Slashdot Mirror
Email Trails Show Bankers Behaving Badly
An anonymous reader writes "The New York Times is running a pair of stories about U.S. financial institutions being investigated by the Federal government and courts for alleged systemic and illegal activities that helped bring about the housing crisis and collapse of the world economy in 2008. Emails produced during courtroom discovery reveal that insiders at JP Morgan Chase knew that the bundles of securities they were marketing to investors were rotten with bad loans. And emails show the credit rating agency Standard & Poor's (a division of McGraw-Hill) was determined to stop losing deals to its competitors by being too tough on the banks whose products they were evaluating."
Corruption is corruption.
Hang them from the trees on Wall Street as a warning to others.
And stop creating government regulations that give them lots of loopholes to exploit.
Futurist Traditionalism
It mentions email, and email is very techy. You need computers and stuff.
rewriting history since 2109
Now we can see who sits in the cockpit of the "invisible hand". When the people at the top of our complex financial system, with the trust and responsibility placed on them to safeguard the well-being of the whole community, behave in such an anti-social manner they belong behind bars. Overt anti-social behaviour is to be punished, that's the whole point of laws. That these people will get of scot-free or with only small (for them) fines is fresh evidence that the structure of our society needs mending. News at 11'!
And I wouldn't blame a few individual bankers, I think this was coordinated a bit higher up. American banks had been selling way too many loans, and when they saw this was becoming a huge problem that might bring down the entire American economy, they made the brilliant move of packaging these loans in nice AAA investment vehicles and selling them to the rest of the world. Now it became a global crisis instead of an American one.
Not a very moral or honest thing to do, but it sure was ingenious.
As someone who has been through an E-Discovery process (lawsuit by a patent troll we were fighting) there is amazing forensic analysis technology that goes into collecting and collating emails, IM's, and documents.
Suppose you were an idiot and suppose you were a member of Congress
Given that the dumb fuckers who get caught passing a few thousand in bad checks tend to do more time than the smart fuckers who get caught passing a few billion in bad securities tend to do more time, I'd say that the quants are on to something...
(Can you imagine what would happen to sentencing guidelines if we decided 'fuck this shit' and started punishing large scale fraud with the same sorts of time-per-thousand-dollars-stolen that we do for blue-collar economic crimes?)
Look, at the height of madness, these derivatives which no one could possibly understand, derivatives so complex even God Almighty could not understand were given the same rating as US Treasury bonds or just a microscopically lower ratings. If these banks really believed the ratings by S&P they would have bought them at the same yields as US Treasury bonds, (or microscopically higher yeilds). But these derivatives were yielding a full percent, and then they were shooting up.
Why? These bastards knew, no matter, what lipstick S&P and Moody's slap on these beasts they are pigs. If small investors were taken in, that lone retiree conserving his/her nest egg, despairing at the ridiculously low interest rates they were getting, buying one lone bond for 12000$ and losing it all, they have my full sympathies, and wish they would be able to take on these bastards and send them to jai.
But, the buyers were the big guys. Why are they buying bonds, whose rating was paid for by the sellers?. Why can't they come up with a plan to pay for the ratings themselves? The bankers could have decided the buyers of bonds would chip in a few dollars and create an agency that will never be paid by the sellers of bonds and would be totally funded y the buyers of the bonds. They still have not done it.
What is playing out in the courts is something like a lovers spat or falling out between the thieves.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
"...anybody who wants to see anything different has got to tell me how we de-centralize."
It's starting, and slowly gaining momentum. Support any efforts in your state or local government to re-assert sovereignty. CO and WA are actively defying federal drug laws. Twenty six states sued to block Obamacare and many governors are actively resisting its implementation. Several states have passed resolutions asserting that the NDAA won't be enforced in their states. With all of the anti-gun hysteria, we're seeing states and even county LEOs claiming that they will stop any new gun control laws being forced on their citizens. Something really interesting is that several county LEOs are claiming that they will actively thwart federal LEOs from enforcing the laws in their jurisdictions.
Maybe if we could elect some courageous state AGs, they could prosecute these banking slime on charges of fraud, forgery, perjury, etc.
I like the idea of state banks. Until fractional reserve banking is banned, I think that's the best way to restore the money power to the people.
F*** the federal government's "oversight" role. They have the FDIC, OTS, OCC, SEC, FBI, CFTC, etc. etc. and they not only failed to stop the Wall St. fraud factory and thwarted any investigation and prosecution, they actively conspired to facilitate and cover up the frauds. There is little hope of positive change at the federal level.
Someone who sells ratings should not also be buying and selling these products. Of course there is a huge perverse incentive here.
Those "bag-of-shit" securities were, in very large part, guaranteed by the US Gov't. That Wall Street Banks offered crap investment opportunities that no one understood is nearly as bad as the so-called investors who bought them with an equal lack of understanding, and don't get me started on people who "bought" homes they could never, ever make the payments on that formed the basis for the "bag-of-shit" investments no one understood.
That they were "highly-rated" by the security analyst firms means very little - I'll leave you with this sage advice from that classic film "Tommy Boy"
Ken
I don't think I've seen anybody who isn't a head of state moving around in public with an armed guard, much less an actual army. They hire ex police to patrol their private driveway, and maybe the chauffeur carries a pistol. There is next to nothing to stop some crazed nutbag, or a concerted group, from offing one of them in broad daylight except the rule of law.
FWIW, I think that would be a tragedy. They should be tried in court for felony larceny, stripped of their assets and holdings, and imprisoned. I would be happy if this was tried in the ICC at The Hague, as what they did was an international crime.
Finally had enough. Come see us over at https://soylentnews.org/
Let's remember, these "smoking gun" emails are the result of exhaustive, comprehensive searches of EVERY ingoing and outgoing email from the respective organizations. In a large enough company I can guarantee you I can find emails that "prove" almost anything relating to thier business, their customers, etc.
That some employees expressed doubts or questioned the value of the products or services their company offers means very little if they are not the decision-makers.
Anyone surprised that a salesman at an investment house might be selling something they either don't understand or personally see the value in shouldn't be investing in the stock market. Would you be surprised to find out the guy selling you a Chevy Volt doesn't believe it is the best car in the world? What a salesman says to a customer is not neccessarily what he believes in his heart or in his mind.
Ken
Look, if I lend a thousand dollars to a homeless guy on the street corner, and he never pays me back, whose fault is it really? I mean, I can start jumping up and down and getting mad about it, but when it comes down to it it's the lender's responsibility to evaluate the debtor's ability to repay.
Or, I guess, you could lend money to people who you know full well can never repay it, and then sell off the debt to somebody else after obfuscating it as "AAA-rated investment grade CDO tranches"; that sounds really sustainable, too.
Even in the *best* case, if true - it indicates a *HUGE* issue.
The FBI should be professional no matter if you cooperate or not. Sure, they *can* be a dick if they want, but it's bad all the way around if they are.
It is, essentially, a violation of the constitutional rights of the accused - in that they are treated differently under the law. [Some nicely, some not.] Proving it in court is a far more difficult matter, however.
That law enforcement doesn't see it as a problem, indicates a serious flaw in their understanding of their responsibilities and have thrown away their honor.
It is, IMO, because of this kind of mind-set that the public starts to lose their respect for law-enforcement and see them as opportunistic thugs. Then the system breaks down - people feel they'll just do whatever they can, if they can get away with it. When people start shooting cops, they don't care much because the cops only care for their "friends" ... and since the cops aren't their friends, whatever bad things happen are just too bad - they're getting back what they did to the public.
It's not right for the public to feel that way - any more than the cops are right to do what they do - but it certainly makes the breakdown of respect more understandable.
So, being thugs and treating some defendants nicely and others like crap really, ultimately costs law enforcement a lot. It also costs society a lot too.
But I really, really hate "explanations" like the parent, because they seem to justify that kind of behavior. IMO, if you can't treat all your "customers" with respect you need to find another job. That doesn't mean you have to love them all - that's pretty hard - but you can at least do your job well and with respect for those you work around/ or with, and interact with.
This ^^ +1000
And tell me, who is likely to *know* who is able to afford the loan better?
A) The bank who has collective experience in the thousands of man-years in making loans and seeing the trends of who pays and who doesn't and what kind of debt load is reasonable. An institution who has NO OTHER job than to manage money, cash-flow and manage risk from loans and investment?
or
B) Sammy Homeowner who simply wants a house. He's not very sophisticated - he couldn't even calculate how his loan should work out in interest and principle. He works hard, but also wants all the good stuff, and his loan officer is telling him - "This is a great deal! You'll love it. It will be great. Here, just sign right here."
If you pick B, can I have what you're smoking - it's really incredible stuff.
The banks knew who was likely to not repay - they are vastly more sophisticated than virtually *ANY* home-owner getting a loan.
I'd agree the person taking the loan should have used more diligence - but the disparity is staggering. Blame ought to be apportioned 10:1 to the Bank.
A and B.
If you buy a home, it's worth doing your homework. I delayed buying a home for well over 5 years, because the market was obviously a bubble. When everyone is talking about flipping X, and making "money for nothing", get out of that immediately. Doesn't matter if it's stock, houses, bonds, whatever. If you buy a house, you know you are going to pay X. If you can't pay X realistically on a long term basis, don't buy it. And there is a reason for the old rule of thumb of buying a house at 2.5 times your annual income. I knew people that when with interest only mortgages, ARMs, etc. They knew they were not making the best decision. But they couldn't see any other way to "get the house they always wanted".
Everyone involved went full retard. Consumers bought mortgages they knew they couldn't afford. Banks issued mortgages they knew were bad ideas. Investment companies packaged those bad idea mortgages into bundles of "really bad idea, now in bulk". Investors bought those bad idea mortgages. And then the government bailed them out. Which again, bad idea.
Only folks that got a beating were the ones that were reasonably smart and stayed within their means.