Banks Were Pushing Subprime Mortgages Behind The Scenes
By Susie Madrak Wednesday Oct 14, 2009 1:00pm
Joe Nocera, who writes the Executive Suite column for the New York Times, has done an interesting thing today. He 1) points out banks are lying about their involvement in subprime mortgages, he 2) notes that Barney Frank is absolutely wrong to defend them and 3) offers documents that support his claim. This is something we used to call "journalism," and I'm happy to see it:
“There has not been a case made that there is an enforcement problem with banks,” Edward Yingling, the head of the American Bankers Association, said last week. “There is a problem with enforcement on nonbanks.”
As I wrote in my column last week, this has become something of a mantra for the banking industry. We aren’t the ones who brought the world to the brink of financial disaster, they proclaim. It was those awful nonbanks, the mortgage brokers and originators, who peddled those terrible subprime loans to unsuspecting or unsophisticated consumers. They’re the ones who need to be regulated!
Apparently, when you say something long enough and loud enough, people start to believe it, even when it defies reality. Here, for instance, is the normally skeptical Barney Frank on the subject: “What happened was an explosion of loans being made outside of the regular banking system. It was largely the unregulated sector of the lending industry and the underregulated and the lightly regulated that did that.”
To which I can now triumphantly reply: Oh, really???
Last weekend, after the column was published, an angry mortgage broker — someone who felt she and her ilk were being unfairly scapegoated by the banking industry — sent me a series of rather eye-opening documents. They were a series of fliers and advertisements that had been sent to her office (and mortgage brokers all over the country) from JPMorgan Chase, advertising their latest wares. They were dated 2005, which was before the subprime mortgage boom got completely out of control. They’re still pretty sobering.
“The Top 10 Reasons to Choose Chase for All Your Subprime Needs,” screams the headline on the first one. Another was titled, “Chase No Doc,” and described the criteria for a borrower to receive a so-called no-document loan. “Got Bank Statements?” asked a third flier. “Get Approved!” In a number of the fliers, Chase makes it clear to the mortgage brokers that the bank doesn’t need income or job verification — it just needs to look at a handful of old bank statements.
“There were mortgage brokers who acted unethically, absolutely,” my source told me when I called her on Monday. (She asked to remain anonymous because she still has to work with JPMorgan Chase and the other big banks.) “But where do you think mortgage brokers were getting the subprime mortgages they were selling to customers? From the big banks, that’s where. Chase, Bank of America — they were all doing it.” So enough already about how the banks weren’t the problem. Of course they were. Here’s the evidence, right here. Read ’em and weep.
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And who was the Pope of Hope (R-Government Sachs) talking to before the election?
Paulson the Plunderer here
The Big Banks securitized the fraudulent and misrepresented loans, the Rating Agencies gave their AAA seal of approval.
The Big Banks sold their mis-rated, misrepresented, fraudulent wares to the world.
The fraud is massive.
Where are the investigations, where are the prosecutions?
Nowhere because these guys are TOO BIG TOO JAIL.
...conspiracy?
No need to.
Didn't Bush Sr. , Saudi Arabia and other foreign nation in partnership in the Carlyle Group , started in the banking empire around 8 years ago..
Wonder if or how much this bailout to the banking empire helped their pocketbook..
If fact under Bush Jr.'s criminal administration didn't the Carlyle Group total wealth more than tripled...
I really believe we made a terrible mistake when we choice Obama as our leader... He is either a republican by nature or his advisors like Emanuel certainly are..
The big banks are even bigger now, there were a dozen, now there are four.
They got away with the fraud last time, they got us to bail them out.
They will be back again.
I'm shocked...SHOCKED...to hear....aaah...skip it.
Your winnings, sir.
Strawman defense:
Cross your arms and point in two directions and say "It wasn't me"
Thank you for banking with JPMorgan Chase & Co!
You'll be happy to know that JPChase just made $3.6 billion dollars (billion with a "b") last quarter (that's in 3 months).
Bonus time!
http://www.nytimes.com/2009/10/15/business/15...
On topic, this is important for people to realize.
And things as such have been going on for a much longer time than 2005.
I got divorced in 2000, took the money we split from the bank and the condo we sold and set my sight on San Diego.
I got a referral for a broker who worked with World Savings who said he could get me approved for a loan up to 300,000 dollars with NO INCOME VERIFICATION. In those days you still had to come up with 20 percent down to get this, but still. Loaning someone 300K for a house and never verifying anything but the fact they are working.
As we know, that was just the start..
“There were mortgage brokers who acted
unethicallycriminally , absolutely,”The bigger the mess the more people should go to jail.
A bunch of money is missing or we wouldn't have had to "bail-out" the banks - or am I missing something?
Heads should roll.
Missing? Not really. Most of it didn't exist to begin with. It only existed on their books. We bailed them out to balance those books. They did use those non-existent assets to line their pockets though.
Phoney money.
Also, I suspect there haven't been prosecutions because to admit that there were crimes would beg the question of the bailout. If more Americans got the impression that trillions of their tax dollars were given away to bail out criminals, they might get upset. Particularly with that single-payer option being so expensive and all... .
we let the banks fund Single-Payer . . . they can afford it with their trillions of taxpayer dollars. It would only be fair.
It's a better investment than subprimes.
when you own Congress.
FHA is about 80% of the current mortgage market
with a 3.5% down, and $8000 tax credit, people can walk into up to $220K houses with nothing down, just roll that "credit" (which many states now offer up front) as your closing cost.
Already we are seeing frantic trouble in 2007 and 2008 vintage FHA loans
1 in 4 2007 in trouble
1 in 5 2008 in trouble
we've learned nothing
the banks get the fees, and instead of the securitization market being a place to offload the loans, now its the US taxpayer directly
http://www.fundmymutualfund.com/2009/10/nyt-f...
Stop using th word SUBPRIME!!!!!!!!!!!!!!!!!!1
Dose that mean that mean I get a loan under the prime rate???????????????
NOOOOOOOO!!!!!!!!!!!
IT is above the prime rate. Who the F___ came up with the term SUBPRIME???
hehe - "substandard" has a much more accurate connotation.
Before this fiasco, the five prime lenders were the go-to-guys for vetted loans. When Mozilla and his cronies soiled the nest, so to speak, 'subprime' became a common description for the deluge of mortgage lenders who stepped into the fray to grab their piece of the mortgage pie. I suspect the term was bastardized to describe all the bad loans they wrote.
He was telling people that adjustable rate mortgages were a good deal.
Even I, as a first-time home buyer, knew enough to lock in a good fixed rate when I got one.
Barney Frank wasn't "defending banks" when he made that statement. That's a load of crap. He was defending the Community Reinvestment Act. Very few of those banks and lenders were regulated under the the Community Reinvestment Act, which the wingnuts have tried to blame for the meltdown.
Good gawd you are waaay off the mark to be attacking Barney Frank, especially based on that quote which you've taken wholly out of context.
Here's some of the context of what Barney Frank said:
Read more at: http://www.huffingtonpost.com/rep-barney-fran...
I thought the Bush Administration pushed the banks into pushing 'subprime' mortgages. Subprime Mortgages...I don't know enough about economics to fill a thimble, but that sounds like a buzzword to describe the practice giving large loans to people that don't have an ice cubes chance in Hell of paying it back in the first place.
http://online.wsj.com/article/SB1255448173276... Looks like the banks had there backs covered on this one.
place the responsibility for this fiasco squarely where it belongs?!
The CORPORATE MEGALOMANIACS who 'own' our politicians and most of the M$M are the ones who are ultimately responsible for the uber hedonism that brought us the mortgage fiasco, the securities fiascos, the Enron fiasco, and YOU NAME THE FINANCIAL FIASCO AND THEY'RE BEHIND IT!!!! These corporatists might be Republicans or they might be Democrats, but they are MOST ASSUREDLY looking out for their own bottom line!!!!!!
And, as long as we continue to snarf the bipartisan red herrings promulgated by these vile corporatists, we will continue to waste our time bickering among ourselves, and we will accomplish NOTHING!!!
Gee , another shocker . Not !
This fraud transcends party lines, but the Bush administration certainly made it damn near impossible because it gutted the FBI. According to Rep. Marcy Kaptur we need at least 1,000 investigators looking into fraud in the housing sector alone.
http://www.washingtonsblog.com/2009/10/white-...
In addition, many top economists and financial experts, including Bank of Israel Governor Stanley Fischer - who was Ben Bernanke’s thesis adviser at MIT - say that - at the very least - the size of the financial giants should be limited.
Even the Bank of International Settlements - the "Central Banks' Central Bank" - has slammed too big to fail. As summarized by the Financial Times:
The report was particularly scathing in its assessment of governments’ attempts to clean up their banks. “The reluctance of officials to quickly clean up the banks, many of which are now owned in large part by governments, may well delay recovery,” it said, adding that government interventions had ingrained the belief that some banks were too big or too interconnected to fail.
This was dangerous because it reinforced the risks of moral hazard which might lead to an even bigger financial crisis in future.
One of the world's leading economic historians - Niall Ferguson - argues in a current article in Newsweek:
[Geithner is proposing that] there should be a new "resolution authority" for the swift closing down of big banks that fail. But such an authority already exists and was used when Continental Illinois failed in 1984.
Indeed, even the FDIC mentions Continental Illinois in the same breadth as "too big to fail" banks.
And William K. Black (remember, he was the senior regulator during the S&L crisis, and is a Professor of both Economics and Law) - says that the Prompt Corrective Action Law (PCA), 12 U.S.C. § 1831o, not only authorizes the government to seize insolvent banks, it mandates it, and that the Bush and Obama administrations broke the law by refusing to close insolvent banks.
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