Difficult times for all - the sequel

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  1. #21

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    Apr 2003
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    Boris - When you're a few billion in debt .. who cares, its all justified by number crunchers.

    When you're a few hundred thousand down, its a HUGE problem.


  2. #22

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    Apr 2003
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    This one will amuse you...

    Corruption: Is This Woman The Smoking Gun Of The Mortgage Meltdown?

    Meet Tracy Warren. NPR says she's not surprised by the mortgage meltdown because she was supposed to be in charge of preventing it. Tracy worked for a quality control contractor that reviewed subprime loans for investment banks before they were sold on Wall Street, and her company's biggest client was none other than Bear Stearns. Tracy says she found plenty of loans to reject. The trouble is, according to Tracy, after she rejected them... her bosses unrejected them.

  3. #23

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    Apr 2003
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    Original story here ...

    Auditor: Supervisors Covered Up Risky Loans : NPR

    Peterson said auditors like Warren basically were hired to find the bad apples in the barrel and pull them out: borrowers with payments they couldn't afford, houses with inflated appraisals, people lying about their income.

    But Warren says her bosses were taking a lot of those bad apples and putting them back in. And Peterson says he thinks the investment banks had a strong financial incentive to do that.

    "They put the bad apples back in the barrel because they knew that they could sell the bad apples along with the good apples and, at least in the short term, nobody would know the difference. That's why they put them back in — because they made more money that way," Peterson says.

    "There's a name for this — it's called 'passing the trash,' " says David Grais, an attorney getting ready to sue Wall Street firms on behalf of investors — big pension funds and others — who bought the bad loans.

    "These were immensely profitable deals. One study showed that the investment banks were making a 40 percent return on equity every two months on these securitizations, which is an eye-popping number," he says.

    Grais says many people on Wall Street make huge bonuses when their business unit is making big money. So the faster they could package up loans — good, bad or ugly ones — and sell them to investors, the more money that they made, he says.

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