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The securitization of mortgages, health care, and education. All were simply fund-managers monetizing other peoples misery, and now many are realizing every pa
by Joel_Mckay 2y ago
The securitization of mortgages, health care, and education.
All were simply fund-managers monetizing other peoples misery, and now many are realizing every party line is the same BS. People are angry, but often for the wrong reasons since wall-street washes accountability by design.
Unfortunately, ridiculous wealth and miserable populations seem a desirable trade in some cultures.
Thank god it is not my task to try and fix it =)
- abrichr 2y agoFTA: > A widespread misconception about mortgage securitization is that it was created to make Wall Street rich. … > Mortgage securitization, and secondary sales of loans, and other mechanisms cause mortgages to migrate from the banking sector to pools of capital which are more structurally insulated against the interest rate cycle.
- yareal 2y agoWhich has the effect of....? At the end of the day, the reasons these choices exist is to make someone rich. The mechanism (shielding from interest rate cycles) is just an implementation detail.
- SpicyLemonZest 2y agoIt's not just an implementation detail. In the 80s there was a big event known as the S&L crisis (https://en.wikipedia.org/wiki/Savings_and_loan_crisis https://en.wikipedia.org/wiki/Savings_and_loan_crisis), where an interest rate spike which was not adequately shielded led a substantial fraction of all US mortgage lenders to fail.
- refurb 2y agoIt has the effect of being able to provide homeowners with cheap 30-year fixed mortgages. I'm surprised you're against it.
- forgetfreeman 2y agoConversely I remain surprised to this day that several hundred execs didn't end up with multi-decade long prison sentences for bricking the global economy with this bullshit.
- refurb 2y agoI’ll tell you why - because the government promoted it. Fannie and Freddie were complicit.
- scarface_74 2y agoThis is another widespread misconception. The mortgages that got the economy in trouble were the no-doc, no income verification type mortgages - ie “non conforming”. By definition, a non conforming loan isn’t backed by Fannie and Freddie. I had multiple non conforming loans I got before the crash. Yes they ended up just like you suspect.
- forgetfreeman 2y agoI have news for you... Source: worked briefly in mortgage underwriting before the crash.
- scarface_74 2y agoAre you denying the fact that a “non conforming loan” by definition means it isn’t eligible for Freddie and Fannie backing? I’ve had 5 first mortgages in my lifetime and only one was “conforming”. My latest one was a unit in a condotel where I live the majority of the year. No government institution would ever back and no income verification loan on a mixed use commercial/personal secondary home.
- forgetfreeman 2y agoI'm reporting observed reality homeboy. I watched thousands of loans a week get pumped through the system with everything from income verification fields left blank to literally fraudulent (as in the loan officer got tech support on the phone to help them generate random numbers) information get pushed through with zero pushback. A point for you to consider: "non conforming loan" is only a meaningful phrase when the criteria for non conforming loans is actually being verified.
- Joel_Mckay 2y agoMichael Milken is the man that popularized mortgage securitization on wall-street. Eventually convicted, then pardoned by #45.. Exactly how is this not dodging accountability son?
- JumpCrisscross 2y ago> Michael Milken is the man that popularized mortgage securitization on wall-street No, he didn’t. He did high-yield corporate debt. Mortgages are neither high yield nor corporate.
- blackhawkC17 2y agoIt’s usually people with the least financial knowledge that rant the most and lie a lot too. Suddenly, mortgages have become a bad thing..
- Joel_Mckay 2y ago"Like everything else, it started off with great intentions" https://financialpost.com/financial-times/how-bonds-ate-the-entire-financial-system https://financialpost.com/financial-times/how-bonds-ate-the-... ..and people like you... easily swayed by sycophantic idealism, and irrational greed. Have a wonderful day, and please refrain from resorting to straw-man arguments and slander if you are feeling upset by facts. =3
- JumpCrisscross 2y agoYou’re both wrong. I’ve worked with some of the people who invented these products and still had to double check your reference to make sure I was correct. I was—Milken didn’t popularise mortgage securitisation. Ranieri did.
- Joel_Mckay 2y agoIf you actually read the posted article it describes Lewis Ranieri's role in detail. There is no right or wrong here in my opinion... just history and documented facts validated through a vetted jury conviction. I wish it was an ill informed opinion kid... I really do... I'd feel much less guilty seeing families growing up in Condos the size of a garden shed.
- o11c 2y ago> People are angry, but often for the wrong reasons since wall-street washes accountability by design. Counterpoint: just as we treat everyone involved in money-laundering as criminal, it is morally obligatory to treat everyone involved in responsibility-laundering as blameworthy. "Remember the human" is a critical feature of every good social construct, but fundamentally impossible for some of the laundering business constructs that are considered ideologically mandatory today.
- Joel_Mckay 2y agoCounterpoint: unless the value siphon effectively steals opportunity cost options from you 25 years before you are born. It takes real ignorant psychopathy to blame victims of the greatest crime in history.
- djbusby 2y agoWhat's the crime? Mortgages? I'm not following you. Some generational wealth theft somehow?
- forgetfreeman 2y agoI'm guessing this is in reference to the first shitheads to decide manufacturing synthetic investment instruments backed by home mortgages was a good idea?
- twoodfin 2y agoThe article explains why, yes, it was a good idea in the context of the US banking system.
- forgetfreeman 2y agoDefinitely a fantastic idea that ended well for all parties. GTFO. It beggars belief that folks would, even for a moment, consider participating in such a naked attempt to whitewash this.
- refurb 2y ago> All were simply fund-managers monetizing other peoples misery No, mortgage securitization simply provides a simple, consistent product that you can sell to investors. Securitization was created by the government, not by a banker. It allows homeowners to access capital that they otherwise couldn't - it's a pretty limited pool of investors willing to buy individual, non-conforming mortgages. If mortgages weren't securitized, then the government would need to provide the funds for all the mortgages - which means a lot less mortgages. And I have no idea what "securitization" of healthcare and education means. It sounds like you learned a new word and just use it to replace "bad things I don't like".
- Joel_Mckay 2y agoPrior to Michael Milken, there were legal standards in place mitigating adopting risks others would bear unnecessary liability to cover. Profit at any price as they say... =3