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. Woosty,

    Didn’t even notice you OCCUPIE … sorry about that for it definitely deserves a compliment … well done, Pumpkin … 🙂

  2. Krugman on Ayn Rand: ” There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.”~Blouise

  3. ekeyra,

    Sorry to burst your “me bubble” but I hadn’t even read your response … I was referring to the mention of Mike Konczal in the Krugman link SwM posted … he is constantly criticized by Ayn Rand lovers like Ryan and other 1% minions as is Krugman. Thus reading Krugman is a no-no for 1%ers and their minions. I have no idea if you are a Rand follower and could care less. It was sarcasm and you’re an idiot.

    Keep trying … I’m sure you’ll find a way to make it about you. Pathetic …

    Krugman on Ayn Rand: ” There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.”

  4. Saw Beau Biden on Mahar last night and he explained how the privatization of the title industry is fundamental to all of the fraud and abuse that came later- the deal being worked by the Administration excuses that and does little or nothing to end the practice – Biden is challenging the legality of the title process and wants it declared illegal. The implication being that if the changes to the title process were illegal to begin with everything that came after, on their face, is illegal. You go Beau! But stay off small planes, bodies of water and out of sheds. Seriously, if his case has any hope of success I think he’s in grave danger.

    Good live-blog of the events of this evening on Wall Street:

    A caution to Mr. Biden and an echo of the argument espoused here, by some, of the perfection of an unfettered capitalist paradise:

  5. shano,

    Welcome to the Turley Blawg. It’s good to hear a new voice of reason. As you can see–some people like to make excuses for banksters and Wall Street shenanigans.

  6. Bron, it does not matter what the interest rate was if institutional fraud has become common practice.

    Banks used to do background checks, at the very least, in order to inform themselves if any given borrower was likely or not to pay back a loan.

    Rather than interest rates, I would wager that the whole ‘mortgage securitization’ process..where lending institutions no longer had any financial exposure to the loans they made, is a much more likely factor.

    One only has to look at the congressional record to see that GS, et al, knew the mortgage securities they were selling were ‘crap’. And then they bet against it in order to make huge profits. Yes, they did have a “Big Short”, no matter how plaintively they deny it now.

    If I could cover some lead bars with gold leaf and then sell it as AAA rated pure ‘gold’ bars I could make huge profits too. It really is that simple.

  7. Blouise,

    “Yeah … what are you doing reading Krugman!? … read Ayn Rand instead then you can be über-smart like me and Alan Greenspan and all those” Wall Street Masters of the Universe who created toxic financial instruments that they didn’t understand and sold them around the world.”

    Krugman … bah humbug!”

    So…that had nothing to do with what i said about krugman’s ignorance? I see.

  8. Shano:

    I dont think it was those mortgages, I think it was the artificially low interest rates which caused a feeding frenzy.

    When the rate of interest is less than the rate of inflation you have a big problem. And bad things happen.

    What should have happened in 2008 is for interest rates to be allowed to rise to market levels and the bad banks to fail.

  9. “Then, like clockwork, some 400 activists brought Lerner’s dream to fruition and converged on JP Morgan Chase’s annual shareholders’ meeting in May — this time in Columbus, Ohio rather than New York.”

  10. “So, a bunch of us around the country are thinking about who would be a really good company to hate? We decided that would be JP Morgan Chase. …. And so we’re going to roll out over the next couple of months what will hopefully be an exciting campaign about JP Morgan Chase that is really about challenge the power of Wall Street. And so what we’re looking at is in the first week of May, we get enough people together – we’re starting now – to really have a week of action in New York with the goal of … I don’t want to go into any details because I don’t know which police agents are in the room, but the goal would be that we would roll out in New York the first week in May.”

    Stephen Lerner

  11. shano,

    Ssshhh … you’ve just spoken aloud the dirty little secret the right is trying so hard to hide … and it wasn’t only minority buyers who were scammed by the banks.

    The other dirty little secret they are trying to hide is that these clowns didn’t, themselves, begin to understand the toxic financial instruments they were creating and selling … dumber than door-nails … the whole lot of them. When I think of this crew of Wall Street bimbos I am reminder of the Christmas Tree thief … the police simply followed his footprints in the snow … they are no brighter than that.

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