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The Sickening Abuse of Power At The Heart of Wall Street

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posted on Apr, 24 2010 @ 06:23 PM

The Sickening Abuse of Power At The Heart of Wall Street

Goldman Sachs E-Mails Crowed About Playing "The Big Short" As the Economy Fell.

As early as May 2007, as homeowners were being crushed under the weight of subprime mortgages, the most profitable firm on Wall Street had long taken out a form of insurance on those delinquencies.

The firm made money on the upside -- originating, securitizing and selling subprime mortgage-based securities to investors -- and on the downside, thanks to the insurance.
(visit the link for the full news article)

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posted on Apr, 24 2010 @ 06:23 PM
They should all be locked up in jail. The fact that they were betting to profit on people loosing their homes is criminal.

They knew they were were loaning money to people that would not be able to pay it back. The market was rigged to fail on purpose.

Check out the video of Michael Lewis, author of the Big Short on The Daily Show.
(visit the link for the full news article)

posted on Apr, 24 2010 @ 06:49 PM
reply to post by Julie Washington

Nothing more than sacrificial lambs to Obama and the federal government's declining popularity. They are in bed with Goldman Sachs. A nice little pony show for all of us to watch and think - "Gee will-ickers that Obama is sure going after the big guy..." and then nothing will come of it in the end and the bad guys will have billions and Obama will have his millions and the American decline will continue.

posted on Apr, 24 2010 @ 07:31 PM
reply to post by ararisq

Good points.

The real culprit is Washington.

People always fall for this stuff.

Washington is borrowing and spending us into oblivion and they keep giving us massive government and massive debt.

If Goldman is guilty then investigate. Washington is just using this as an excuse to spend billions of dollars and sadly useful idiots will cheer them on.

Everyone who has made money is not a crook. We don't need sweeping financial reform. The government always inflates problems into a crisis because they want to waste and spend more money.

Where did a lot of this start? With the government.

They were saying every American should own a home. So they squeezed arms to ease underwriting standards. If you were against this then you were called racist or you hated poor people.

I was in the mortgage business for 3 years as a loan officer. Companies would send us all kind of deals. We would get someone with 550 credit score with all kinds of red flags but someone like Countrywide or Indymac could work with them and the loan would go through.

Because while the mortgage crisis convulsing Wall Street has its share of private-sector culprits -- many of whom have been learning lately just how pitiless the private sector’s discipline can be -- they weren't the ones who "got us into this mess." Barney Frank's talking points notwithstanding, mortgage lenders didn't wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so - or else.

The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and "redlining" because urban blacks were being denied mortgages at a higher rate than suburban whites.

The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to "meet the credit needs" of "low-income, minority, and distressed neighborhoods." Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this "subprime" lending by authorizing ever more "flexible" criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.

All this was justified as a means of increasing homeownership among minorities and the poor. Affirmative-action policies trumped sound business practices. A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense. "Lack of credit history should not be seen as a negative factor," the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as "valid income sources" to qualify for a mortgage. Failure to comply could mean a lawsuit.

This is why I got out of the loan business and cashed out of my investment properties before it all came crashing down.

People need to realize, it was GOVERNMENT that pushed lenders to give out loans despite bad credit and in order to be "compassionate."

Goldman needs to be investigated but we don't need sweeping reform by these sociopaths in Washington.

They will waste billions and nothing will change because the problem starts with them.

[edit on 24-4-2010 by Matrix Rising]

posted on Apr, 24 2010 @ 08:02 PM
reply to post by Julie Washington

I have to disagree somewhat.

You can speculate however you want. You could bet right now on shorting the whole economy with inverse ETF's. (Good luck!)

There are no "locks" in speculation and they could have easily went the wrong way as well. If we are just speaking in these terms I would have to disagree with you I guess.

Think about it like this. If the housing market stays hot 6-12 months longer than they "expected" then they would be burned for quite a bit. But it is necessary for investment banks to hedge positions as well because just as I said there are no sure bets. And they were IMO 100% hedged in other securities to lay off this risk. They have to be.

All information is on the table for everyone to see unless we are talking about seconds before a NFP event or something like that where information does leak seconds before if you are sitting in the catbird seat. So what I am saying is you knew as much as they did at that time and there was no one with "inside" information knowing the day the market would top. There is SPECULATION but nothing is guaranteed, ever.

If we are talking about the charges of fraud set forth about misleading then I would have to agree it looks like they are most likely guilty of that with all known information that has provided at least to this point. They would still say differently of course but I am guessing Fabby Fab Fabrice will take the brunt of pain from SEC as the likely scapegoat.

Anyway, getting to more of my response to your post there is no reason why you shouldn't be able to bet long/short of anything as long as there is a counterparty to your trade. And there always will be if you want to have a market.

Have a nice evening

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