The Banking Coverup, The Financial Crisis and the Cause of The Crash

[Aardvark154]

There's nothing secret about how GS operates. There doesn't have to be, as they openly control the process. That's deals with your obtuse remark, now if you have anything critical to say about William Black's allegations, the content of the thread, i'm sure others would like to hear it, because posting content verses name-calling and sophistry is always more interesting.

You already commented on the post I made regarding Mr. Black - several posts back by now. As I say Mr. Black is entitled to his opinion, and indeed it is an informed opinion about banking regulation. That does not, however, mean he is correct. And again, he certainly doesn't have the ear of the President. Further, you have already implied that the President is either a dupe or part of the cabal.

 

[Mcluhan]

You already commented on the post I made regarding Mr. Black - several posts back by now.

Actually, that`s incorrect, i was replying in sequence to your last post [ https://terb.cc/vbulletin/newreply.php?do=newreply&p=2571337 ]

You probably became disoriented while exchanging common views with the serf.

As for Obama, i could not be further disenchanted..well, maybe that`s untrue..there`s probably room to move my disenchantment lower still.

 

[dcbogey]

As for Obama, i could not be further disenchanted..well, maybe that's untrue..there's probably room to move my disenchantment lower still.

Please don't tell me you had your expectations raised to such unreasonable levels that you're disappointed now. Was it the mainstream media that raised your hopes so much?

 

[Aardvark154]

Actually, that's incorrect, i was replying in sequence to your last post

How the heck is it incorrect. You wrote and posted it.

 

[Mcluhan]

Please don't tell me you had your expectations raised to such unreasonable levels that you're disappointed now. Was it the mainstream media that raised your hopes so much?

If you check back, i was the first poster to bring Obama to the table here, along with the added-in comment that I thought he had what it took to be President. Everyone scoffed. (everyone). I saw the guy's power to win-over from the get go. Now i see him as a made man. Different.

 

[Mcluhan]

How the heck is it incorrect. You wrote and posted it.

That's one way to obscure your mistake. Alice, go back and count posts. lol.. sometimes you are just too O/C for words...

If any other thoughtful points (content) you wish to bring to bear on this topic, please resume. So far, none have been raised, not even the low hanging...

 

[onthebottom]

Sounds like a rhetorical question, posed in order to take a shot at Clinton's admin, the usual dance. Regardless...

So defensive, let's take a look at the content.

WILLIAM K. BLACK: Well, that's exactly what hasn't happened. We haven't looked, all right? The Bush Administration essentially got rid of regulation, so if nobody was looking, you were able to do this with impunity and that's exactly what happened. Where would you look? You'd look at the specialty lenders. The lenders that did almost all of their work in the sub-prime and what's called Alt-A, liars' loans.

I challange you to find banking regulation the Bush administration "got rid of"

WILLIAM K. BLACK: Liars' loans mean that we don't check. You tell us what your income is. You tell us what your job is. You tell us what your assets are, and we agree to believe you. We won't check on any of those things. And by the way, you get a better deal if you inflate your income and your job history and your assets.

BILL MOYERS: You think they really said that to borrowers?

WILLIAM K. BLACK: We know that they said that to borrowers. In fact, they were also called, in the trade, ninja loans.

No doc loans, bad underwriting policy perhaps, deregulation or fraud - hardly.

WILLIAM K. BLACK: Liars' loans mean that we don't check. You tell us what your income is. You tell us what your job is. You tell us what your assets are, and we agree to believe you. We won't check on any of those things. And by the way, you get a better deal if you inflate your income and your job history and your assets.

BILL MOYERS: You think they really said that to borrowers?

WILLIAM K. BLACK: We know that they said that to borrowers. In fact, they were also called, in the trade, ninja loans.

Now, is he terribly repetitive or are your copy/paste skills in need of work (certainly not in need of practice).

WILLIAM K. BLACK: Right, and the investment banker that — we call it pooling — puts together these bad mortgages, these liars' loans, and creates the toxic waste of these derivatives. All of them do that. And then they sell it to the world and the world just thinks because it has a triple-A rating it must actually be safe. Well, instead, there are 60 and 80 percent losses on these things, because of course they, in reality, are toxic waste.

He has the basics of it, packaging of assets (loans) into securities (mortgage back securities in this case) that are sold. The language of "toxic waste" is a bit melodramatic. To believe that there are 60-80% losses you have to believe the securitizing asset (real estate) will deflate by more than 50%.... I think that's a bit pessimistic. No mention of mark-to-market accounting rules yet.

As for the ratings - yes I do believe the ratings agencies turned a portfolio of sub AAA into AAA by diversifying the portfolio (say geographically) believing that real estate in the entire country couldn't fall - poor credit rating performance to say the least.

BILL MOYERS: You're describing what Bernie Madoff did to a limited number of people. But you're saying it's systemic, a systemic Ponzi scheme.

WILLIAM K. BLACK: Oh, Bernie was a piker. He doesn't even get into the front ranks of a Ponzi scheme...

BILL MOYERS: But you're saying our system became a Ponzi scheme.

WILLIAM K. BLACK: Our system...

BILL MOYERS: Our financial system...

WILLIAM K. BLACK: Became a Ponzi scheme. Everybody was buying a pig in the poke. But they were buying a pig in the poke with a pretty pink ribbon, and the pink ribbon said, "Triple-A."

Funny that Bill Moyers completely missed the point. What Bernie did some something completely different.... but then that has nothing to do with banking regulation or the credit crisis. This PBS crowd really should have taken more math and less political science in school.

BILL MOYERS: Is there a law against liars' loans?

WILLIAM K. BLACK: Not directly, but there, of course, many laws against fraud, and liars' loans are fraudulent.

BILL MOYERS: Because...

WILLIAM K. BLACK: Because they're not going to be repaid and because they had false representations. They involve deceit, which is the essence of fraud.

BILL MOYERS: Why is it so hard to prosecute? Why hasn't anyone been brought to justice over this?

WILLIAM K. BLACK: Because they didn't even begin to investigate the major lenders until the market had actually collapsed, which is completely contrary to what we did successfully in the Savings and Loan crisis, right? Even while the institutions were reporting they were the most profitable savings and loan in America, we knew they were frauds. And we were moving to close them down. Here, the Justice Department, even though it very appropriately warned, in 2004, that there was an epidemic...

They didn't investigate because there wasn't a crime.

He's making a tremendous leap here, he's saying because no-doc loans are poor underwriting policy that they're fraud..... and the whole "liar loan" language is really pathetic. I have a no-doc loan, why, because I was a very good credit risk and the loan officer had more than 15 years balance/transaction history on me when she made the loan.

BILL MOYERS: Who did?

WILLIAM K. BLACK: The FBI publicly warned, in September 2004 that there was an epidemic of mortgage fraud, that if it was allowed to continue it would produce a crisis at least as large as the Savings and Loan debacle. And that they were going to make sure that they didn't let that happen. So what goes wrong? After 9/11, the attacks, the Justice Department transfers 500 white-collar specialists in the FBI to national terrorism. Well, we can all understand that. But then, the Bush administration refused to replace the missing 500 agents. So even today, again, as you say, this crisis is 1000 times worse, perhaps, certainly 100 times worse, than the Savings and Loan crisis. There are one-fifth as many FBI agents as worked the Savings and Loan crisis.

This is really entertaining, he's valuing the current crisis at somewhere between 100-1,000 times as bad as the savings and loan crisis.... that's some valuation range.... it really feels like he's just making this stuff up on the fly, no one who knows anything about this would give themselves a 10x range of value....

And how, exactly, do FBI agents prevent poor underwriting/rating? No laws were broken.

BILL MOYERS: You talk about the Bush administration. Of course, there's that famous photograph of some of the regulators in 2003, who come to a press conference with a chainsaw suggesting that they're going to slash, cut business loose from regulation, right?

WILLIAM K. BLACK: Well, they succeeded. And in that picture, by the way, the other — three of the other guys with pruning shears are the...

BILL MOYERS: That's right.

WILLIAM K. BLACK: They're the trade representatives. They're the lobbyists for the bankers. And everybody's grinning. The government's working together with the industry to destroy regulation. Well, we now know what happens when you destroy regulation. You get the biggest financial calamity of anybody under the age of 80.

No regulation was destroyed - again that PBS audience isn't paying attention.

cont....

OTB

 

[onthebottom]

Cont....

BILL MOYERS: But I can point you to statements by Larry Summers, who was then Bill Clinton's Secretary of the Treasury, or the other Clinton Secretary of the Treasury, Rubin. I can point you to suspects in both parties, right?

WILLIAM K. BLACK: There were two really big things, under the Clinton administration. One, they got rid of the law that came out of the real-world disasters of the Great Depression. We learned a lot of things in the Great Depression. And one is we had to separate what's called commercial banking from investment banking. That's the Glass-Steagall law. But we thought we were much smarter, supposedly. So we got rid of that law, and that was bipartisan. And the other thing is we passed a law, because there was a very good regulator, Brooksley Born, that everybody should know about and probably doesn't. She tried to do the right thing to regulate one of these exotic derivatives that you're talking about. We call them C.D.F.S. And Summers, Rubin, and Phil Gramm came together to say not only will we block this particular regulation. We will pass a law that says you can't regulate. And it's this type of derivative that is most involved in the AIG scandal. AIG all by itself, cost the same as the entire Savings and Loan debacle.

Bingo, the only deregulation in the banking industry was done by Clinton and his Treasury Secs... and in fact they lobbied against CDFS regulation as well..... there is your smoking gun.... somehow I think the PBS fans missed it.

BILL MOYERS: What did AIG contribute? What did they do wrong?

WILLIAM K. BLACK: They made bad loans. Their type of loan was to sell a guarantee, right? And they charged a lot of fees up front. So, they booked a lot of income. Paid enormous bonuses. The bonuses we're thinking about now, they're much smaller than these bonuses that were also the product of accounting fraud. And they got very, very rich. But, of course, then they had guaranteed this toxic waste. These liars' loans. Well, we've just gone through why those toxic waste, those liars' loans, are going to have enormous losses. And so, you have to pay the guarantee on those enormous losses. And you go bankrupt. Except that you don't in the modern world, because you've come to the United States, and the taxpayers play the fool. Under Secretary Geithner and under Secretary Paulson before him... we took $5 billion dollars, for example, in U.S. taxpayer money. And sent it to a huge Swiss Bank called UBS. At the same time that that bank was defrauding the taxpayers of America. And we were bringing a criminal case against them. We eventually get them to pay a $780 million fine, but wait, we gave them $5 billion. So, the taxpayers of America paid the fine of a Swiss Bank. And why are we bailing out somebody who that is defrauding us?

Childish language and UBS example aside he has this right.

BILL MOYERS: And why...

WILLIAM K. BLACK: How mad is this?

BILL MOYERS: What is your explanation for why the bankers who created this mess are still calling the shots?

WILLIAM K. BLACK: Well, that, especially after what's just happened at G.M., that's... it's scandalous.

BILL MOYERS: Why are they firing the president of G.M. and not firing the head of all these banks that are involved?

WILLIAM K. BLACK: There are two reasons. One, they're much closer to the bankers. These are people from the banking industry. And they have a lot more sympathy. In fact, they're outright hostile to autoworkers, as you can see. They want to bash all of their contracts. But when they get to banking, they say, ‘contracts, sacred.' But the other element of your question is we don't want to change the bankers, because if we do, if we put honest people in, who didn't cause the problem, their first job would be to find the scope of the problem. And that would destroy the cover up.

LOL

Ah, the conspiracy.

You have noticed that the banks are back to making money, many of which are looking to repay their TARP funds (that many didn't want/need) by the end of this year. The difference between GM and the banking industry isn't a conspiracy, or even influence, it's sustainability. With the exception of AIG, the banking market will be back and running very quickly, to the extent it isn't already.

On Brooksley E. Born : "While on the commission and after becoming its chair two years later, Born sought comments on the need to regulate derivatives, specifically swaps that are traded at no central exchange, known as the dark market, and thus have no transparency except to the two counter-parties (no actual regulatory scheme was proposed at the time). The request for comments, called the "Concept Release," stated that the growth of trade in derivatives had prompted the CFTC to re-examine its regulatory scheme. [1] The request for comments was opposed by Federal Reserve chairman Alan Greenspan and Treasury Secretaries Robert Rubin and Lawrence Summers.[2] Specifically, on May 7, 1998, former SEC Chairman Arthur Levitt joined the oAs the financial crisis of 2008 gained momentum, newspapers began reporting on what might be some of its causes, including the adversarial relationship Greenspan, Rubin and Levitt had with Brooksley Born, [4] with Greenspan leading the opposition, and how Born's recommendations were suppressed.[2]

Ah, so the Democrats killed the banking market?

LMAO

OTB

 

[Aardvark154]

sometimes you are just too O/C for words...

A new term for Orange County, California?

Obscure my mistake? You seemingly forgot both my post and your response to it.

Pretty soon we are going to arrive at President Obama, "Manchurian Candidate" of the secret banking interests.

 

[Mcluhan]

Cont....

LMAO

OTB

Ok, great, so there is some meat on the bone after all, to tear at. Seems Alice the antagonist passed them by. So let's just summarize your argument below for clarity. Written below are all the content points nailed by you.

Meanwhile, i'll listen to the video again after dinner, re-read and think over your criticisms.

1. So defensive, let's take a look at the content.
2. I challange you to find banking regulation the Bush administration "got rid of"
3. No doc loans, bad underwriting policy perhaps, deregulation or fraud - hardly.
4. Now, is he terribly repetitive or are your copy/paste skills in need of work (certainly not in need of practice).
5. He has the basics of it, packaging of assets (loans) into securities (mortgage back securities in this case) that are sold. The language of "toxic waste" is a bit melodramatic. To believe that there are 60-80% losses you have to believe the securitizing asset (real estate) will deflate by more than 50%.... I think that's a bit pessimistic. No mention of mark-to-market accounting rules yet.

As for the ratings - yes I do believe the ratings agencies turned a portfolio of sub AAA into AAA by diversifying the portfolio (say geographically) believing that real estate in the entire country couldn't fall - poor credit rating performance to say the least.
6. Funny that Bill Moyers completely missed the point. What Bernie did some something completely different.... but then that has nothing to do with banking regulation or the credit crisis. This PBS crowd really should have taken more math and less political science in school.

7. They didn't investigate because there wasn't a crime.

He's making a tremendous leap here, he's saying because no-doc loans are poor underwriting policy that they're fraud..... and the whole "liar loan" language is really pathetic. I have a no-doc loan, why, because I was a very good credit risk and the loan officer had more than 15 years balance/transaction history on me when she made the loan.

8. This is really entertaining, he's valuing the current crisis at somewhere between 100-1,000 times as bad as the savings and loan crisis.... that's some valuation range.... it really feels like he's just making this stuff up on the fly, no one who knows anything about this would give themselves a 10x range of value....

And how, exactly, do FBI agents prevent poor underwriting/rating? No laws were broken.

9. No regulation was destroyed - again that PBS audience isn't paying attention.

10. The only deregulation in the banking industry was done by Clinton and his Treasury Secs... and in fact they lobbied against CDFS regulation as well..... there is your smoking gun.... somehow I think the PBS fans missed it.

11. Childish language and UBS example aside he has this right.

12. Ah, the conspiracy.

You have noticed that the banks are back to making money, many of which are looking to repay their TARP funds (that many didn't want/need) by the end of this year. The difference between GM and the banking industry isn't a conspiracy, or even influence, it's sustainability. With the exception of AIG, the banking market will be back and running very quickly, to the extent it isn't already.

13. Ah, so the Democrats killed the banking market?

 

[dcbogey]

Pretty soon we are going to arrive at President Obama, "Manchurian Candidate" of the secret banking interests.

If you check back, i was the first poster to bring Obama to the table here, along with the added-in comment that I thought he had what it took to be President. Everyone scoffed. (everyone). I saw the guy's power to win-over from the get go. Now i see him as a made man. Different.

I'm thinking he's already there.

 

[onthebottom]

Ok, great, so there is some meat on the bone after all, to tear at. Seems Alice the antagonist passed them by. So let's just summarize your argument below for clarity. Written below are all the content points nailed by you.

Meanwhile, i'll listen to the video again after dinner, re-read and think over your criticisms.

1. So defensive, let's take a look at the content.
2. I challange you to find banking regulation the Bush administration "got rid of"
3. No doc loans, bad underwriting policy perhaps, deregulation or fraud - hardly.
4. Now, is he terribly repetitive or are your copy/paste skills in need of work (certainly not in need of practice).
5. He has the basics of it, packaging of assets (loans) into securities (mortgage back securities in this case) that are sold. The language of "toxic waste" is a bit melodramatic. To believe that there are 60-80% losses you have to believe the securitizing asset (real estate) will deflate by more than 50%.... I think that's a bit pessimistic. No mention of mark-to-market accounting rules yet.

As for the ratings - yes I do believe the ratings agencies turned a portfolio of sub AAA into AAA by diversifying the portfolio (say geographically) believing that real estate in the entire country couldn't fall - poor credit rating performance to say the least.
6. Funny that Bill Moyers completely missed the point. What Bernie did some something completely different.... but then that has nothing to do with banking regulation or the credit crisis. This PBS crowd really should have taken more math and less political science in school.

7. They didn't investigate because there wasn't a crime.

He's making a tremendous leap here, he's saying because no-doc loans are poor underwriting policy that they're fraud..... and the whole "liar loan" language is really pathetic. I have a no-doc loan, why, because I was a very good credit risk and the loan officer had more than 15 years balance/transaction history on me when she made the loan.

8. This is really entertaining, he's valuing the current crisis at somewhere between 100-1,000 times as bad as the savings and loan crisis.... that's some valuation range.... it really feels like he's just making this stuff up on the fly, no one who knows anything about this would give themselves a 10x range of value....

And how, exactly, do FBI agents prevent poor underwriting/rating? No laws were broken.

9. No regulation was destroyed - again that PBS audience isn't paying attention.

10. The only deregulation in the banking industry was done by Clinton and his Treasury Secs... and in fact they lobbied against CDFS regulation as well..... there is your smoking gun.... somehow I think the PBS fans missed it.

11. Childish language and UBS example aside he has this right.

12. Ah, the conspiracy.

You have noticed that the banks are back to making money, many of which are looking to repay their TARP funds (that many didn't want/need) by the end of this year. The difference between GM and the banking industry isn't a conspiracy, or even influence, it's sustainability. With the exception of AIG, the banking market will be back and running very quickly, to the extent it isn't already.

13. Ah, so the Democrats killed the banking market?

A quality copy/paste with numbering.

OTB

 

[Mcluhan]

I'm thinking he's already there.

Correct, I am already there. Obama is owned.

 

[Mcluhan]

A quality copy/paste with numbering.

OTB

The list was for clarity as well as Alice's benefit. Its always good to frame arguments clearly.

 

[onthebottom]

The list was for clarity as well as Alice's benefit. Its always good to frame arguments clearly.

Tear away.

OTB

 

[Aardvark154]

Correct, I am already there. Obama is owned.

JM&J too bad Rob Serling isn't still on this mortal coil.

 

[onthebottom]

JM&J too bad Rob Serling isn't still on this mortal coil.

LOL

He's off googling banking conspiracy posts as a comeback.... he'll notice not a single word of mine was a copy/paste.

OTB

 

[Mcluhan]

Tear away.

OTB

1. So defensive, let's take a look at the content.

I'll pass, not defensive on Clinton at all. The sooner you stop assuming that I am in support of the US so-called left wing of your so-called two-party system the less I will need to keep correcting that assumption.

2. I challange you to find banking regulation the Bush administration "got rid of".

That would be a straw man argument posited by you. In the context of Black's statements, Black was referring to lack of loans criteria regulation enforcement, namely Liar Loans, hence fraud:

Black: Yeah, because no income verification, no job verification, no asset verification.

Black went on to cite how Bush's admin promoted/facilitated the lack of enforcement by way of example of 500 F.B.I. taken off the securities commission, moved over to 9/11 investigation, and they were never replaced.

3. No doc loans, bad underwriting policy perhaps, deregulation or fraud - hardly.

So you're claiming fraud was not a factor – Black clearly disagrees in an overwhelming way. As this is an appeal to authority call, I'll give Black the benefit of the doubt, his credibility verses yours.


5. He has the basics of it, packaging of assets (loans) into securities (mortgage back securities in this case) that are sold. The language of "toxic waste" is a bit melodramatic. To believe that there are 60-80% losses you have to believe the securitizing asset (real estate) will deflate by more than 50%.... I think that's a bit pessimistic. No mention of mark-to-market accounting rules yet.

50% off peak? I have no trouble with that. That's about what I expect, or more. The slide is about 1/2 way there, check back in 2011 when residential bottoms.

As for the ratings - yes I do believe the ratings agencies turned a portfolio of sub AAA into AAA by diversifying the portfolio (say geographically) believing that real estate in the entire country couldn't fall - poor credit rating performance to say the least.

More than that, the payment arrangement between rating agency and seller is an open door to corruption. I agree with you, only moreso.

6. Funny that Bill Moyers completely missed the point. What Bernie did some something completely different.... but then that has nothing to do with banking regulation or the credit crisis. This PBS crowd really should have taken more math and less political science in school.

I'm sure that Moyer's comment was primarily a foil for Black's 'piker' comment. But you worked in a degrading remark so that probably counts for something.

7. They didn't investigate because there wasn't a crime.

That's the one thing about a crime, if you don't look for it, you won't find it. They found 10% incidence of fraud in the S&L cases (says Black), but you expect us to believe that it's magically different this time round. In fact, not only different but ZERO; its incredulous.

He's making a tremendous leap here, he's saying because no-doc loans are poor underwriting policy that they're fraud..... and the whole "liar loan" language is really pathetic. I have a no-doc loan, why, because I was a very good credit risk and the loan officer had more than 15 years balance/transaction history on me when she made the loan.

That might be so, but other than the obvious plug for your personal creditworthiness I don't see a connection to the bulk of Indymac loans, and Countrywide's 1 billion losses etc. Different client base.

"No such thing Liar loans.. Pathetic" you say. Been to Florida lately?

Black says: " They just gutted the verification process. We know that will produce enormous fraud, under economic theory, criminology theory, and two thousand years of life experience."

Seems you two are diametrically opposed on this one; interesting. I'll defer to Black as the probable higher authority.

8. This is really entertaining, he's valuing the current crisis at somewhere between 100-1,000 times as bad as the savings and loan crisis.... that's some valuation range.... it really feels like he's just making this stuff up on the fly, no one who knows anything about this would give themselves a 10x range of value....

Back to you later on this one. I'll check comparative data and do some arithmetic. On the surface his comment doesn't seem outlandish.

And how, exactly, do FBI agents prevent poor underwriting/rating? No laws were broken.

Because they were never enforced is his point.

9. No regulation was destroyed - again that PBS audience isn't paying attention.

You passed/skipped by Brooksley Born. It was one of his main points here. http://en.wikipedia.org/wiki/Brooksley_Born He suggests the big boys quashed her attempts to push for regulation.

10. The only deregulation in the banking industry was done by Clinton and his Treasury Secs... and in fact they lobbied against CDFS regulation as well..... there is your smoking gun.... somehow I think the PBS fans missed it.

No where in his discussion does Black use the word 'deregulation'. You make a straw man argument again. You twist his argument somewhat.

Black: " Now a triple-A rating is supposed to mean there is zero credit risk."
I took him to mean the basket of poor risk paper bundled with actual Triple-A. He was talking about rating agencies and also lack of enforcing regulations (not deregulation)

11. Childish language and UBS example aside he has this right.

Could be.

12.
Ah, the conspiracy.
You have noticed that the banks are back to making money, many of which are looking to repay their TARP funds (that many didn't want/need) by the end of this year. The difference between GM and the banking industry isn't a conspiracy, or even influence, it's sustainability. With the exception of AIG, the banking market will be back and running very quickly, to the extent it isn't already.

I have noticed that they are reporting profits, yes but I think the jury is still out on how, even if the market's call tends to be positive. The controversy raging over off-book accounting of non-performing securitized debt still exists, and whether the bigger banks are technically solvent is still a matter for debate. The bottom line is that unless the economy turns around,(and it has not yet, and continues to worsen) the banks are going downward just like any other business, maybe slower than some, because the Gov seems intent on the pushing the Japanese solution, the same solution they cautioned Japan to avoid at all costs.

Unless we get a turnaround, there will be a lot of so-called zombie banks, the walking dead of the next 10 years.

 

[Mcluhan]

JM&J too bad Rob Serling isn't still on this mortal coil.

You know, for a guy with nothing to say, you do it well.

 

[Aardvark154]

You know, for a guy with nothing to say, you do it well.

Then again, I'm not the man saying that the President of the United States and his administration are under the control of an cabal of banking interests.