BILL POOLE IS A SHAME HE’S SHAMEFUL!!!!”

“WE HAVE ARMAGEDDON”

http://www.cnbc.com/id/15840232?video=452808336&play=1