Monday, August 30, 2010

Wall Street's Biggest Fraud

Over the last two years of the housing bubble, Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history.
Faced with increasing difficulty in selling the mortgage-backed securities that had been among their most lucrative products, the banks hit on a solution that preserved their quarterly earnings and huge bonuses:


They created fake demand.
A ProPublica analysis shows for the first time the extent to which banks -- primarily Merrill Lynch, but also Citigroup, UBS and others -- bought their own products and cranked up an assembly line that otherwise should have flagged.
The products they were buying and selling were at the heart of the 2008 meltdown -- collections of mortgage bonds known as collateralized debt obligations, or CDOs.
As the housing boom began to slow in mid-2006, investors became skittish about the riskier parts of those investments. So the banks created -- and ultimately provided most of the money for -- new CDOs. Those new CDOs bought the hard-to-sell pieces of the original CDOs. The result was a daisy chain [1] that solved one problem but created another: Each new CDO had its own risky pieces. Banks created yet other CDOs to buy those.
(snippet)

They were paid by the CDO, not the bank, and were supposed to serve as a bulwark against self-dealing by the banks, which had the fullest understanding of the complex and lightly regulated mortgage bonds.
It rarely worked out that way. The managers were beholden to the banks that sent them the business. On a billion-dollar deal, managers could earn a million dollars in fees, with little risk. Some small firms did several billion dollars of CDOs in a matter of months.

More Here..

16 comments:

  1. Everything caused by wall street and banksters, you might as well say it was caused by jooz. Jooz eventually get kicked out of every country they ever inhabit. Let history be your guide. If it is the truth, it is not racist. And The whole world has been scammed by you know who.

    ReplyDelete
  2. VIDEO TO WATCH

    OVERDOSE. The Next Financial Crisis.

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  3. To say it is all banksters fault is not true, Bush pushed them with his "America's Homeownership Challenge"to the tune of $440 Billion, he even paid the down payments of 40,000 home owners a year that had no down payment. Bankster are greedy.... Bush.... Stupid!

    ReplyDelete
  4. Um, um, um says it's because of Bush. Talk about stupid.

    Obozo is just a darker shade of Bush. Nothing has changed, only the puppet.

    ReplyDelete
  5. That's right!

    That stuupid loser W Bush

    That sinofabitch led us into the vietnam war 1'

    Didn't he?!

    What a fducking douchebag you are 10"57

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  6. Anonymous said...
    To say it is all banksters fault is not true, Bush pushed them with his "America's Homeownership Challenge"to the tune of $440 Billion, he even paid the down payments of 40,000 home owners a year that had no down payment. Bankster are greedy.... Bush.... Stupid!
    Your problem friend 2.57 is that you mistake economics for party politics and think Bush was a Dumbo Republican stupid .
    he was only a sock puppet for the ruling elite like Obama who is also seen as a dumbocrat politition now.

    MISSION ACOMPLISHED BUSH !
    In order for Trillions of dollars to flow into america to create and maintain the great Ponzi Dollar Hegemony Economy , while america was being de-industrialised , Bush acted in co-operation with the Banksters to create a bigger supply of Dud mortgage bonds sold in bundled AAA packages
    To support Ponzi economics.
    So the republican puppet, passed out loans like a keynesian democrat to anybody willing to sign X on a mortgage paper.
    Suddenly a Republican wanted to provide the american dream house to all americans even to the poor!!

    Nice guy ,an american hero, even if he was a failure in finding WMD or his CIA agent Bin Scapegoat Laden.
    But Bush was only ramping up the market for the banksters by creating demand for housing mortgages and an ever bigger property bubble.
    A "privatised" Freddy and Fannie supplied the government finance.Cheap taxpayer supplied credit was provided ,but the banksters got the profits on that, flogged off the bonds and pocketed the proceeds.
    And not just the obvious "Joos" tribal financier cabal at goldman sach benifited, but the entire financial sector.

    As a bonus the deficit financing provided an oportunity for the governmenment to sell government treasuries to bondholders foreign and domestic.

    The banksters or the government were not so much interested in repayments but in flogging off dud bonds worldwide to the Arabs ,the chinese etc.
    Before the Chinese and russians woke up to the scams in the AAA sub prime mortgage bundled bonds ,they had each purchased hundreds of billions of the Fannie and Freddy bonds.
    The finance sector boomed contibuting 40% of all profits to the GDP. And bush provided extra tax concessions on the banksters bonuses.

    Till the shit hit the fan and Russia and China forced Bush to nationalise all the Dud bonds so the taxpayer got the bill for the losses.
    Otherwise Fannie and Freddies "government backed securities " the Privatised agencies would have defaulted on their debts.
    This would have been seen as the US goverment defaulting on its bonds.
    And crashed the dollar.
    These mortgages are still bleeding losses by the billion every month , but the billions of continuing losses are being paid to the bondholders with an unlimited debt funding guarantee .

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