Forum Thread

The Lenders Put the Lies in Liar's Loans

Reply to ThreadDisplaying 6 Posts
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
    Are you sure you want to delete this post?
        
    PBS' "Frontline" is now using the word fraud in its "Untouchables" program, which is an improvement over previous investigatory documentaries into the financial crisis, but they still fail to explain specifically what the industry itself termed to be "liar's loans."

    http://video.pbs.org/video/2327953844?starttime=524000

    The mortgage originators:
    1.) doctored income statements to lower the reported debt-to-income ratio.
    2.) pressured real estate appraisers to value the properties above value to lower the loan-to-value ratio.

    With those two variables, originators made what looked like safe loans (low risk), but at a premium yield (exceptionally high interest rates). That alone should have been warning sign. On the basis of those two variables, originators were awarded bonuses for hitting a "sweet spot." Even if borrowers lied, they would have no idea what number to put down as income to hit that magic number. Also, borrowers would not and could not tell the appraiser to overvalue the home they were buying.

    The Lenders Put the Lies in Liar's Loans and Bear the Principal Moral Culpability

    by William K. Black, former S & L regulator, two-time government whisteblower & exposer of the Keating 5.

    http://neweconomicperspectives.org/2011/10/lenders-put-lies-in-liars-loans-and....r

    Also, whether or not criminal charges applicable, the government as a regulator and creditor has a responsibility to remove incompetant or fraudulent managers, through the regulatory process. They don't even do that. It's government of, by, and for the 1%. The White House has failed miserably. "The financial sector is a lot more trouble than it is worth."-Warren Mosler.

    Slap on the wrist fines are just a cost of businesses easily justified by the profits made on the frauds committed.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
    Are you sure you want to delete this post?
        
    Looks like the DoJ is freaking out about Frontline's "Untouchables" program, which in my opinion was still a soft-ball report on the control frauds that drove the financial crisis. Listen DoJ, if you can't prosecute Wall Street for what the industry termed behind closed doors to be "liar's loans," you are totally incompetant as lawyers, and the American people deserve better representation. Obama should clean house beginning with A.G. Holder on down.


    http://www.nakedcapitalism.com/2013/01/for-once-maybe-lying-does-not-pay-dojs-l...l
  • Independent
    Plymouth, WI
    Are you sure you want to delete this post?
        
    The system that owns our government would rather lock someone up for pot than lock up a banker who is part of the money system, no matter what the system member banker does against the majority and America, why? Because the system doesn't care about America or the majority, they care about more money no matter what laws or morals they break to get it.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
    Are you sure you want to delete this post?
        
    Agreed. Banking regulation is always a work in progress and mistakes are going to be made, but what has gone down is a total failure of everything. "The financial sector is parasitic"-Warren Mosler. Warren Mosler is one of the top hedge fund managers in U.S. history, and he came to Occupy Dallas and said exactly this: his industry is a total waste of human endeavor. It adds nothing to the real economy and everything to distrupt and destroy the lives of the people in this country. Unlike so many his industry, Warren has protesting Wall Street since the 70s. He's the original Wall Street protester. The financial sector can serve a valuable role in providing opportunities to business to expand and get the funding they need to put people to work, but it's been turned into a gigantic fraud dominated casino, where the little guy gets f#####, and no public purpose is served.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
    Are you sure you want to delete this post?
        
    Another thing. It is was Warren who tipped off the MMTers at UMKC to the fraud that Wall Street was committing when the bubble burst in 2008. MMTers, at that point, were under the impression, that it was a matter of deteoriation of credit standards that drove the crisis, and not fraud, per se. Warren recognized that it was fraud, and after that, Bill Black and Randy Wray got on the ball. So it was Warren who broke the story, and he did so just by looking at the numbers. The Bush economy pushed a lot of MMTers away from their own understanding, due to the how long the Bush expansion went on, but it was fraudulent private sector lending that carried it on.
  • Independent
    Plymouth, WI
    Are you sure you want to delete this post?
        
    Carlitos Wrote: Another thing. It is was Warren who tippied off the MMTers at UMKC to the fraud that Wall Street was committing when the bubble burst in 2008. MMTers, at that point, were under the impression, that it was a matter of deteoriation of credit standards that drove the crisis, and not fraud, per se. Warren recognized that it was fraud, and after that, Bill Black and Randy Wray got on the ball. So it was Warren who broke the story, and he did so just by looking at the numbers, The Bush economy pushed a lot of MMTers away from their own understanding, due to the how long the Bush expansion went on, but it was fraudulent private sector lending that carried it on.
    If someone saw this to be the reason, your words: "that it was a matter of deteoriation of credit standards that drove the cirisis, and not fraud, per se." I would of asked why the standard changed? The answer to this question will clearly lead to fraud. Crazy how the system criminals walk and the majority fills the prisons for breaking bull crap system laws.