24 ms·

"Consider the 2008 crisis, yes some white Americans went to jail, but the major (only?) " The 2008 crises was not built on outright fraud by most of the banks.

"Consider the 2008 crisis, yes some white Americans went to jail, but the major (only?) " The 2008 crises was not built on outright fraud by most of the banks. They didn't commit any crimes for the most part. Individuals lied on their applications, bank managers overlooked it, VP of Mortgage Sales for banks didn't want to hear about underperforming loans, ratings agencies didn't want to due proper due dilligence, German and Japanese banks buying the crap were too lazy to do any due diligence ... and it came down. There was 'systematic, greed, stupidity and irresponsibility' across the board - home buyers included. It was not caused by some cabal of bankers specifically doing something illegal.

CalChris 10y ago
> The 2008 crises was not built on outright fraud by most of the banks. ... It was not caused by some cabal of bankers specifically doing something illegal. That is not true. Why Only One Top Banker Went to Jail for the Financial Crisis http://www.nytimes.com/2014/05/04/magazine/only-one-top-banker-jail-financial-crisis.html http://www.nytimes.com/2014/05/04/magazine/only-one-top-bank...
- ecorealist 10y ago
  Thanks for posing this article. Kareem Serageldin was certainly guilty but actually goes to strengthen my original argument -- it is rare to find Arab financiers on Wall St, it is telling that the one prosecution on the 2008 CDO disaster is an Arab guy!
- goseeastarwar 10y ago
  As Larry Summers said on a recent episode of "The Axe Files" podcast, you can't litigate bankers being stupid.
colemickens 10y ago
No, just no. There was clear and obvious fraud. At banks. At rating agencies. At investment firms. In the government. And pretty blatant coordination between some players, including among some that were supposed to be regulating and watching for the sort of fraud that occurred and was allowed to occur. The Big Short covers this in an entertaining fashion. Alternatively, http://dafacto.com/2011/the-big-short-a-brief-summary-of-the-2008-financial-collapse/ http://dafacto.com/2011/the-big-short-a-brief-summary-of-the... edit: I apologize, I edited later than I should have (mostly just rearranged words).
- edblarney 10y ago
  "I'll pay you to go watch The Big Short and then try to tell me that again" That's the problem with 'The Big Short'. It's a terrible film because it mostly points the finger at bankers as somehow 'guilty of some crime' - and they are not. They are 'guilty' of doing some things, but not breaking the law for the most part, and they didn't get into some other issues, particularly they didn't want to point fingers at the millions of Americans who lied on their mortgage applications. There weren't really any crimes obviously committed in the 'big short'. Maybe the hucksters in Florida overlooking issues on loan applications. Maybe the ratings agencies ... but it would be extremely hard to prove this one. Ultimately, the banks stupidly gave credit to people they should not have, and it inflated really badly and got out of hand. Stupid lazy bankers all around bought crap without doing due diligence and they paid the price. It was people making a lot of bad bets due to the underlying failure of information the system. All the individuals lying on their loan forms are at least as guilty as anyone else. "At banks. At rating agencies. At investment firms. In the government" You'll have to list specific examples, because I see greedy people making stupid decisions, not fraud. The ratings agencies didn't commit 'fraud' - they did not accept 'money to change their ratings', this would be fraud. What they didn't do well is their actual jobs, because to do it well would have meant less business. So this was a conflict of interest that led to a really bad outcome, but it's not outright fraud.
  - AWildDHHAppears 10y ago
    You know who did commit fraud and was never, ever prosecuted? The millions of homeowners who applied for mortgages they had no way of paying back.
    - cmdrfred 10y ago
      I agree so long as you start at the top and work your way down.
  - colemickens 10y ago
    >So this was a conflict of interest that led to a really bad outcome, but it's not outright fraud. Interesting. Is there a strict legal difference? I guess I perceived it as a spectrum and the flagrantness of the conflict of interest and the profit derived from it seemed like it approached what I imagine as "fraud" in my head. But then again, I'm not a lawyer, or a banker, or an economist. Thanks for the reply, I'm now doing some more reading on this myself.
deleted 10y ago
[deleted]
_pmf_ 10y ago
> It was not caused by some cabal of bankers specifically doing something illegal. At some point (still far from the breakdown), selling derivatives that include known bad debts did become illegal.

CalChris 10y ago

> The 2008 crises was not built on outright fraud by most of the banks. ... It was not caused by some cabal of bankers specifically doing something illegal. That is not true. Why Only One Top Banker Went to Jail for the Financial Crisis http://www.nytimes.com/2014/05/04/magazine/only-one-top-banker-jail-financial-crisis.html http://www.nytimes.com/2014/05/04/magazine/only-one-top-bank...

ecorealist 10y ago
Thanks for posing this article. Kareem Serageldin was certainly guilty but actually goes to strengthen my original argument -- it is rare to find Arab financiers on Wall St, it is telling that the one prosecution on the 2008 CDO disaster is an Arab guy!
goseeastarwar 10y ago
As Larry Summers said on a recent episode of "The Axe Files" podcast, you can't litigate bankers being stupid.

colemickens 10y ago

No, just no. There was clear and obvious fraud. At banks. At rating agencies. At investment firms. In the government. And pretty blatant coordination between some players, including among some that were supposed to be regulating and watching for the sort of fraud that occurred and was allowed to occur. The Big Short covers this in an entertaining fashion. Alternatively, http://dafacto.com/2011/the-big-short-a-brief-summary-of-the-2008-financial-collapse/ http://dafacto.com/2011/the-big-short-a-brief-summary-of-the... edit: I apologize, I edited later than I should have (mostly just rearranged words).

edblarney 10y ago
"I'll pay you to go watch The Big Short and then try to tell me that again" That's the problem with 'The Big Short'. It's a terrible film because it mostly points the finger at bankers as somehow 'guilty of some crime' - and they are not. They are 'guilty' of doing some things, but not breaking the law for the most part, and they didn't get into some other issues, particularly they didn't want to point fingers at the millions of Americans who lied on their mortgage applications. There weren't really any crimes obviously committed in the 'big short'. Maybe the hucksters in Florida overlooking issues on loan applications. Maybe the ratings agencies ... but it would be extremely hard to prove this one. Ultimately, the banks stupidly gave credit to people they should not have, and it inflated really badly and got out of hand. Stupid lazy bankers all around bought crap without doing due diligence and they paid the price. It was people making a lot of bad bets due to the underlying failure of information the system. All the individuals lying on their loan forms are at least as guilty as anyone else. "At banks. At rating agencies. At investment firms. In the government" You'll have to list specific examples, because I see greedy people making stupid decisions, not fraud. The ratings agencies didn't commit 'fraud' - they did not accept 'money to change their ratings', this would be fraud. What they didn't do well is their actual jobs, because to do it well would have meant less business. So this was a conflict of interest that led to a really bad outcome, but it's not outright fraud.
- AWildDHHAppears 10y ago
  You know who did commit fraud and was never, ever prosecuted? The millions of homeowners who applied for mortgages they had no way of paying back.
  - cmdrfred 10y ago
    I agree so long as you start at the top and work your way down.
- colemickens 10y ago
  >So this was a conflict of interest that led to a really bad outcome, but it's not outright fraud. Interesting. Is there a strict legal difference? I guess I perceived it as a spectrum and the flagrantness of the conflict of interest and the profit derived from it seemed like it approached what I imagine as "fraud" in my head. But then again, I'm not a lawyer, or a banker, or an economist. Thanks for the reply, I'm now doing some more reading on this myself.

deleted 10y ago

[deleted]

_pmf_ 10y ago

> It was not caused by some cabal of bankers specifically doing something illegal. At some point (still far from the breakdown), selling derivatives that include known bad debts did become illegal.