Politics

Lying For Wall Street

-Submitted by David Drumm (Nal), Guest Blogger

New York City mayor Michael Bloomberg surprised many when he stooped to the level of Rush Limbaugh to push the Big Lie, that it was the government that caused the mortgage crisis. Bloomberg claimed that “It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and to give mortgages to people who were on the cusp.” Bloomberg added that members of Congress “were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will.”

Fannie and Freddie don’t make loans. Whom does Bloomberg think he’s fooling?

 

Matt Taibbi referred to the speech as Bloomberg’s Marie Antoinette moment, his own personal “Let Them Eat Cake” line. Taibbi went on to write:

Well, you know what, Mike Bloomberg? FUCK YOU.

The Big Lie has been shown false so many times, and Bloomberg’s persona as a pragmatic technocrat has been so carefully crafted, that Taibbi’s frank language is not only understandable, but refreshingly honest.

More than 84% of the subprime loans were issued by private lending institutions. Only one of the top 25 subprime lenders was directly subject to the Community Reinvestment Act (CRA).

The Occupy Wall Street movement must be worrying the 1% if Bloomberg is willing to embarrass himself by spouting falsehoods. It was the greed of Wall Street that created the demand for riskier loans. Mortgage Backed Securities were a hugely profitable financial monster with an appetite for more and more mortgages. More mortgages required more borrowers and hence, risky and even fraudulent lending practices.

As we have discussed, here, the Obama administration has proposed a settlement with major banks that would restrict the ability of prosecutors to investigate wrongdoing with regard to bundling of loans into mortgage securities. Taibbi’s frank statement need not be reserved for Bloomberg.

H/T: Mike Konczal, McClatchy, Barry Ritholtz, NYTimes, Center for Responsible Lending (pdf).

91 thoughts on “Lying For Wall Street”

  1. Quoting anything from the Austrian School of Economics will not help your credibility any more than advocating anarchy will, ekeyra. Both schools of thought are based on juvenile fantasy. One that society can exist without laws and the other that the market can operate as a just mechanism to prevent and/or punish bad actors.

  2. Swarthmore,

    Krugman is also on video stating that if we pour all of our resources into combating a threat from space aliens that doesn’t exist, we would all be better off. Why are you still even paying attention to anything he has to say?

  6. Government had an awful big hand in those loans.

    Bloomberg has it partially right, but there were other actors, like the people who knew a 25,000/year income is not enough to purchase a house and the mortgage brokers who told them no problem we can get you into a no interest loan. But the main reason was the artificially low interest rates set by the Federal Reserve.

    And by the way did you know the Glass Steagall Act was most probably a way for the Rockefellers to stick it to the house of Morgan? And something esle which is interesting, the number of bank failures among banks who sold securities was much less than the ones who were just banks alone.

    Repeal socialism/fascism/communism and the Glass Steagall Act and the myriad other bank regulations that have caused incalculable harm to the American people. Repeal the Federal Reserve Bank.

    But the big lie is right, you repeat enough times that regulations like Glass Steagall help people maybe enough people will believe it.

    Go read the history of the Glass Steagall Act, it was a manipulation by wealthy bankers to make it harder for other wealthy bankers to do business.
    Seems like banker A wanted to push out Banker B.

    ROFLMAO.

  8. Oh so we dont have a fiat currency, a central bank, legal tender laws, interest rate manipulation, and fractional reserve banking? Good to know.

  9. FHFA Sues 17 Banks Over Massive Mortgage Losses At Fannie and Freddie
    September 15th, 2011
    http://www.bankfraudblog.com/fhfa-sues-17-banks-over-massive-mortgage-losses-at-fannie-and-freddie/

    Excerpt:
    The ripple effects of the financial crisis continue to take their toll on banks, as reckless lending during the bonanza years catches up to them.

    Friday after the closing bell, and ahead of a Labor Day weekend, the Federal Housing Finance Agency confirmed it was suing 17 different financial institutions for misrepresenting the quality of mortgage backed securities sold to Fannie Mae and Freddie Mac.

    Affecting major banks like Bank of America, JP Morgan Chase, Goldman Sachs and Citigroup, the suit alleges negligent misrepresentation, securities laws violations, and common fraud as they issued, bundled, and sold MBS to government sponsored enterprises. (See list of institutions, amounts, and the suit against BofA below).

    The FHFA is not looking for repurchases, but rather is looking to retrieve losses on Fannie and Freddie’s loan portfolios. JPMorgan is being sued over $33 billion in securities, while Bank of America-Merrill Lynch is on the hook for almost $25 billion, and the Vampire Squid, Goldman Sachs, is in for $11.1 billion.

    According to the suit, “defendants falsely represented that the underlying mortgage loans complied with certain underwriting guidelines and standards, including representations that significantly overstated the ability of the borrowers to repay their mortgage loans.”

  11. Some of you might be interested in checking out the Bank Fraud Blog:
    http://www.bankfraudblog.com/

    *****

    Here’s the most recent posting at the blog:
    Delaware AG Sues MERS for Deceptive Practices
    October 31st, 2011
    http://www.bankfraudblog.com/631/

    Excerpt:
    Delaware Attorney General Beau Biden has sued the Mortgage Electronic Registration system (MERS) the controversial entity that has been at the heart of the robo-signing flap and perhaps the center of the housing crisis. The suit, filed yesterday in the Delaware Chancery Court, charges that the parent corporation MERSCORP and MERS have repeatedly violated the state’s Deceptive Trade Practices Act.

    MERS was established by Fannie Mae, Freddie Mac and several large mortgage lenders such as Wells Fargo and Bank of America in 1995 with the goal of reducing recording costs and the inefficiencies of transferring ownership of residential mortgages among mortgage brokers, lenders, Fannie Mae and Freddie Mac, the secondary market system and investors. The concept was to record the initial loan documents in the name of MERS and retain that record even as paper documents were passed along from originator to subsequent holders of the debt.

    Over the years there was an increasing tendency for loan documents to become separated from the loans themselves and as more banks consolidated, big mortgage companies began to fail, and foreclosures ramped up, more and more loan transfers were not properly recorded on the MERS system and documents were actually lost. This has led, not only to improper foreclosure procedures but even instances where properties were foreclosed where there was no outstanding mortgage. MERS is currently the repository for about 65 million mortgages.

  12. Nal is that it. Snopes says it’s false so thats the catch all end all. What are the facts as to the case.

  13. S.M.,

    I am saying there is a bank deal going down right now that needs to be stopped. You need to read up on it. It’s now! Fight back, even if Obama’s the one doing the deal. It’s wrong.

    If you go to occupy wall street you can read about it or go to naked capitalism.

  18. jill, It is more than apparent that you want to keep the attention on Obama. Although the primaries begin in less than two months, there seems to be an attempt to stifle discussion of the republican candidates and their positions.

Comments are closed.