Interest rate 'freeze' - the real story is fraud

[n2doc]

Interesting read:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/09/IN5BTNJ2V.DTL

snip:

It is truly amazing that right now everyone in the country is deferring to Paulson and the heads of Countrywide, JPMorgan, Bank of America and others as the best group to work out a solution to this problem. No one is talking about the fact that these people created the problem and profited to the tune of hundreds of billions of dollars from it.

I suspect that such a group first sat down and tried to figure out how to protect their financial interests and avoid criminal liability. And then when they agreed on the plan, they decided to sell it as "helping working families stay in their homes." That's why these meetings were secret, and reporters and the public weren't invited.

The next time that Paulson is before the Senate Finance Committee, instead of asking, "How much money do you think we should give your banking buddies?" I'd like to see New York Sen. Chuck Schumer ask him what he knew about this staggering fraud at the time he was chief of Goldman Sachs.

The Goldman report in October suggests that rampant investor demand is to blame for origination fraud - even though these investors were misled by high credit ratings from bond rating agencies being paid billions by the U.S. investment banks, like Goldman, that were selling the bundled mortgages.

This logic is like saying shoppers seeking bargain-priced soup encourage the grocery store owner to steal it. I mean, we're talking about criminal fraud here. We are on the cusp of a mammoth financial crisis, and the Federal Reserve and the U.S. Treasury are trying to limit the liability of their banking friends under the guise of trying to help borrowers. At stake is nothing short of the continued existence of the U.S. banking system.

[wishlist]

1. Heads of these firms claim they just thought home values would keep rising

I saw a panel recently that was giving information to Congress and included the CEO of Countrywide, Angelo Mozilo. He admitted that he and the other top people in the lending industry screwed up and the panel agreed that Fed regulators were too lax. But they all claimed that they were just swept up in the rising property value frenzy and just assumed wrongly that the increase in values would continue indefinitely. They chose to ignore any warnings or suggestions that their poor lending practices would backfire disastrously.

Regardless of the incompetence and 'fraud', it appears that these companies and their obscenely paid CEO's and investors will be bailed out as much as possible by the Fed.

[stillcool]

3. and Ken Lay had no idea...

what was happening at his company. Deaf, dumb, and blind. What a coincidence.

[sendero]

2. I think it is simpler than that..

... they are trying to prevent an all-out no-holds-barred collapse of our banking system.

They are scared shitless, and they should be, it is not at all certain that a collapse can really be prevented, no matter what they do.

[formercia]

4. Foreign entities flush with cash will buy the banks

for pennies on the dollar. The have to get rid of their greenbacks somehow.

Guess who's going to be in charge next time around?


They don't have to invade us, they buy us out on the cheap.

[terisan]

6. Which foreign powers will have the controlling interest in Bush-destroyed America ?

Many countries such as China have government ownership interests in corporations, some have controlling interests. How ironic that Bush and Cheney will be turning America into a colony of socialized countries while they fly off to Dubai and Paraguay with billions.

[gratuitous]

5. Krugman's column today in the Times has it in a nutshell

The Paulson plan is designed to do two things: (1) Give the appearance that the administration is doing something; and (B) stop any alternative plan, like Barney Frank's, that might actually do something.

One of the little factoids from Krugman's column that might be startling is that of all the high-risk subprime mortgages written in the last few years, fully 55% of them -- more than half -- were written for home buyers who qualified for lower rates. Now, why would mortgage companies steer borrowers into loans that would cost more? Why, why, why? Oh, I just can't imagine.

Could it be . . .

GREED?

[formercia]

7. The NAZIs did the same thing in WWII

They had so much loot to steal and stash, they kept the War going for much longer that it could have been.

They're stalling to give them time to grab as much loot as they can before the economy goes down in flames.