US Financial Quagmire Bringing Out the Scammers

coondoggie contributes this snippet from NetworkWorld: "You could probably see this one coming. With all of the confusion and money involved you knew there would be cyber-vultures out there looking to cash in. Well the Federal Trade Commission today issued a warning that indeed such increased phishing activities are taking place. Specifically the FTC said it was urging user caution regarding e-mails that look as if they come from a financial institution that recently acquired a consumer's bank, savings and loan, or mortgage. In many case such emails are only looking to obtain personal information — account numbers, passwords, Social Security numbers — to run up bills or commit other crimes in a consumer's name, the FTC stated."

Comments

*illegal* scammers

[Anonymous Coward]

As apposed to the mortgage brokers, sub prime lenders, financial institutions,ceos that got us into this mess and will walk away loaded and scott free.

Re:*illegal* scammers

[quizwedge]

Don't forget that it wasn't just the mortgage brokers, but the government requiring banks to loan to people who normally wouldn't qualify for a loan and couldn't afford to pay it back.

Re:*illegal* scammers

[vux984]

Don't forget that it wasn't just the mortgage brokers, but the government requiring banks to loan to people who normally wouldn't qualify for a loan and couldn't afford to pay it back.

Trotting this out are you?

Its true the government did require to make loans to people who wouldn't otherwise qualify, but that's not really the issue at all. They were forced to assume some extra risk by legislation, any remotely thoughtful person would realize that the banks should have MITIGATED this EXTRA risk, by covering it elsewhere.

To give you an example, if I run a bank, and the government says, you have to lend money to joe, and I know Joe can't afford it, and will probably foreclose, I don't just "do it and blame the government when joe forecloses", I set the interest rate on ALL my customers a little higher to ensure that when Joe forecloses I'm not bankrupt.

Thus the government requiring the banks to lend to people who they would otherwise not to, is no different than any other regulation placed on banks, all of which costs them money to satisfy, and in each case they simply pass the cost onto their customers.

Instead, in this case, they just blindly did it, and worse, they then created mortgage backed securities full of these risky loans and then did the most colossally stupid thing... the thing that caused the REAL collapse of the economy... they LIED about how risky these were, leading them to be GROSSLY overvalued.

Re:*illegal* scammers

[quizwedge]

I think there's plenty of blame to go around....

I don't think the government should have forced banks to make loans they were pretty sure would fail. Part of that is my belief in limited government; part of that is that it contributed to the housing bubble and all bubbles have to burst.

Fannie Mae and Freddie Mac should never have bought those bad mortgages in droves like they did. Having a flippant attitude of we'll buy up the mortgages and if they fail, well, we'll just get more money from the government was utterly and completely irresponsible.

The banks shouldn't have lied about the risk of the mortgage backed securities. I can't fault them too much for selling off the bad mortgages to Fannie and Freddie. They are a business and their job is to maximize profits. Having the person who made the loan having no interest in if the loan failed or not was stupid for the economy, but that's more or Freddie and Fannie buying the bad mortgages. But you're right, the banks do deserve some of the blame for lying about the securities.

Finally, having bought a house about 10 months ago, I know first hand that there is a lot of paperwork to go through. My wife and I knew what kind of loan we wanted and had done our homework to know what we could afford before we started looking at houses. While it's not popular in an election year to blame the constituency, personal responsibility comes into play. Yes, the people who signed for loans they couldn't afford bear some of the blame as well.

My point is that people are looking for the one "bad guy" to blame. Pointing fingers at one part of the problem while ignoring the rest won't get us out of this mess.

Re:*illegal* scammers

[FooAtWFU]

And the government who did their best to subsidize and encourage it!

Remember? It was back in the Clinton era, and there was a Fannie Mae accounting scandal, and in lieu of the serious reforms they were like "oh yeah yeah we'll be Nice instead and try to extend home ownership to even more Americans, even lower-incme ones!" Yay Subprime!

And, of course, bad money drives out the good. We're lucky there were as many responsible or quasi-responsible banks as there were. And three cheers for two candidates (four candidates?) who don't know one thing between them about how to actually manage an economy.*

(* Try not to! Trying to get Reality to conform to your will is likely to make it worse.)

Re:*illegal* scammers

[electrictroy]

The end of that same article also provides evidence that the CRA *did* have negative consequences
(especially in conjunction with the repeal of Glass-Steagall Act).

"Economist Stan Liebowitz wrote in the New York Post that a strengthening of the CRA in the 1990s encouraged a loosening of lending standards throughout the banking industry.[47] In a commentary for CNN, Congressman Ron Paul, who serves on the United States House Committee on Financial Services, charged that the CRA with "forcing banks to lend to people who normally would be rejected as bad credit risks."[55] A Christian Science Monitor editorial also mentions the Community Reinvestment Act and the government-backed Fannie Mae as being laws responsible for pushing banks and mortgage brokers into granting easy credit and subprime loans to those who could not afford them.[56]

"In a Wall Street Journal opinion piece, Austrian school economist Russell Roberts wrote that the CRA subsidized low-income housing by pressuring banks to serve poor borrowers and poor regions of the country. Jeffrey A. Miron, a senior lecturer in economics at Harvard University, in an opinion piece for CNN, goes so far as to call for "getting rid" of Fannie Mae and Freddie Mac, as well as policies like the Community Reinvestment Act that "pressure banks into subprime lending."[57]"

Re:*illegal* scammers

[ultranova]

Instead, in this case, they just blindly did it, and worse, they then created mortgage backed securities full of these risky loans and then did the most colossally stupid thing... the thing that caused the REAL collapse of the economy... they LIED about how risky these were, leading them to be GROSSLY overvalued.

Stupid ? It's a bloody genius thing. They crashed the economy, made sure that their own assets are safe - as they are with government bailouts - and will undoubtedly use those assets to buy lots of stock once the ongoing crash brings the rates low enough. Everything gets blamed on the government - the libertarians and other armchair economists will take care of that - while the masterminds laugh all the way to the bank, which they also own.

Re:*illegal* scammers

[electrictroy]

He's on the Congress' Financial Services Committee. He didn't get there by being stupid. (shrug). And if you still don't like him, then I suggest you read Walter E. Williams work. He's an economics professor at George Mason University in D.C. and he's no dummy either:

http://www.gmu.edu/departments/economics/wew

BTW:

I always find it amusing that pro-socialists think "he's a weirdo" is a persuasive argument. Sorry but that doesn't really sway me to your viewpoint. ;-) Next time try a logical argument based on reason; I will listen to that. CONVINCE me that your viewpoint is the correct viewpoint. I won't listen to "he's a weirdo" non-arguments.

But what about the real scam?

[gillbates]

That allows investment bankers to pawn off responsibility for their misdeeds on the American public?

So I'm supposed to pay an additional $10k in taxes to finance the bad decisions of those who foreclosed on middle class Americans? And if I have to pay it over time (as Congress proposed), I'll end up paying even more (because Congress will borrow money to finance the bailout).

I would say that I've got that money in my 401k, but I doubt it's worth anything now.

I've got a better idea. Start printing money. Yes, devalue the currency to the point where I can settle my mortgage for a few hours worth of work. If bank CEOs can get bonuses for shafting even the Americans who were smart enough to avoid bad lending practices, we should be able to just print the money to pay off our debts.

Re:But what about the real scam?

[PunkOfLinux]

Yeah, but then your retirement becomes essentially worthless...

It's wrong that we're paying for their mistakes, and we will be paying for that for YEARS to come.

This is not capitalism - by influencing the market (especially so heavily) and giving money to institutions just because they're 'a huge part of the economy' we gave up capitalism. These people fucked up - by the tenets of capitalism, if they can't survive this on their own, LET THEM FAIL. Oh, boo hoo, a tough few years. Better than going even further into debt just to bail out a few rich pricks who made the mistake of doing things where the benefits were far outweighed by the costs and potential risks.

Re:But what about the real scam?

[qbzzt]

Yeah, but then your retirement becomes essentially worthless..

Your retirement is worthless. We aren't raising enough kids, so the economy won't be able to support us retiring.

Re:But what about the real scam?

[Maudib]

The bailout isn't a bailout. The bankers who screwed up are for the most part being wiped out, along with the investors. Please see AIG, LEH and BS stock prices and you will see that the company owners and the company employees are being entirely wiped out. The "bailout" is preventing the guys who screwed up and are wiped out from wiping out everyone else. Its about liquidity and fear. Good companies are being destroyed due to too much fear and too little liquidity. It isn't a lie when the Fed says that most of what will be bought with the $700 million will be good or profitable. So the feds loose a couple hundred mil on this. Several trillions are being wiped out every week in the stock market.

Re:But what about the real scam?

[Maudib]

While things are certainly going to be bad you have badly misread what is happening.

(1) The liquidity crisis is actually preventing inflation and there is a good chance that we could even witness some deflation if things don't change. Economic downturns are not necessarily couple with inflation, in fact we could even see deflation during this recession.

(2) Treasuries (U.S. Debt) have become even more valuable. Yields are almost effectively zero while prices are sky high. This is because everyone is so afraid of the markets that they are running to pick up the safest instrument available: U.S. debt. You really think China or anyone else will dump treasuries? Where would they put the money? Europe? China? Russia? Europe is as screwed as we are while Russia and China are even worse.

(3) The U.S. Dollar has actually been gaining value lately, likely due to point #2.

(4) "Buy land, seeds, guns and ammo cause Darwin is going to come knocking for the slow and trusting. Real assets are the only hard currency left." This is a nonsensical point. In order for "Real Assets" to trump cash it is likely that we would need a total failure in the rule of law, at which point having bought land or seeds would be meaningless as anyone with a gun would simply take them. Logic points to a couple years of slow or negative growth, not the collapse of society. I bet you spent Y2K in a basement.

You can have your land and seeds, I am going to start accumulating value stocks at all time lows.

Re:But what about the real scam?

[bitrex]

These people fucked up - by the tenets of capitalism, if they can't survive this on their own, LET THEM FAIL. Oh, boo hoo, a tough few years. Better than going even further into debt just to bail out a few rich pricks who made the mistake of doing things where the benefits were far outweighed by the costs and potential risks.

It's known as the US system of quasi-capitalomarxism called "Socialism for the rich, capitalism for the poor."

Re:But what about the real scam?

[damburger]

This has already been refuted by someone else: http://it.slashdot.org/comments.pl?sid=991171&cid=25324879

If you want to know what your ideal market would look like, look at the 19th century. Unfettered capitalism is human suffering and wage slavery, and that is a historical fact.

Bringing out Scammers??

[arthurpaliden]

Hell, it was started by scamers, they wore three piece suits but they were still scammers.

Re:Yep.

[TubeSteak]

One of the scammers was so brazen he came right to my doorstep! Said he needed a "contribution" so he could "go to Washington" and "fix this mess."
Yeah, right! I fell for that one four years ago!

We call those guys "incumbents"
Your default position this election season should be not voting for them.

Don't listen to campaign promises, look at the incumbent's voting history.

Bad spending and bad lending.

[EmbeddedJanitor]

America as a whole, citizens and government, have a "charge it" mentality.

Government don't want to tighten their belts because that's an instant turn off to the voters. Nope, rather rack up more debt and hope that you die or leave office before the shit hits the fan.

hmmmmmm

[qzulla]

From TFA:

Perhaps the concern is unfounded as this PC World article notes. The article states that more than half of us are deleting messages from banks and financial institutions without even thinking twice. Experts say recipients who receive these e-mails believe that all the messages are part of phishing e-mail scams.

So more than half of the 16 bazillion people are ignoring them?

My guess is that five bazillon are responding.

Think about that.

Fake numbers but you get my point.

qz

Uhhh, what?

[Sycraft-fu]

I've seen some dumb shit but this ranks way up there. China would invade the US? How? China lacks a large naval for and you might note that there's a very large ocean separating the US from China. Ok so maybe we assume they simply commandeer commercial ships. Great, except those will all be adorning the bottom of the ocean before they get anywhere near the US. For whatever else you want to say about the US they have a very large and capable military and that includes navy. They'd notice (via spy satellites) thousands of tanks and troops and such being loaded in to ships. Those ships would then have to contend with the world's best attack submarines, with not one, but many aircraft carriers, with a whole bunch of airforce out of Japan and so on. This is before they get anywhere near the US coast and then have to contend with defenses there.

China has no ability at all to invade the US. Their military strength is in manpower and tanks. Impressive, and a good defense, but it doesn't float. They could invade Russia or North Korea or the like if they wanted, but not the US. You can't prep a large military force to move and achieve strategic surprise against a nation like the US that has world wide satellite monitoring. So they'll know you are coming. That means you have to have a way to counter the US Navy, and they don't.

Then of course there's the whole North Atlantic Treaty Organization, NATO thing. An attack on US soil would be operable under that, meaning that most of Europe would be committed to the US's defense.

No, China has no way at all to invade the US. They could nuke the US, if they wished, they do have ICBMs, but of course that would guarantee their country was wiped out since the US doctrine is to just annihilate a nation that does that and the US has way more (and more accurate) nukes.

So seriously, let's try to keep it a little more intelligent on Slashdot.