The lenders are not dumb, they collect the fees now and keep them, neither are the investors buying the MBS, they collect their fees and use OPM to buy the crap. The dumb ones are the shareholders. The lenders and the ones selling the CDOs will all get bailed out, it will be S&L bailout all over again just much bigger.
Home loans: I can't believe folks are so dumb
- Thread starter Smart Money
- Start date
Some of these lenders are going to get handed a bunch of keys to houses that the borrowers had no interest in. Those keys will be to $800k houses in Bakersfield that are worth about $350k on a good day where people aren't insane.
The only companies that do really well will be the ones who sold most of their loans. The CDO sellers might have some sort of obligation to the CDO holders...no?
There are a lot of lenders/banks that made a good amount of money by holding the mortgages and turning themselves into banks to manage everything.
Writedowns will be widespread...I'm worried about company honesty in this area.
I think we'll see everything fall apart..shareholders will get stuffed, but they're free to move in and out and that's what they should do. Probably won't though.
We'll see where the fallout lies...I'd personally like to see the lenders get hit with the brunt of the damage because of their practices...self-destructive. Shareholders could probably bankrupt many of these companies with lawsuits alone due to negligence cases and breach of fiduciary duty as many of the execs in these companies must have known that they were in no way looking out for the long term interests of shareholders.
Forced to buy back 1st and 2nd loans due to early defaults:
http://blogs.marketwatch.com/greenberg/2007/03/beyond_subprime_1.html
See, I'm sure there are some interesting clauses out there governing the CDOs and MBSs.
http://blogs.marketwatch.com/greenberg/2007/03/beyond_subprime_1.html
See, I'm sure there are some interesting clauses out there governing the CDOs and MBSs.
In a fair world the lenders and the investors would take the hit for their recklessness but the S&L crisis is a good road map for what will likely happen. Executives will walk away with their money made and untouchable. The company will go down in flames and the shareholders will take the hit. That's why CFC's CEO is selling up now, also no coincidence that CFC is now a thrift, makes it easier for them to be bailed out or to access liquidity. If anyone does time it won't be much and they will get to keep their ill gotten gains.
The subprime debacle to date hasn't had much of an impact (yet) and yet you had the Senate already talking about a bail out. The one's they were going to bail out were the ones on the hook for defaults, not the shareholders.
B19 I agree with you, those responsible should be the ones to pay but as you know it doesn't work like that when money can buy the outcome and the crooks are flush. After all the shareholders who will end up holding the bag are likely mutual funds and pension plans who's investors will have no significant way of complaining, and orcourse the dumb retail investor who always steps in to buy "bargains" just before they declare BK.
The subprime debacle to date hasn't had much of an impact (yet) and yet you had the Senate already talking about a bail out. The one's they were going to bail out were the ones on the hook for defaults, not the shareholders.
B19 I agree with you, those responsible should be the ones to pay but as you know it doesn't work like that when money can buy the outcome and the crooks are flush. After all the shareholders who will end up holding the bag are likely mutual funds and pension plans who's investors will have no significant way of complaining, and orcourse the dumb retail investor who always steps in to buy "bargains" just before they declare BK.
Mvic, you're most certainly right. I'm interested in a few aspects of this that might turn in the favor of morality. Hopefully some execs get nailed.
Businessweek stated that the SEC is investigating some companies for insider trading...even those including "automatic sale plans" which I'm hoping involve CFC's CEO. He's the worst of the worst to because he avoids the senate and pumps his stock on Mad Money while dumping...goes on CNBC and says this isn't a big deal knowing full well the exposure that these companies have...including his own probably. It's just disgusting.
I think the DOJ/SEC/FBI will all hopefully show some moxy and really put it to these guys...but you're right, it's unjust and in the end a lot of money will probably disappear into the sunset...sad.
Another hope of mine is that considering A TON of the losses will be buyers of these CDOs and MBSs and that's Wall St. and so I'd like to hope that there's more recourse for their actions since Wall St. has a lot of lobbying power.
I think Mozilo is the next Skilling...I'm guessing he'll jump ship hoping that it crashes and burns long after he's taken off in his own private yacht.
cheers!
Businessweek stated that the SEC is investigating some companies for insider trading...even those including "automatic sale plans" which I'm hoping involve CFC's CEO. He's the worst of the worst to because he avoids the senate and pumps his stock on Mad Money while dumping...goes on CNBC and says this isn't a big deal knowing full well the exposure that these companies have...including his own probably. It's just disgusting.
I think the DOJ/SEC/FBI will all hopefully show some moxy and really put it to these guys...but you're right, it's unjust and in the end a lot of money will probably disappear into the sunset...sad.
Another hope of mine is that considering A TON of the losses will be buyers of these CDOs and MBSs and that's Wall St. and so I'd like to hope that there's more recourse for their actions since Wall St. has a lot of lobbying power.
I think Mozilo is the next Skilling...I'm guessing he'll jump ship hoping that it crashes and burns long after he's taken off in his own private yacht.
cheers!
It's my only hope to make money and compete 
snipped quote from sombody
This is a country of severe financial mismanagement
snipped quote from sombody
This is a country of severe financial mismanagement
Quote from ElectricSavant:
It's my only hope to make money and compete
snipped quote from sombody
This is a country of severe financial mismanagement
There you go....none of this is new, same old story dating back to the Romans and beyond. We here in the US are at least lucky enough to get our own slice if we are quick, smart and lucky enough.