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REFERENCE The best book on the 2008-9 crisis was “The Sellout,” by Charles Gasparino. He traces several threads:
- How the investment banks (Merrill, Lehman, Bear Stearns) had leveraged themselves into near-death experiences before
- How US government policies virtually forced banks to make low-down payment mortgages to buyers with sub-standard credit, forcing up prices
- How securitization meant these sub-standard loans could be bundled up and sold far and wide (w/ great losses to the buyers)
- How the ratings agencies gave this crap AAA ratings
- How the sales incentives to create mortgage-backed securities led to incredible short term behavior on the part of investment bankers
- How AIG (insurance) screwed up by guaranteeing many of these in Credit Default Swaps....etc, etc, etc.
It took an unholy confluence of events—government policy, investment banker greed, and last, but not least, securitization to create the perfect storm.....and swamped taxpayers w/ billion dollar bailouts.
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POLS MAKE ZILLIONS IN PERPETUITY---by making insider deals w/ these bankers to issue education, transportation, and other municipal bonding deals.
Bonding is eternal taxation---taxpayers get stuck w/ huge tax bills.
Newly uncovered internal memos reveal the Obama administration knowingly exaggerated charges of racial discrimination in probes of Ally Bank and other defendants in the $900 billion car-lending business as part of a racial justice campaign that's looking more like a massive government extortion and shakedown operation
Obama's Consumer Financial Protection Bureau has reached more than $220 million in settlements with several auto lenders since the agency launched its anti- discrimination crusade against the industry in 2013. Several other banks are under active investigation. That's despite the fact that the CFPB had no actual complaints of racial discrimination--- it was all just based on half-baked statistics.
A 23-page internal report detailing CFPB's strategy for going after lenders shows why these companies are forking over millions of dollars in restitution and fines to the government despite denying any wrongdoing.
CFPB applied the screws to Ally, saying it had statistical evidence showing its participating dealers were œmarking up loan prices for blacks and Hispanics vs. whites (by an average of $3 a month). Ally fought back, insisting non-discriminatory factors, such as credit history, down payments, trade-ins, promotions and rate- shopping, explained differences in loan pricing. After conducting a preliminary regression analysis, the bank found these factors alone accounted for at least 70 percent of the “racial disparities†the government was claiming.
CFPB admits in the memo that it never considered these or other legitimate business aspects of the car deals it investigated
Also in its initial rebuttal, Ally complained CFPB's entire case was based on disparate impact statistics, not actual complaints by consumers, and that those estimates relied on guesswork about the race of the borrowers. (The auto industry does not report borrower race, so CFPB tried to ID race by last name and ZIP code, a so-called proxy method that is wildly inaccurate.)
(Excerpt) Read more at nypost.com ...
- How securitization meant these sub-standard loans could be bundled up and sold far and wide (w/ great losses to the buyers)
- How the ratings agencies gave this crap AAA ratings
Thanks again, I forgot to mention that last bit in my previous post. Moody's, S&P et al. gave those turd sandwiches a clean bill of health...and they're not rotting in jail, why?