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At Morgan Stanley from 1996 through 2010 and an executive during the banking crisis. I feel like that's gotta be simplistic and/or wrong because that's nothing

At Morgan Stanley from 1996 through 2010 and an executive during the banking crisis. I feel like that's gotta be simplistic and/or wrong because that's nothing but red flags for me. Could someone correct me? Why should this not be concerning? Those were some of the most predatory and poorly run companies in America at the time.

refulgentis 10y ago
The Big Short gets into why it's misplaced to blame the big banks for the crisis, and calling them "predatory and poorly run" goes several unjustified steps beyond that.
- iaw 10y ago
  Where do you believe 'The Big Short' places the blame?
  - refulgentis 10y ago
    Mortgage lenders, like Countrywide, who were selling predatory crap to banks that weren't questioning Countrywide enough, and had an unyielding faith in house prices always increasing. More doofus behavior than knowing malfeasance, at least, that's what I got out of the book? Clearly that's a minority viewpoint, perhaps I should re-read it...:X
    - nl 10y ago
      I think the the more common impression from the book was that mortgage lenders were incentived not to ask questions, and banks were more than happy to take their offerings, repackage them, and resell them to dumb money. Many at the banks seemed to know what was happening: remember how the price wasn't dropping as fast as they expected? That was Goldman covering their position and refusing to make the market at a reasonable price until they were safe. The dumb banks for burnt of course.
  - friendlygrammar 10y ago
    A bunch of greedy individuals cheating the system for their personal gain and misaligned incentive structures.
- ceejayoz 10y ago
  You must have watched a different movie than I did.
- airza 10y ago
  Did you read the same book I did?
- sidlls 10y ago
  That is the exact opposite of the truth.
- RodericDay 10y ago
  We must have read different books
- hervature 10y ago
  I don't know why this was an unpopular comment. I believe they meant to say "to solely blame". I think Michael Lewis did a very good job at showing the crisis was caused by what I dub the 5 pillars: 1) Greedy bankers who were trying to maximize their bonuses by selling high risk instruments. 2) Predatory home loans that allowed for the financial instruments to exist and all the people associated (the lenders, the salespeople, etc.) 3) A completely backwards system for how the ratings agencies work and how their greed outweighed their duty to correctly rate instruments. 4) Greedy home owners who wanted to "keep up with the Jones" by having bigger and bigger homes and didn't understand their risk exposure. 5) While this is not explicitly mentioned by Lewis in his book, I think he makes it quite clear that simple regulation could've cut one of the previous four pillars from propping up the crisis. Regardless, I thought Lewis' book was more of a treatise on how incredible human greed in all facets of the economy caused the collapse. Not just the investment banks, although they are certainly partly to blame.

refulgentis 10y ago

The Big Short gets into why it's misplaced to blame the big banks for the crisis, and calling them "predatory and poorly run" goes several unjustified steps beyond that.

iaw 10y ago
Where do you believe 'The Big Short' places the blame?
- refulgentis 10y ago
  Mortgage lenders, like Countrywide, who were selling predatory crap to banks that weren't questioning Countrywide enough, and had an unyielding faith in house prices always increasing. More doofus behavior than knowing malfeasance, at least, that's what I got out of the book? Clearly that's a minority viewpoint, perhaps I should re-read it...:X
  - nl 10y ago
    I think the the more common impression from the book was that mortgage lenders were incentived not to ask questions, and banks were more than happy to take their offerings, repackage them, and resell them to dumb money. Many at the banks seemed to know what was happening: remember how the price wasn't dropping as fast as they expected? That was Goldman covering their position and refusing to make the market at a reasonable price until they were safe. The dumb banks for burnt of course.
- friendlygrammar 10y ago
  A bunch of greedy individuals cheating the system for their personal gain and misaligned incentive structures.
ceejayoz 10y ago
You must have watched a different movie than I did.
airza 10y ago
Did you read the same book I did?
sidlls 10y ago
That is the exact opposite of the truth.
RodericDay 10y ago
We must have read different books
hervature 10y ago
I don't know why this was an unpopular comment. I believe they meant to say "to solely blame". I think Michael Lewis did a very good job at showing the crisis was caused by what I dub the 5 pillars: 1) Greedy bankers who were trying to maximize their bonuses by selling high risk instruments. 2) Predatory home loans that allowed for the financial instruments to exist and all the people associated (the lenders, the salespeople, etc.) 3) A completely backwards system for how the ratings agencies work and how their greed outweighed their duty to correctly rate instruments. 4) Greedy home owners who wanted to "keep up with the Jones" by having bigger and bigger homes and didn't understand their risk exposure. 5) While this is not explicitly mentioned by Lewis in his book, I think he makes it quite clear that simple regulation could've cut one of the previous four pillars from propping up the crisis. Regardless, I thought Lewis' book was more of a treatise on how incredible human greed in all facets of the economy caused the collapse. Not just the investment banks, although they are certainly partly to blame.