Posted on 08/12/2009 3:01:24 AM PDT by nickcarraway
“. Dick Fuld. Fuld never tired of telling people that Lehman was built to triumph in adversity..”
Fuld was beyond stupid. He could have sold his company, but his hubris buried it.
>>”securitized and packaged” bank loans that were
>>sold globally as profit-making financial instruments.
Got FICO?
For “Liar Loans”, that’s the only number that mattered... and if those scores were fabricated - then so were the AAA ratings... that went “poof” and were downgraded to junk almost overnight.
How does one fabricate a FICO score? Well, it begins with purchasing the source-code to Empower, the loan origination Software used by Argent Mortgage (Ameriquest’s wholesale division), and making a few changes - specifically, to the data entry screens related to FICO...
Nah, nothing to see here, move along.
And you’re Right On Target with regards to moral relativism. When folks start living by “Do what thou wilt shall be the whole of the Law”, bad things happen.
What amazes me is the malfeasance or corruption of the regulators who, confronted with damning information by skeptical analysts, did nothing.
There must be some kind of process put in place that rewards risk taking whistle blowers for stepping up to the plate with correct information.
Perhaps we should give them access to the SEC employees pensions, the pensions of those who should have been doing their jobs, i.e.
“As I said——moral relativity. “
Maybe more like moral bankruptcy. All of this securitized POSpaper were designed so everone could grab one or two points, and then pass it off to the next schminder. All the while the rating agencies were in their pockets, offering them cover. Nice scam if you can get in on it.
They weren't asleep, but many were paid to look the other way.
“They weren’t asleep, but many were paid to look the other way”
Some must have been bought. They all were not that stupid. I would love to know how they were paid off, though ;-)
Phil Gramm exempted credit default swaps from regulation. You can't enforce what isn't there.
Bookmark!
Bookmark!
IMO, you can't determine somethings value by splitting into 100s of pieces and betting on whether those pieces will make or lose money.
Hope I'm making sense. I'm just beginning to delve into this economic stuff.
Still, that is 5 to 6 times total of USA's total real estate market, which tells everything one needs to know about the nature of this "insurance" that no sane insurance company would underwrite. John Paulson (AFAIK, no relation to Hank Paulson) was one of the several hedge fund guys who figured this out very early in the "game".
Was this economic crisis planned? - FR - 2009 January 07, one of my several posts on this "supersized" $60+ Trillion "insurance".
One of the reasons CDSs flew under the radar of the SEC and other financial regulators because the instrument was sold not on the open / public market or exchanges like stocks, bonds or options but as an unregulated "insurance," most of it from or through London branches of international banks and financial institutions. Now there is a "clearance exchange" in the works for these types of derivatives, which should provide substantially more transparency.
An excellent overview on the origins and the "Masters of the Universe" of this particular derivatives / CDSs fiasco (Howard Sosin, Randy Rackson and Barry Goldman of Drexel Burnham Lambert, and later of AIG Financial Products Division) is in this three-part series from January 2009, by Robert O'Harrow Jr. and Brady Dennis:
Bold innovators led AIG's stunning rise
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