Comments on: Fire ! http://www.ritholtz.com/blog/2009/03/fire-2/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 07:16:03 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: Mutant Capitalism http://www.ritholtz.com/blog/2009/03/fire-2/comment-page-1/#comment-155173 Mutant Capitalism Fri, 20 Mar 2009 00:35:08 +0000 http://www.ritholtz.com/blog/?p=22107#comment-155173 Excellent analogy! Let's be a little more specific about this subprime playbook. This house fire was no accident. It can not be blamed entirely on economic conditions, financial ability of borrowers, liar loans or time worn predatory lending tactics. There were arsonists involved and their flame accelerant was mortgage servicing fraud. These were subsidiary servicers of major investment banks. Some were independent servicers who merely contracted their services aka "Fire for Hire". Now these servicers had perfected their game, having been at it since late '80's for their own and others' profit. Here's one who recently got FTC wrist slap after 20 years of despicable behavior: Bear Stearns - EMC Mortgage Corp - http://www.ftc.gov/opa/2008/09/emc.shtm Where's the profit in these times when mortgages are under water and homes no longer hold equity? Insurance, of course...... but not just any old insurance policy, one where you are not required to have skin in the game, which makes it almost impossible for forensics to identify and prosecute perpetrators of this crime. Thanks to Phil Gramm's deregulatory dance moves credit default swaps became that emminently suitable vehicle for this purpose. So it was that in cold dark winter days of January 2006 - subprime ABX index was born, conceived and birthed by a group of traders working for investment banks that all had subsidiary servicers under their roofs/control. http://www.bloomberg.com/apps/news?pid=20601170&refer=special_report&sid=aA6YC1xKUoek How are ABX.HE indices compiled every 6 months? By these very same traders of course. http://www.forbes.com/2007/08/06/croesus-chronicles-indexes-oped-cz_rl_0807croesus.html Was the whole subprime credit default swap orgy rigged from the start? Did investment banks conspire to rig ABX in their favor? Did insider servicing information inspire obscene leverage in these bets? Did investment bankers instruct subsidiary servicers in which REITs to manufacture bogus defaults? Take a look at the big players in Markit Group's kick-off ABX presentation: ABN AMRO, Bank of America, Barclays Capital, Bear Stearns, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, UBS, and Wachovia, all firms with subsidiary mortgage servicing units. http://www.markit.com/information/products/category/indices/abx/documentation/contentParagraphs/09/document/ABX_Marketing_Presentation.pdf Markit's own website acknowledges "Working in conjunction with a consortium of key asset-backed security trading desks" Financial Times reports that these banks and brokerage firms held a majority interest in Markit of approximately 67%, hedge funds owned 13%, and employees 20%. The firm's web site currently says it has 16 banks as shareholders, without naming the banks. That's okay. We know who THEY are. It's time to call things are they are: Retention Bonuses = Hush Money Markit Group Consortium = Banking CARTEL House on Fire = ARSON ! Excellent analogy! Let’s be a little more specific about this subprime playbook. This house fire was no accident. It can not be blamed entirely on economic conditions, financial ability of borrowers, liar loans or time worn predatory lending tactics. There were arsonists involved and their flame accelerant was mortgage servicing fraud. These were subsidiary servicers of major investment banks. Some were independent servicers who merely contracted their services aka “Fire for Hire”. Now these servicers had perfected their game, having been at it since late ’80′s for their own and others’ profit. Here’s one who recently got FTC wrist slap after 20 years of despicable behavior:
Bear Stearns – EMC Mortgage Corp – http://www.ftc.gov/opa/2008/09/emc.shtm
Where’s the profit in these times when mortgages are under water and homes no longer hold equity?
Insurance, of course…… but not just any old insurance policy, one where you are not required to have skin in the game, which makes it almost impossible for forensics to identify and prosecute perpetrators of this crime. Thanks to Phil Gramm’s deregulatory dance moves credit default swaps became that emminently suitable vehicle for this purpose. So it was that in cold dark winter days of January 2006 – subprime ABX index was born, conceived and birthed by a group of traders working for investment banks that all had subsidiary servicers under their roofs/control.
http://www.bloomberg.com/apps/news?pid=20601170&refer=special_report&sid=aA6YC1xKUoek
How are ABX.HE indices compiled every 6 months? By these very same traders of course.
http://www.forbes.com/2007/08/06/croesus-chronicles-indexes-oped-cz_rl_0807croesus.html
Was the whole subprime credit default swap orgy rigged from the start?
Did investment banks conspire to rig ABX in their favor?
Did insider servicing information inspire obscene leverage in these bets?
Did investment bankers instruct subsidiary servicers in which REITs to manufacture bogus defaults?
Take a look at the big players in Markit Group’s kick-off ABX presentation: ABN AMRO, Bank of America, Barclays Capital, Bear Stearns, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, UBS, and Wachovia, all firms with subsidiary mortgage servicing units.
http://www.markit.com/information/products/category/indices/abx/documentation/contentParagraphs/09/document/ABX_Marketing_Presentation.pdf
Markit’s own website acknowledges “Working in conjunction with a consortium of key asset-backed security trading desks” Financial Times reports that these banks and brokerage firms held a majority interest in Markit of approximately 67%, hedge funds owned 13%, and employees 20%. The firm’s web site currently says it has 16 banks as shareholders, without naming the banks. That’s okay. We know who THEY are.
It’s time to call things are they are: Retention Bonuses = Hush Money
Markit Group Consortium = Banking CARTEL
House on Fire = ARSON !

]]> By: benesposito http://www.ritholtz.com/blog/2009/03/fire-2/comment-page-1/#comment-154860 benesposito Thu, 19 Mar 2009 04:20:27 +0000 http://www.ritholtz.com/blog/?p=22107#comment-154860 AGG said: "There’s a nice bullseye! It would be a nice start to impeach Dodd and put him in prison. Less than 1% of our politicians give a rip about our economic wellfare. They are bought and paid for by the lobbyists Fuck the business as usual types. An interesting point you bring up; sort of like asking a person why he wants to play chess when everybody plays checkers. Ethical relativism is an oxymoron. It’s also the current popular delusion of the vox populai. The shrinks will pontificate that a person demanding a “golden rule” type behavior from his leaders has a RIGID PERSONALITY. After all, ridicule is a great rhetorical device." So have some fun and scream at (ridicule) a politician today. So let's see, ridicule filled rants are going to stop the ridiculers. Also in a short space you managed to commit the fallacies of ad hominem, argument from omniscience, argument from adverse consequences, argumentum ad baculum, argumentum ad ignorantiam, argumentum ad populum, begging the question, composition fallacy, confirmation bias, confusion of correlation and causation, non sequitur, red herring, slippery slope, and straw man. lol, if only you could lead us out of this trouble. AGG said:
“There’s a nice bullseye! It would be a nice start to impeach Dodd and put him in prison.

Less than 1% of our politicians give a rip about our economic wellfare. They are bought and paid for by the lobbyists

Fuck the business as usual types.

An interesting point you bring up; sort of like asking a person why he wants to play chess when everybody plays checkers. Ethical relativism is an oxymoron. It’s also the current popular delusion of the vox populai. The shrinks will pontificate that a person demanding a “golden rule” type behavior from his leaders has a RIGID PERSONALITY.

After all, ridicule is a great rhetorical device.”

So have some fun and scream at (ridicule) a politician today.

So let’s see, ridicule filled rants are going to stop the ridiculers.
Also in a short space you managed to commit the fallacies of ad hominem, argument from omniscience, argument from adverse consequences, argumentum ad baculum, argumentum ad ignorantiam, argumentum ad populum, begging the question, composition fallacy, confirmation bias, confusion of correlation and causation, non sequitur, red herring, slippery slope, and straw man.

lol, if only you could lead us out of this trouble.

]]> By: zitidiamond http://www.ritholtz.com/blog/2009/03/fire-2/comment-page-1/#comment-154825 zitidiamond Thu, 19 Mar 2009 02:31:12 +0000 http://www.ritholtz.com/blog/?p=22107#comment-154825 A lady friend of mine from the South once told me that the American Constitution prohibits socialism. I could only think to respond by saying that if that had been the case, her part of the country, as a slave based feudal economy, would never have ratified the Constitution. A lady friend of mine from the South once told me that the American Constitution prohibits socialism. I could only think to respond by saying that if that had been the case, her part of the country, as a slave based feudal economy, would never have ratified the Constitution.

]]> By: AGG http://www.ritholtz.com/blog/2009/03/fire-2/comment-page-1/#comment-154818 AGG Thu, 19 Mar 2009 02:18:53 +0000 http://www.ritholtz.com/blog/?p=22107#comment-154818 rootless_cosmopolitan , An interesting point you bring up; sort of like asking a person why he wants to play chess when everybody plays checkers. Ethical relativism is an oxymoron. It's also the current popular delusion of the vox populai. The shrinks will pontificate that a person demanding a "golden rule" type behavior from his leaders has a RIGID PERSONALITY. This poor rube doesn't understand the "real" world. I say, I understand it all too well. To accept common political corruption as status quo ante not to be questioned but to be lived with is the sophistic cowerdice that destroys nations. Granted, the "rigid" true believers who claim some holy religion while killing anyone who disagrees are conveniently grouped with those who demand principled behavior of politicians. After all, ridicule is a great rhetorical device. But truth always stands and sleazy behavior always brings poverty to individuals and to nations. Yeah, I know. it doesn't look like it but all the clever PR for the financial gimmickry practiced by our leaders will bring them, and us, down. So have some fun and scream at a politician today. rootless_cosmopolitan ,
An interesting point you bring up; sort of like asking a person why he wants to play chess when everybody plays checkers. Ethical relativism is an oxymoron. It’s also the current popular delusion of the vox populai. The shrinks will pontificate that a person demanding a “golden rule” type behavior from his leaders has a RIGID PERSONALITY. This poor rube doesn’t understand the “real” world. I say, I understand it all too well. To accept common political corruption as status quo ante not to be questioned but to be lived with is the sophistic cowerdice that destroys nations. Granted, the “rigid” true believers who claim some holy religion while killing anyone who disagrees are conveniently grouped with those who demand principled behavior of politicians. After all, ridicule is a great rhetorical device. But truth always stands and sleazy behavior always brings poverty to individuals and to nations. Yeah, I know. it doesn’t look like it but all the clever PR for the financial gimmickry practiced by our leaders will bring them, and us, down.
So have some fun and scream at a politician today.

]]> By: Mark E Hoffer http://www.ritholtz.com/blog/2009/03/fire-2/comment-page-1/#comment-154807 Mark E Hoffer Thu, 19 Mar 2009 02:04:37 +0000 http://www.ritholtz.com/blog/?p=22107#comment-154807 rootless, you'd need a few more conditions to really delineate the bounds of the field..but, given this: " If politicians weren’t corrupt, if they just were honest.." and Today's current scene: They'd resign, go Home to their constituents, explain what they thought the deal was, why they were resigning, instruct as to the 9th & 10th Amendments, to begin with, and apologize for being so deluded for too long. but, to the general demeanor of your Q: Do I think we'd live on "EZ St." w/ 168. Happiness for all and sundry? No, not quite. Could we be, significantly, better off? Of Course, we, most certainly, could, and, dare say, would be. rootless,

you’d need a few more conditions to really delineate the bounds of the field..but, given this: ” If politicians weren’t corrupt, if they just were honest..” and Today’s current scene: They’d resign, go Home to their constituents, explain what they thought the deal was, why they were resigning, instruct as to the 9th & 10th Amendments, to begin with, and apologize for being so deluded for too long.

but, to the general demeanor of your Q: Do I think we’d live on “EZ St.” w/ 168. Happiness for all and sundry? No, not quite. Could we be, significantly, better off? Of Course, we, most certainly, could, and, dare say, would be.

]]> By: rootless_cosmopolitan http://www.ritholtz.com/blog/2009/03/fire-2/comment-page-1/#comment-154790 rootless_cosmopolitan Thu, 19 Mar 2009 01:27:42 +0000 http://www.ritholtz.com/blog/?p=22107#comment-154790 AGG, Mark, may I ask you, do you believe in following? If politicians weren't corrupt, if they just were honest, knew things and acted because they had the best for "the people of the USA" and "our economic welfare" in mind, then they would do the right thing to fight the economic crisis and all the major problems would be solved and everything would be just fine afterward? Or there hadn't even been any economic crisis in the first hand, but economic growth forever, and a good life for everyone who is "honest" and "hard-working" in USA instead? Really? rc AGG, Mark,

may I ask you, do you believe in following? If politicians weren’t corrupt, if they just were honest, knew things and acted because they had the best for “the people of the USA” and “our economic welfare” in mind, then they would do the right thing to fight the economic crisis and all the major problems would be solved and everything would be just fine afterward? Or there hadn’t even been any economic crisis in the first hand, but economic growth forever, and a good life for everyone who is “honest” and “hard-working” in USA instead?

Really?

rc

]]> By: GB http://www.ritholtz.com/blog/2009/03/fire-2/comment-page-1/#comment-154775 GB Thu, 19 Mar 2009 01:02:55 +0000 http://www.ritholtz.com/blog/?p=22107#comment-154775 Barry, You forgot to mention that the house is fully insured by a federally subsidized agency lobbied into existance by the banker. Barry, You forgot to mention that the house is fully insured by a federally subsidized agency lobbied into existance by the banker.

]]> By: WNL http://www.ritholtz.com/blog/2009/03/fire-2/comment-page-1/#comment-154768 WNL Thu, 19 Mar 2009 00:54:38 +0000 http://www.ritholtz.com/blog/?p=22107#comment-154768 I have a thought on how to handle this. Announce that in 2 weeks, the gov' t will release the names of only the AIG current and former employees who elected to keep, rather than return, their 'bonuses' - those who return the bonus will not make the list. Some think that there is a real risk to life and limb for those who keep that bonus. Further decisions (to tax them, etc) can be made depending upon how many keep the bonus. I have a thought on how to handle this.

Announce that in 2 weeks, the gov’ t will release the names of only the AIG current and former employees who elected to keep, rather than return, their ‘bonuses’ – those who return the bonus will not make the list.

Some think that there is a real risk to life and limb for those who keep that bonus. Further decisions (to tax them, etc) can be made depending upon how many keep the bonus.

]]> By: Mark E Hoffer http://www.ritholtz.com/blog/2009/03/fire-2/comment-page-1/#comment-154762 Mark E Hoffer Thu, 19 Mar 2009 00:48:15 +0000 http://www.ritholtz.com/blog/?p=22107#comment-154762 AGG, franklin has no intelligible to what you laid out. That *History isn't taught at his level. in a way, it's too bad, he's a bright boy, maybe he'll discover that one has to Learn more than they're Taught.. Jason, to your point: "then I realized, no I-Banker would get themselves dirty like that", and given the recency of AIG coverage, see: http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=AIG+CIA yon' Rabbit Hole, may it have an End. AGG,

franklin has no intelligible to what you laid out. That *History isn’t taught at his level.

in a way, it’s too bad, he’s a bright boy, maybe he’ll discover that one has to Learn more than they’re Taught..

Jason,

to your point: “then I realized, no I-Banker would get themselves dirty like that”, and given the recency of AIG coverage, see: http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=AIG+CIA

yon’ Rabbit Hole, may it have an End.

]]> By: Jason Crowell http://www.ritholtz.com/blog/2009/03/fire-2/comment-page-1/#comment-154741 Jason Crowell Thu, 19 Mar 2009 00:06:15 +0000 http://www.ritholtz.com/blog/?p=22107#comment-154741 Actually, I think you leave out the part about the I-Banker paying off some guy called "Matches" Malone to make sure that their CDS payoff bigtime. Then saying "Hoocoodanode" when Matches does...what guys nicknamed Matches do. THEN grumbling about having to pay taxes for the Fire Department, and railing against taxes to help the homeless. (At first, I figured something about the I-Banker tossing the gas can and taking a shower to get the smell of five gallons of gas off him...then I realized, no I-Banker would get themselves dirty like that) Actually, I think you leave out the part about the I-Banker paying off some guy called “Matches” Malone to make sure that their CDS payoff bigtime. Then saying “Hoocoodanode” when Matches does…what guys nicknamed Matches do.

THEN grumbling about having to pay taxes for the Fire Department, and railing against taxes to help the homeless. (At first, I figured something about the I-Banker tossing the gas can and taking a shower to get the smell of five gallons of gas off him…then I realized, no I-Banker would get themselves dirty like that)

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