4 minutes ago, Maddus Mattus wrote
@cbae: Good movie!
Especially the first minute! See who facilitated it all? The FED. Not the greedy banks, the FED. They started this, the rest is just a result of cheap money.
Are you going to blame the drug dealer because you're a drug addict with no will power? LOL
Nobody put a gun to the bankers' heads to borrow money from the Fed to use as leverage.
Then ask yourself the question, if these CDO's are such hazardous products, why buy them?
Did you even pay attention to the video? The CDOs weren't hazardous until the sub-prime loans got riskier and riskier. Riskier and riskier loans were issued because of pure greed by all the parties involved. Investors bought the CDOs because the credit rating agencies rated them safer than they really were. And who do think pays these credit rating agencies to rate the CDOs? You don't think they work for free, do you? They are paid by the investment banks themselves.
The greedy banks didn't give a crap. They were making a killing selling these securities from their investment banking arm. The retail banking arms of these SAME COMPANIES bought the CDOs because of the high yields and because they were covered by the CDSs.
Did you get that? The retail banking side of one bank bought CDOs sold by the investment banking side of another bank or even their own investment bank. See the problem caused by the repeal of Glass-Steagall?
Because by law, when you sell a customer a savings account, you are required to reinvest that money into mortgages. All the safe mortgages are not for sale, those are way to valuable for a bank. So they bought the CDO's knowing full well what they bought.
Nobody forces banks to put money into mortgages. And these safe mortgages were part of the CDOs. These CDOs were the AAA-rated ones that had CDSs backing them. This claim of yours is proof you have no idea what you're talking about.
Again, you didn't learn a damn thing. These AAA-rated CDOs became toxic not because of the creditworthiness of the borrower. They became toxic because home values dropped so much even the most creditworthy borrowers defaulted.
Even if the mortgages weren't securitized in CDOs, they were potential defaults. It didn't matter. The homeowner has no idea who owns his paper. Securitized or unsecuritized. Highly creditworthy borrowers got out of their loans because of the drop in home values.
It's one government failure after another.
The only thing failing is your argument. Give it up, man.
I'm not claiming that the banks have a clean conscience, but if you open your eyes you will see the invisible hand behind it all.
The government played no part in the crisis except to prevent a global economic meltdown. They could have, if not for deregulation. The banks and insurance companies like AIG, who issued the CDSs, got themselves into this mess and took everybody down with them.