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Also, this kind of document fraud was only a minor part of the financial collapse. The big mistake, which Stewart briefly touched on, was that the rating agenci

by zzalpha 12y ago

Also, this kind of document fraud was only a minor part of the financial collapse. The big mistake, which Stewart briefly touched on, was that the rating agencies massive fucked up. Well, no, those are two sides of the same coin. On the one hand you have people giving out dubious loans and reselling them while claiming that if you mix the shit up the right way it turns into gold. On the other hand you have ratings agencies who bought into the nonsense. The two were 100% complicit and, I think, equally to blame.

rhino369 12y ago
But the dubious loans were known to be dubious, it wasn't fraud. It would have been a problem even if there was no fraud. The fraud exacerbated the issue further, but I wouldn't say it is two sides of the same coin.
- zzalpha 12y ago
  I'm not claiming they were equally complicit in fraud. I'm saying the ratings agencies and the lenders are equally responsible for the collapse. The lenders knew they were giving out dubious loans. The ratings agencies bought into the mathematical models. Frankly, I think it was simply stupidity and hubris. On both sides. It's amazing how stupid people are in the face of irrational exuberance. Which is why I say: they're equally complicit. As are those folks who took the loans (though to a lesser degree, as they may have been poorly or actively misinformed by loan officers), and those folks who bought and sold the derivatives knowing full well what was in them (or at least were aware of the models the risk assessments were based on). Which is where ultimately regulators and regulations are supposed to play a role: to counteract the market's tendency toward irrationality. IMO, if you want to lay the crash at the feet of anyone, it's captured regulators, toothless regulatory bodies, and elected officials who bought into Wall Street bullshit that they could mind their own playground. And really, you could lay all that straight at the feet of that granddaddy of all corruption issues: money in politics.
- otterley 12y ago
  Almost all those mortgages were insured by Fannie Mae and Freddie Mac, both of which have very strict documentation and qualification requirements to issue policies. If the big banks knowingly lied to them or to any other insurer about the mortgagees in order to obtain an insurance policy, and the insurer relied on these misrepresentations, they are guilty of fraud.

by zzalpha 12y ago

rhino369 12y ago

But the dubious loans were known to be dubious, it wasn't fraud. It would have been a problem even if there was no fraud. The fraud exacerbated the issue further, but I wouldn't say it is two sides of the same coin.

zzalpha 12y ago
I'm not claiming they were equally complicit in fraud. I'm saying the ratings agencies and the lenders are equally responsible for the collapse. The lenders knew they were giving out dubious loans. The ratings agencies bought into the mathematical models. Frankly, I think it was simply stupidity and hubris. On both sides. It's amazing how stupid people are in the face of irrational exuberance. Which is why I say: they're equally complicit. As are those folks who took the loans (though to a lesser degree, as they may have been poorly or actively misinformed by loan officers), and those folks who bought and sold the derivatives knowing full well what was in them (or at least were aware of the models the risk assessments were based on). Which is where ultimately regulators and regulations are supposed to play a role: to counteract the market's tendency toward irrationality. IMO, if you want to lay the crash at the feet of anyone, it's captured regulators, toothless regulatory bodies, and elected officials who bought into Wall Street bullshit that they could mind their own playground. And really, you could lay all that straight at the feet of that granddaddy of all corruption issues: money in politics.
otterley 12y ago
Almost all those mortgages were insured by Fannie Mae and Freddie Mac, both of which have very strict documentation and qualification requirements to issue policies. If the big banks knowingly lied to them or to any other insurer about the mortgagees in order to obtain an insurance policy, and the insurer relied on these misrepresentations, they are guilty of fraud.