I’m not market or financial expert by any means, but the more I read about the Credit Default Swaps leads me to believe that there was a lot of fraud taking place. Individuals hedging both ends of the game...one one side providing easy credit to high-risk borrowers knowing they would fail, and then on the other end using the Credit Default Swaps to bet that the mortgages would fail. I know this is simplistic as I explained it, but I could see white collar financial whizzes (with assistance from the mob — Russian or otherwise) playing this game to the hilt. Should I take off my conspiracy hat?
CDS fraud would be the most logical explanation for NINJA loans. Offer a $200,000 loan and then place a few $200,000 bets that it will fail. The worse the loan, the better.
In situations where a fraud-minded buyer purchased CDSs from legitimate sellers, bailing out the NINJA loan by buying the property would achieve the most equitable result (since the buyer of the CDSs would get nothing from them). On the other hand, I suspect that in most cases trying to dump in hundreds of billions of dollars would simply feed the corrupt system and make matters worse.
As I understand it and the media refuses to report, the banks created CDS to farm out the risk demanded by the libs for the bad loans they had to make.
No tinfoil at all...the Dems set it all up to fail through Freddie and Fannie and blocking legislation to correct it even after Greenspan told them this would happen. You can then safely conclude who is “betting” on the fail.