Is Wall Streets full of crooks ?

[Native Floridian]

"However if you want to hack away at the government maybe start a thread about the government causing the problem. There seem to be many here who dislike the government so you should be able to find many takers to agree with your POV. "

Well NF. If you cannot see that government policies helped this whole fiasco you are not as open minded as you try to appear. Further, this thread has kind of gotten to the bash the greedy rich people stage and your statement here supports that. So, You would make fun of me pointing out government involvement, but you seem to push the 99 percenter way. HMMMM.

I think that wall street is chuck full of criminals, nuts and psychos. And believe it or not most of them are now on the left side of the aisle. And many CEOS are now lawyers. That leads to bad juju.

Reread my post. pay close attention to the sentence that says Governement policies did contribute to the crash. Where do you get that i said anything different?

You lost me with the rest of it.

 

Amazon Forum Fav 👍

Agony and Death on a Gold Rush Steamer: The Disastrous Sinking of the Side-Wheeler Yankee Blade - Grab it through Amazon!

[Native Floridian]

Strange my parents first home they bought they were not required to put down 50% and that was in the mid 50's....

My first home I saved and put down 25% in early 80s, current home I put down same again 25%... But I also didn't try to buy more than I could afford ....

Why were mortgage companies giving loans with no income verification, why were they allowing buyers to buy homes with house payments that were over 50% of their take home pay? It was due to those practices that we had a housing bubble, Country Wide was one of them and they were bought by BOA, both public traded companies. Wall Street had their hands in the pie as well, they made billions of dollars and the average hard working joe got stuck with the bills...

My mortgage was originally with countrywide.

Sent from my Galaxy Nexus using Tapatalk 2

YOur parents buying a home with less than 50% dp is possible. Just not the norm for most of america. banks normally required 30 to 50% dp depending on the creditworthineness and income of the borrower. That said, to the point, if anyone thinks life as we know it would be anywhere near as good as it is in this country without the financial markets that give corporations access to capital, they are uninformed.

We may not like the way some of these people act, but the fact is, our markets work.

TH, as for the no income verification etc, there was fraud at every level. From the borrower on up. As for the borrowers - they weren't any certain class of people. They were the poor, they were the middle income and they were the rich. This cut across all classes. And, it wasn't "They!" it was us. The people on this board, our neighbors, our friends, and relatives. These people committed mortgage fraud. Some actively participating and other's passively. it was free for all out there for years of easy credit.

50% of income with no income verifcation - was that right? of course not! But who's fault was it? The underwriters who accepted it, the mortgage broker who wrote it, the originator who bundled it, the Wall Street firm funding it, the borrower who lied on the app? As I've said, greed caused the crash. Greed at many levels.

 

[Treasure_Hunter]

Wall street had a big part in the greed.....

Sent from my Galaxy Nexus using Tapatalk 2

 

[TheCoinKid]

Exploit or capitalize?

A Wall Street firm sent out a notice to commerical banks that it was interested in buying any distressed loans that the banks had. Tell us whatcha got and we will let you know if we are interested. No arm twisting, no hammer down sales pitch.

A bank in Maryland contacted the firm to see if they would be interested in taking a distressed mortgage off their hands. The mortgage was to a hospital, the outstanding amount due was about 100 million dollars. And the bank wanted if off their books.


The Wall Street firm took a look at it, analyzed it, and offered the bank 50 cents on the dollar. The bank countered at 72 or 73 cents on the dollar. The bank didn't know it at the time, but they were, at that point, a hooked fish. Negotiation brought about a deal at 62 cents on the dollar. The Wall Street firm took the troubled loan off the bank's hands and the bankers walked away thinking they had just bamboozled one of Wall Street's biggest names. Walking away with 62 million dollars they were happy campers!


The Wall Street guys were happy to! Happy owning a 100 million dollar mortgage on the brink of default? Yup! When the firm analysed the loan, they weren't looking at probability of turning it around. They were looking at probability of default. It was the almost certainty of a default that motivated them to make an offer. You see, this was back in the early days of securitized loans. This particular loan was securitized through Ginnie Mae. All GNMA backed loans are backed fully by the United States Government. In a default the govt pays off the loan in full and the interest due.The Wall Streeters were betting on default.


Sure enough the loan defaulted, and 30 days later the U. S. Government paid the Wall Street firm the 100 million dollar outstanding loan balance. Along with the defaulted interest owed. The firm walked away with a with a 60% plus profit for a deal that took less than 90 days from beginning to end. 38 million dollars profit for 90 days work.

Everyone walked away happy. Everyone got what they wanted.

That the loan was in distress, not the Wall Streeter's fault.

That the loan was part of the GNMA program, not the Wall Streeter's department. They had nothing to do with that.

Did the Wall Streeters exploit the bankers or just capitalize on their own knowledge?

NF,

In your example, why would the bank sell a loan on the brink of default for 62 cents on the dollar, if it was fully guaranteed by the US Government?

TCK

 

[Native Floridian]

NF,

In your example, why would the bank sell a loan on the brink of default for 62 cents on the dollar, if it was fully guaranteed by the US Government?

TCK

In the early days of GNMA guaranteed mortgages some banks didn't realize the loans were fully guaranteed.

 

[Native Floridian]

Wall street had a big part in the greed.....

Sent from my Galaxy Nexus using Tapatalk 2

Keep throwing stones! I couldn't agree with you more.

Still, the fact is that most people who feel that way are clueless about how Wall Street works. And clueless to the fact that unless they are Cody Lundin or someone like him they're more dependent on Wall Street than they think.

You can't throw a light switch in your house without Wall Street's help. No trash pick up, no police department, no schools, at least beyond a one room schoolhouse. No paved streets. The list goes on and on.

Our lives are interwoven with the capitalistic system that fuels the engine to make it work.

 

[Native Floridian]

Interestingly, for as crooked as wall street is, it's cleaner than some other professions. or apparently so. In my career i've seen, personally, four guys tossed out for fraud. One is doing 20 years in PA state prison. The other three? Two became lawyers and one became a CPA.

 

[TheCoinKid]

Interestingly, for as crooked as wall street is, it's cleaner than some other professions. or apparently so. In my career i've seen, personally, four guys tossed out for fraud. One is doing 20 years in PA state prison. The other three? Two became lawyers and one became a CPA.

And just what are you implying?

 

[Native Floridian]

Implying nothing! Directly saying that my profession, at least at my level, is cleaner than these other professions. It's more vigorously policed for the bad apples. Though the industry didn't persue criminal charges against 3 out of 4 of these bad apples, all charges, violations, and actions against resigistered individuals is disclosed on an industry wb site and is public information. Yet, the policing entities for CPAS and Attorneys either didn't find it, or didn't care. And though i'm sure i' am insulting members of these professions with this post, it is what it is. How is the guy who stole $600,000 from clients 10 years ago now working as an attorney?

While it is easy to point at Wall Street and financial advisors in particular and say crook, the facts say differently. If you want to become a financial advisor today at a major firm and you've got anything more than a speeding ticket on your record, you are wasting your time because you are not getting in.

 

[TheCoinKid]

Implying nothing! Directly saying that my profession, at least at my level, is cleaner than these other professions. It's more vigorously policed for the bad apples. Though the industry didn't persue criminal charges against 3 out of 4 of these bad apples, all charges, violations, and actions against resigistered individuals is disclosed on FINRA's web site and is public informantion. Yet, the policing entities for CPAS and Attorneys either didn't find it, or didn't care. And though i'm sure i' am insulting members of these professions with this post, it is what it is. How is the guy who stole $600,000 from clients 10 years ago now working as an attorney?

While it is easy to point at Wall Street and financial advisors in particular and say crook, the facts say differently. If you want to become a financial advisor today at a major firm and you've got anything more than a speeding ticket on your record, you are wasting your time because you are not getting in.

The intent of my comment was more for humor than anything else. Intent often gets lost in text.

Now, for the sake of rebuttal, had "your profession" pursued criminal charges, it may have resulted in giving the other professions "something to hang their hat on" for denying entry.

I don't agree that your profession is cleaner than those other professions, but then again, opinions are like noses (clean version). Everyone has one and they're all different.

I enjoy the banter and plan to keep it respectful.

TCK

 

[Native Floridian]

No that you mention it, as a joke I get it! Sorry about that!

Our industry can't persue criminal charges only fine, bar and make recommendations. It's up to state and fed prosecuters to take the next step, criminal prosecution.

To my point, if a disbarred lawyer tries to get a job at Merrill Lynch, the ex lawyer would have to disclose the fact that they are disbarred. They would have to offer the reasons. Most likely, ML would discover the disbarment during their our background investigation. Either way here is no way that Merrill Lynch would hire them. Same goes for every other firm on the street.

That being the standard here we are somewhat in disbelief that these crooks could land on their feet in other high end professions of trust.

I mentor young people looking at our profession. i tell them keep your record clean. The stupidist night of your college experience could be the one that determines whether you land that dream job. Don't disqualify yourself before you get to the starting gate.

 

[Native Floridian]

The bar to entry in our profession is so high because we've been the target of lawsuits and regulatory persecution.

For example, at the fed level - 20 plus years ago it was thought the Brokers were ripping people off, so the SEC commissioned an investigation. They put a pit bull who hated brokers in charge. This guy was going to clean up the industry. he was looking for a type of broker who ripped off clients and then moved from firm to firm before the firm's compliance department could catch them. And before state and federal authorities could catch them. He dubbed them Rogue brokers. As the investigation moved forward the pit bull ran into a problem. He had to keep lowering the bar as to just what constituted a rogue broker. That was because he wasn't finding enough brokers who were ripping off clients. Finally, the bar was bottomed out to some ridiculous criteria just so the pit bull could save face.

In the end, as it turned out, out of roughly 90,000 registered brokers, less than 300 fit that criteria. IOW, statically insignificant. A non problem. Still the SEC declared a win and ordered fixes to forever clean up the industry. Today, 20 years later we have to comply yearly with fixes to the non problem from 20 years ago. At cost of millions of dollars per firm per year.

Every advisor has to take continuing education, every year. Every three years advisors have to pass a test. Failure at any of these levels means look for a new career.


At the lawsuit level - We have big bullseye on our backs. There is an entire industry built around how to sue your broker. Lawyers pay tens of thousands of dollars to attend seminars on how to target brokers.

Not that there aren't brokers/financial advisors who deserve to be sued, but many of the cases are frivilous. WE lose those cases before we get to the arbitration table when the opposition pulls out a petty misdemeanor from when the broker was 19. Thus the high bar to entry.

 

[Native Floridian]

Back on the mortgage debacle. Everyone loves to demonize WAll Street. We are a fairly easy target. Though i do believe that Wall Street played a roll in the mortgage meltdown, they did so as source of capital. Were they the primary villians? Not in my opinion. Why? Because they were the ones left without a chair when the music stopped. Why would they do something that would lose them money? in this case billions.

Wall Street as the primary holders of these mortgages was left on the hook with hundreds of billions of dollars in losses. As the end holder of the mortgages WAll Street was counting on the system that produced those mortgages to work. They were counting on the integrity of the system.

Steve Eisman showed just how clueless WAll Street was to the fact that the process that delivered those mortgages to them had broken down. A high end analyst at a big name firm, his children's Nanny, making all of $25,000 a year, yet with over a million dollars in mortgage debt asking him for advice woke him up. The rest of Wall Street never got that message.


Meanwhile on main street greed had taken over. Potential homeowners looking to buy houses. Existing homeowners looking to refi to buy more crap. Investors adding to their empires. Builders needing to sell to refill the kitty so they could build more. Realtors not wanting anything to step on their sales, Mortgage brokers with magic wands to make it all work. Local bankers looking the other way because once the loans were bundled they got paid and the mortgages weren't their problem.

All these people got what they wanted. The homeowners got their houses, the investors got their properties, the refiers' got their new swimming pool, the professionals involved in these transactions at the main street level made billions. And when the music stopped Wall Street got left holding the bag. They got screwed! That should make some of you happy!

Was Wall Street greedy? Wall Street is always greedy. It's what makes the place work. Did they cause the mortgage meltdown? No. Quite the opposite. They counted on the system that was making them rich to work.

 

[sirlostalot]

Is this a trick question?

 

[Native Floridian]

lostalot - truckers never lie in their log books, right?

Those in glass houses...

 

[Treasure_Hunter]

Wall Street was left holding the bag with out a chair when the music stopped? Homeowners didn't have a bed to sleep in... :banghead:

What about the home owners who lost their homes or ended up underwater by 10's of thousands of dollars through no fault of their own....


Sent from my Galaxy Nexus using Tapatalk 2

 

[Native Floridian]

Wall Street was left holding the bag with out a chair when the music stopped? Homeowners didn't have a bed to sleep in... :banghead:

What about the home owners who lost their homes or ended up underwater by 10's of thousands of dollars through no fault of their own....


Sent from my Galaxy Nexus using Tapatalk 2

What about them? Wall Street didn't cause the problem. Thinking they did is as illogical as thinking a person would purposely buy a lemon car. Wall Street got stuck with the bad mortgages. After investing billions of their own money into these mortgages do you believe they wanted them to default?

If i came to you and said, TH here is an investment that will lose you 80%, would you buy it? Of course not. Wall Street traders and execs are no different than you. When they buy an investment they expect to make a profit. That's what they expected with the mortgages they bought. They are not going to do anything to get in the way of making money. Same as you or I.

Wall Street had no idea that the system had become tainted at the production end. That their investment was eroded at the foundation.

Worse the system that was suppose to double check them didn't work. That is, the ratings agencies failed at their jobs as well.

As for the homeowner's, for those not involved in the fraud yeah, as a fellow homeowner i have a lot of sympathy. I too took a hit. For those who lost jobs because of this i have sympathy. But for those homeowners who helped cause this mess by lying on mortgage apps? Sympathy isn't the word that comes to mind.

 

[Treasure_Hunter]

Not talking about those that lied, talking about the millions of homeowners that lost homes and or are underwater and had nothing to do with it, they are the ones who had no chairs when the music stopped not wall street...
.

Sent from my Galaxy Nexus using Tapatalk 2

 

[Native Floridian]

TH, those who lost homes because of the mortgage debacle and those who lied are one in the same.

During interviews when asked how they could afford so much house these people had no answer. When asked what they though would happen when the mort rate adjusted upwards some said they had no idea that could happen. That even though the mortgage contract they signed and intialed showed exactly to the penny how much the mortgage would increase to and when. There are those who said they though they'd be able to refinance because that's what they've always done before. There are those who signed off on negative amortization schedules.

This is what happens when you lie on a mortgage app - you lose your house! This is what happens when sign a contract you can not fulfill!

BTW, i doubt any of these people are homeless. Especially in hard it places like Vegas and Florida. There is such a glut of empty houses on the market that investors lowered rents and rental credit standards just to get the cash flow.

I have a friend who lost his place in Cape Coral. For the past four years he has rented a 3000 sq ft 4 bdrm screened pool home for $800 a month. $800 a month for a luxury home! My son has a few fellow officers on the LEE County Sherriff's force that are doing similar. Big new houses dirt cheap rent!

Yeah TH, for these people who lost their homes, cry me a river!

 

[Dave44]

Native you are too close to the forest, and you are so enamored with the current ruling party you are not thinking clearly.

Here, try this TH.
How The Government Caused The Mortgage Crisis - Business Insider

"""""t wasn't greed that caused the mortgage mess. In large part, the mess was the product of government policies designed to increase homehownership among the poor and ethnic minorities.Today Peter Wallison points out how Fannie Mae, Freddie Mac and the FHA created a demand for bad mortgages that encouraged mortgage brokers to generate millions of them.
From the Wall Street Journal:
Mortgage brokers had to be able to sell their mortgages to someone. They could only produce what those above them in the distribution chain wanted to buy. In other words, they could only respond to demand, not create it themselves. Who wanted these dicey loans? The data shows that the principal buyers were insured banks, government sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac, and the FHA—all government agencies or private companies forced to comply with government mandates about mortgage lending. When Fannie and Freddie were finally taken over by the government in 2008, more than 10 million subprime and other weak loans were either on their books or were in mortgage-backed securities they had guaranteed. An additional 4.5 million were guaranteed by the FHA and sold through Ginnie Mae before 2008, and a further 2.5 million loans were made under the rubric of the Community Reinvestment Act (CRA), which required insured banks to provide mortgage credit to home buyers who were at or below 80% of median income. Thus, almost two-thirds of all the bad mortgages in our financial system, many of which are now defaulting at unprecedented rates, were bought by government agencies or required by government regulations.""

Read more: How The Government Caused The Mortgage Crisis - Business Insider

To say that government had nothing to do with the crisis is laughable, at best. But we are not at the end of this debacle yet.
​