Too Big to Fail

[Swan Noir]

The equilibrium point based on market history? Where would I find that data?

Quote from Random.Capital:

I am not advocating mortgage requirements be set like that, I'm describing where they will end up if you let the market do it's thing. This isn't based on "revealed religion", it's based on market history, which has already shown us the equilibrium point bounces around 50-70% down, balloon payment after 3 to 7 years.

 

[newguy05]

Quote from jokepie:

A corporation is a collection of hundreds or not thousands of individuals with families and houses and dependents. No Corporation can be blamed, but the Culture that is supported by the market regulations.
What happened in financial world is no different in the Auto or for that matter in any industry.
What was wrong is that Lehman was forced in bankrupty and about 30K people lost jobs and sat on Unemployment benefits increasing more debt that ever. These people had families.
There is only a 1-2% individuals in these corporations that make most o fthe money, thats just the nature of the beast and its no bodys right to JUDGE. Most of these people have worked hard over 30 years to get where they are.
Anyways. will anything change..not anytime soon.

+100, most employees at lehman are just your average hardworking middle class that got completely destroyed. They worked 50+ hrs every week in technology, operations, middle office, HR, etc..that has nothing to do with the 1% of the firm that was part of the meltdown. It wasnt even the bankruptcy but the wipeout of their 401k and retirement savings.

Lehman had a very strong employee ownership culture, the firm actively encouraged employees to buy its stock with program that gives a 15% haircut to the market price but with a very long lock in period, plus portions of bonus are paid in stocks with same lock period. Now imagine someone who worked there over a decade+ (many people) that are about to reach the retirement age, and in a mere 3 months 50% or more of their life savings have gone to pennies on top of losing their job. Or the schmucks who worked there for decades and got laid off with a 12 month severance package, all of sudden their severance package were gone before even getting his first paycheck, on top of his lehman stocks, and out of a job. Plus noone will hire him due to his old age especially on wall street.

Main street like to play the victim and vilify lehman as a whole, when in fact most of the people there worked jobs much harder than they ever did, and just as innocent, but got completely destroyed.

I understand the timing why lehman didnt get bailed out, and why they had to bail everyone else out afterwards, but watching this movie and reliving those days still makes me angry how the whole thing went down.

 

[jokepie]

Quote from newguy05:

+100, most employees at lehman are just your average hardworking middle class that got completely destroyed. They worked 50+ hrs every week in technology, operations, middle office, HR, etc..that has nothing to do with the 1% of the firm that was part of the meltdown. It wasnt even the bankruptcy but the wipeout of their 401k and retirement savings.

Lehman had a very strong employee ownership culture, the firm actively encouraged employees to buy its stock with program that gives a 15% haircut to the market price but with a very long lock in period, plus portions of bonus are paid in stocks with same lock period. Now imagine someone who worked there over a decade+ (many people) that are about to reach the retirement age, and in a mere 3 months 50% or more of their life savings have gone to pennies on top of losing their job. Or the schmucks who worked there for decades and got laid off with a 12 month severance package, all of sudden their severance package were gone before even getting his first paycheck, on top of his lehman stocks, and out of a job. Plus noone will hire him due to his old age especially on wall street.

Main street like to play the victim and vilify lehman as a whole, when in fact most of the people there worked jobs much harder than they ever did, and just as innocent, but got completely destroyed.

I understand the timing why lehman didnt get bailed out, and why they had to bail everyone else out afterwards, but watching this movie and reliving those days still makes me angry how the whole thing went down.

Absolutely, I am so furious & I will never forget that fateful day on 745 7th ave.

 

[SteveD]

A perfect storm that took many years to develop:

Wall Street goes public: GS, MLCO, LEH etc....old structure of partnership had bulk of personal wealth tied up in company and took on all risk.....

Banks became "quasi-hedge funds".....

Securitization of the home loan (Liar's Poker)....

FNMA and other tax payer backed lenders....subject to political pressure, etc etc...

Invention of the "sub-prime" mortgage??? This is just a repackaging of "junk bonds" dating from the 80's....

The real esate myth that home values and real estate always increase in value.....

The dot.com bust, that drove a lot of investors into real estate as the next big hot method to make money....flipping, etc etc..

I think in the coming year we will see talk of breaking up the big banks.....they will make loans: car loans, small business loans, raise fees but take on almost no risk.....no construction loans...

We need to wind down Fannie/Freddie and get the govt out of the mortgage business.....we are the only country that has it...

There is a huge commercial mortgage back security business so there is no reason to believe that the residential will not develop one also.

Most, if not all, public traded homebuilding companies need to be put out of business.....their business model does not work....the local/regional developer is a better model....

IMHO

SteveD