View Full Version : Crash Fault?Bush-Paulson-Greenspan Wall St. Crooks

Gayle in MD
01-28-2011, 09:47 AM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"><span style='font-size: 26pt'>In a report released today, the Financial Crisis Inquiry Commission found that "reckless" Wall Street firms, an abundance of cheap credit and "weak" federal regulators caused the crisis.

"This financial crisis could have been avoided. Let us be clear," chairman Phil Angelides said at the Washington press conference marking the official release of the report. "The record is replete with evidence of failures. None of what happened was an act of God."</span>


Former California treasurer Angelides confirmed that the bipartisan panel appointed by Congress to investigate the financial crisis concluded that several financial industry figures appear to have broken the law and has referred multiple cases to state or federal authorities for potential prosecution.

The report also revealed that Goldman Sachs collected $2.9 billion from the American International Group as payout on a speculative trade it placed for the benefit of its own account, receiving the bulk of those funds after AIG received an enormous taxpayer rescue, according to the FCIC.

The 662-page report, available online, and as a book, offers 10 main conclusions:

"This financial crisis was avoidable."

"Despite the expressed view of many on Wall Street and in Washington that the crisis could not have been foreseen or avoided, there were warning signs," the report reads."The tragedy was that they were ignored or discounted."

"Widespread failures in financial regulation and supervision proved devastating to the stability of the nation's financial markets."

"Securities and Exchange Commission could have required more capital and halted risky practices at the big investment banks. It did not," the report reads.

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Advertisement"The Federal Reserve Bank of New York and other regulators could have clamped down on Citigroup's excesses in the run-up to the crisis. They did not. Policy makers and regulators could have stopped the runaway mortgage securitization train. They did not.

"Dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis."

Financial institutions acted recklessly and depended too heavily on short term loans, the inquiry found. "Compensation systems--designed in an environment of cheap money, intense competition, and light regulation--too often rewarded the quick deal, the short-term gain--without proper consideration of long-term consequences," it reads.

"A combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis."

The inquiry found that in the years leading up to the crisis, American households, and institutions, borrowed too much and saved too little.

"When the housing and mortgage markets cratered, the lack of transparency, the extraordinary debt loads, the short-term loans, and the risky assets all came home to roost. What resulted was panic," the report reads. "We had reaped what we had sown."
<span style='font-size: 23pt'>
"The government was ill prepared for the crisis, and its inconsistent response added to the uncertainty and panic in the financial markets."</span><span style='font-size: 20pt'>Key government agencies, the Treasury Department, the Federal Reserve Board, and the Federal Reserve Bank of New York were behind the curve, the report concluded.

"They were hampered because they did not have a clear grasp of the financial system they were charged with overseeing, particularly as it had evolved in the years leading up to the crisis."</span>"There was a systemic breakdown in accountability and ethics."

Many borrowers lied about being able to pay mortgages, lenders made loans they knew borrowers couldn't afford, the report said.

<span style='font-size: 20pt'>"Countrywide executives recognized that many of the loans they were originating could result in 'catastrophic consequences.' Less than a year later, they noted that certain high-risk loans they were making could result not only in foreclosures but also in 'financial and reputational catastrophe' for the firm. But they did not stop."</span><span style='font-size: 20pt'>
"Collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the flame of contagion and crisis."</span><span style='font-size: 23pt'>
The report found irresponsible lending was prevalent, and there were warnings, but "the Federal Reserve neglected its mission," and mortgage lenders passed the risk along.</span><span style='font-size: 20pt'>"From the speculators who flipped houses to the mortgage brokers who scouted the loans, to the lenders who issued the mortgages, to the financial firms that created the mortgage-backed securities, collateralized debt obligations... no one in this pipeline of toxic mortgages had enough skin in the game."

"Over-the-counter derivatives contributed significantly to this crisis..."</span><span style='font-size: 20pt'>Speculating on devices like collateralized debt obligations fanned the flames, with everyone from farmers to corporations to investors betting on prices and loan defaults. When the housing bubble popped, these were at the center of the fallout.</span><span style='font-size: 20pt'>
"The failures of credit rating agencies were essential cogs in the wheel of financial destruction..."</span><span style='font-size: 20pt'>
But, the report found, those bets wouldn't have been possible without the seal of approval from ratings agencies.</span>
<span style='font-size: 14pt'>"This crisis could not have happened without the rating agencies. Their ratings helped the market soar and their down- grades through 2007 and 2008 wreaked havoc across markets and firms," the report reads.</span> </div></div>

01-28-2011, 09:59 AM
All brought to us by the constant tinkering of Federal Government.

Gayle in MD
01-28-2011, 10:10 AM
Shahien Nasiripour shahien@huffingtonpost.com | HuffPost Reporting

<span style='font-size: 17pt'>Wall Street Appears To Have Violated Federal Securities Law, Crisis Panel Finds </span>

Wall Street firms that sold mortgage-backed securities appear to have violated federal securities laws by misleading investors on the quality of the underlying mortgages, a bipartisan panel created by Congress to investigate the root causes of the financial crisis concluded.
<span style='font-size: 20pt'>
Banks that sold home loan bonds often didn't disclose key details that would have helped investors accurately judge the quality of the investments. For example, investors were rarely told whether the mortgages failed to meet the banks' own standards.</span>That failure raises "the question of whether the disclosures were materially misleading, in violation of the securities laws," the panel said.

<span style='font-size: 20pt'>The claim of allegedly widespread securities law violations is among the more explosive findings in a sweeping report released Thursday by the Congressionally-appointed Financial Crisis Inquiry Commission. Those details help explain why the panel opted to refer several financial industry figures to state or federal law enforcement agencies for potential prosecution, as The Huffington Post reported Monday.</span><span style='font-size: 26pt'>The report, the result of a year-long investigation, finds fault with nearly every every cog in the financial system: Wall Street investment banks, government regulators, the Federal Reserve, hedge funds and credit rating agencies.</span>

<span style='font-size: 26pt'>The crisis panel blamed Wall Street for taking excessive risks and creating exotic financial instruments that even bank chiefs didn't understand.</span>

<span style="color: #990000"> Hmmmm, where is Chopstick??? </span>

<span style='font-size: 26pt'>It criticized federal regulators for ignoring clear warning signs that the meteoric rise in home prices was unsustainable and the bubble would one day pop.</span> Credit rating agencies were faulted for telling investors that mortgage-linked investments based on sketchy home loans deserved to be rated as highly as Treasuries. And government officials were taken to task for allowing bloated mortgage giants Fannie Mae and Freddie Mac to help inflate the bubble, then resisting calls to rein them in because it threatened political goals of maximizing the national homeownership rate.
<span style='font-size: 20pt'>
The worst financial crisis since the Great Depression was avoidable, the report concludes.</span>
<span style='font-size: 14pt'>

<span style="color: #990000">Just as I have stated all along. </span>
Yet while much of the commission's findings simply reiterate what many already know to be true -- government officials watched and did nothing as Wall Street took ever bigger risks -- the plight of investors possibly being duped into buying dubious securities has largely been ignored.</span><span style='font-size: 20pt'>The multi-trillion mortgage bond market was rife with poor data, an overall lack of information, and little oversight, the crisis commission found.</span>

<span style="color: #990000">Just whom is responsible for overseeing this market???? </span>

Many of these instruments were sold by Wall Street giants like Morgan Stanley, Goldman Sachs, and Citigroup. Big investors like pension funds and German banks bought them without knowing all the risks.

<span style='font-size: 20pt'>The commission's report concludes that sellers of mortgage bonds didn't tell buyers enough about the underlying mortgages they were purchasing. The crisis panel found that firms routinely failed to disclose basic facts that would have helped investors properly evaluate what they were buying.</span><span style='font-size: 20pt'>
The finding appears to bolster claims by investors suing Wall Street firms for selling them now-toxic mortgage bonds.</span>Giant lenders like JPMorgan Chase and Bank of America face billions of dollars in lawsuits and potential losses over such allegations.

JPMorgan set aside nearly $6 billion last year to cover legal costs "predominantly for mortgage-related matters," it said on January 14. Bank of America is facing almost $8 billion in claims to buy back soured mortgages from aggrieved investors, the firm said on January 21.

<span style='font-size: 20pt'>In September, the crisis commission heard testimony from Keith Johnson, former president of Clayton Holdings, one of the nation's biggest mortgage research companies. Johnson testified that some 28 percent of the loans given to homeowners with poor credit examined by his firm on behalf of Wall Street banks failed to meet basic standards. Yet nearly half appear to have been sold to investors regardless, he added.</span>Last April, the commission heard from Richard Bowen, a whistleblower and former chief underwriter for Citigroup's consumer-lending unit. Bowen told the panel that in the middle of 2006, he discovered more than 60 percent of the mortgages the bank had purchased from other firms and then sold to investors were "defective," meaning they did not satisfy the bank's own lending criteria. On November 3, 2007, Bowen sent an e-mail to top Citi officials, including Robert Rubin, a former Treasury Secretary. Bowen's warnings appear to have been ignored.

Thanks to their testimony -- especially Johnson's -- the commission's final report found that investors weren't adequately told what they were actually buying.

"Such disclosures were insufficient for investors to know what criteria the mortgage they were buying actually did meet," the report states.

Christopher Whalen, a bank analyst and managing director at Institutional Risk Analytics, said the crisis commission's findings on behalf of investors will help them in their fight against securities issuers, but only slightly.

"It'll help the plaintiffs to have more evidence in the public domain," Whalen said, in reference to the commission's report. "But the real place where the rubber hits the road is when the investor alleges fraud. Basic, plain vanilla fraud."

"Whether disclosure was there or not doesn't matter," he added.

The crisis panel, hobbled by staff turnover and partisan infighting throughout the year, produced the report after a year-long investigation in which it reviewed millions of pages of documents, interviewed more than 700 witnesses and held 19 days of public hearings across the country.

The six Democratic commissioners voted for the report's findings; <span style='font-size: 14pt'>the four Republicans voted against, </span>producing two separate, dissenting reports. <span style='font-size: 14pt'>The Republicans largely looked at global forces, like savings from Asia flooding the U.S. financial system, and the role played by government housing goals.</span>

<span style="color: #990000">Would that be the Bush Ownership Policy???? Oh yes, that IS after all the main excuse for failiong to take action, when they knew what was coming, that the inept regulations p9ointed to, "It would have been aggainst the President's "Ownership Society" policies.

Not only did Bush's apppointees like Paulson, and Republican Fed Chairmen, Greenspan prove their deceit and incompetence, "the fundamentals of our economy are strong" but Greenspan blowing the bubble up with those Bush friendly low interest rates for his "ownership Society"

Given Bush, left this country in such a mess, squandered a budget surplus, left the country mired in two raging wars, ran up more debts than all previous administrations combined, hence, the country was ill equipped to properly handle the financial crises.

As some of us have stated, all along, it was the CROOKS on Wall Street, who caused this crisis, and the incompetence of the Bush Administration, along with irrational tax cuts during war time, and leaving the ticket off the ledger, using Emergency Funding, and massive debts incurred while Republicans were spending and borrowing us into a complete collapse of our economy, and threatening the global economy.

If anyone cam come up with any man in American History, who damaged America, more than Bush, please do so, but don't try to blame those who inherited unprecedented debts, mismanaged wars, corruption, abuse, and eight years of redistribution of wealth to the top, leaving the rest with onoly their equity in their homes, to get by on...all of this, created and left by Bush et al, and exploited by Wall Street Crooks!</span>


01-28-2011, 10:53 AM
<span style="color: #000099">Apparently, as usual, you did not read the report. I doubt the authors you quote did either. I'll give you a clue what it does say. "Clinton".</span>

Gayle in MD
01-28-2011, 11:14 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Chopstick</div><div class="ubbcode-body"><span style="color: #000099">Apparently, as usual, you did not read the report. I doubt the authors you quote did either. I'll give you a clue what it does say. "Clinton".</span> </div></div>

I read the report, and as usual, you are conflating it, to protect you views, because "Clinton" was not nearly portrayed as one of the main causes, and his decisions were convoluted into entirely different practices, of no oversight, under Republicans, Greensapn, Paulson and under Bush.

Clearly, the bulk of the blame goes to the same Corporate pigs, I've been blaming all along, their corruption and greed, their fraud, and their exotic instruments, used to hide what they were actually doing, used to steal even more, some of which you once said, weren't used, until after the crash.



01-28-2011, 12:13 PM
Notice that in the thread title, the first person she blames is Bush. As I read the article, it seems that there were a lot of people in the banking industry that the article blames. And if the charges are true, some of those bank officials belong in jail. Of course, I suspect several of those banking types are now working within the Obama administration, so they may never end up facing charges.


Gayle in MD
01-28-2011, 12:25 PM

Greenspan Was Chairman of the Federal Reserve. He is a Republican, Free Market zealot, against regulations.

He is most responsible for the culture of corruption, that gave Wall Street the greenlight, for fraud, and even stated, he is never concerned about fraud in the markets.

He later admittted he underestimated that GREED, could block out their judgement.

He knew what was coming, and retired to jump the shark!

The fact that the bulk of damage was done between 03, AFTER F & F got out of the subprime market, and late o6, which is the time span when every economist, every documentary, and every book that I have read on this subject, states, proves that it grew into a serious threat, during Bush, under his Free Market zeal, under Greenspans tenure of "Free unregulated market, policy."

You prefer to blame Clinton, who had been out of office, during the years that Wall Street Crooks, performed their fraud, skewed the market, stole from all of us, and crashed the economy....

There were warnings, after warnings, about what was going on.

Bush et al, did NOTHING!

As for Clinton??? who, BTW, was not the President who put forth the CRA, anyway...but CRA was early on, cleared:

“I want to give you my verdict on CRA: NOT guilty,” said FDIC Chairman Sheila Bair, according to a press release by the Federal Deposit Insurance Corporation. Before the Consumer Federation of America, Bair said Thursday she wanted to clear up the “myth” that the Community Reinvestment Act caused the financial crisis — and she set out to do so with vigor.

The Community Reinvestment Act — or CRA — is a federal law designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. It has largely been criticized by conservative members of the GOP as promoting predatory lending practices.

<span style='font-size: 20pt'>“Point in fact,” she said, “only one in four higher-priced first mortgage loans were made by CRA-covered banks during the hey-day years of subprime mortgage lending. The rest were made by private independent mortgage companies and large bank affiliates not covered by CRA rules.”</span>

And “Let me ask you,” she proceeded. <span style='font-size: 20pt'>“Where in the CRA does it say to make loans to people who can’t afford to repay? Nowhere.” </span>
<span style='font-size: 20pt'>
The facts are simple, Bair said. The lending practices that are causing problems today were driven by a desire for more market share and revenue growth, not because the government encouraged certain lending practices.</span>

Mark Hillman, a former majority leader in the Colorado state Senate tells a different tale. “Through CRA, banks were strong-armed to make risky loans and threatened with fines of up to $500,000 per violation if they didn’t reach government quotas,” he wrote in an op-ed published in late October. “Banks were encouraged to hire ‘community groups,’ like ACORN, to find ‘qualified’ borrowers.”

Bair said CRA has always recognized there are limitations on the potential volume of lending in lower-income areas due to "safety and soundness" considerations, and that's why the CRA never set out lending targets or goals. However, the CRA isn't without imperfections, and now is the time to put more emphasis on the qualitative aspects of lending in CRA examinations, she said.

<span style='font-size: 14pt'>Bair isn't alone in her defense for CRA. Just two weeks ago, Comptroller of the Currency John Dugan said in a speech at the Enterprise Annual Network Conference that "CRA is not the culprit behind the subprime mortgage lending abuses, or the broader credit quality issues in the market place."</span>In closing remarks, Bair suggested that while the bulk of lending abuses were outside the banking sector, bank regulators must be more vigilant. "Consumer protection by bank regulators is not an oxymoron," she said.

http://www.ritholtz.com/blog/2008/12/fdi...air-on-cra-not- (http://www.ritholtz.com/blog/2008/12/fdic-chairman-sheila-bair-on-cra-not-guilty/z.com/blog/2008/12/fdic-chairman-sheila-bair-on-cra-not-)

End of story.

01-28-2011, 04:17 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Gayle in MD</div><div class="ubbcode-body">And “Let me ask you,” she proceeded. <span style='font-size: 20pt'>“Where in the CRA does it say to make loans to people who can’t afford to repay? Nowhere.” </span>
[size:20pt] </div></div>

It's a shame she didn't read the act either.

Luckily, you have El Dubb Dubb to do the thinking the American left just won't do anymore:

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Sec. 2906. Written evaluations

(a) Required (1) In general Upon the conclusion of each examination of an insured depository institution under section 2903 of this title, the appropriate Federal financial supervisory agency shall prepare a written evaluation of the institution's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods. (2) Public and confidential sections Each written evaluation required under paragraph (1) shall have a public section and a confidential section. (b) Public section of report (1) Findings and conclusions (A) Contents of written evaluation The public section of the written evaluation shall - (i) state the appropriate Federal financial supervisory agency's conclusions for each assessment factor identified in the regulations prescribed by the Federal financial supervisory agencies to implement this chapter; (ii) discuss the facts and data supporting such conclusions; and (iii) contain the institution's rating and a statement describing the basis for the rating. (B) Metropolitan area distinctions The information required by clauses (i) and (ii) of subparagraph (A) shall be presented separately for each metropolitan area in which a regulated depository institution maintains one or more domestic branch offices. (2) Assigned rating The institution's rating referred to in paragraph (1)(C) (FOOTNOTE 1) shall be 1 of the following: (FOOTNOTE 1) So in original. Probably should be paragraph ''(1)(A)(iii)''. (A) ''Outstanding record of meeting community credit needs''. (B) ''Satisfactory record of meeting community credit needs''. (C) ''Needs to improve record of meeting community credit needs''. (D) ''Substantial noncompliance in meeting community credit needs''. </div></div>

OH DEAR! (http://www.fdic.gov/regulations/community/community/12c30.html)