’60 Minutes’ Brought it Home Last Night

Posted on October 6th, 2008 in Daily Mortgage/Housing News - The Real Story, Mr Mortgage's Personal Opinions/Research

Steve Croft did a great job last night telling it like it is in 12 minutes. The story was called ‘A Look at  Wall Street’s Shadow Market’.  Jim Grant from Grant’s Interest Rate Observer and one of my long time heroes, was a featured expert.  This is a no-frills story that should will get you fired up. I will shut up now and let you watch. -Best Mr Mortgage

CBS 60 Minutes Link: http://www.cbsnews.com/stories/2008/10/05/60minutes/main4502454.shtml

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  • 19 Responses to “’60 Minutes’ Brought it Home Last Night”

    1. Thanks for that link!!! Wow, looks like a “I’ll scratch your back if you’ll scratch mine” scheme!! I still don’t believe that part about how 6% of delinquent mortgages caused this whole problem. I blow the BS horn.

    2. Great show, do not miss. If you’ve been paying attention it’s pretty basic, but everyone in the US saw this, which is great.

      I do have some thoughts:

      It’s not quite right to say they didn’t understand these instruments. The knowledge was compartmentalized. The fancy math guys setting up CDOs computed risk of each instrument correctly. But they were TOLD to ignore correlated risk: the chance that when one of these fails others might fail for the same reason.

      The risks, and therefore the price, of CDSs added on to these were computed by someone else in a different firm. Again ignoring correlated risks.

      Then the ratings agencies, who are woefully understaffed, were coerced (and lied to) to give their AAA ratings on things they couldn’t possibly understand, because they never had all the information. Besides they were getting paid by these guys.

      Finally, these were all executed with borrowed money, and those facts weren’t put into the original risk calculation, as if it wasn’t material.

      So somewhere, in some company, somebody understood each part of these transactions. The problem is with the big picture.

      But the big picture is job of the senior management, the guys who are getting away with 100’s of millions of dollars for setting this monstrosity up. They are the ones who didn’t understand the implications of their multiple decisions, who borrowed so much money they had to get laws changed so they could borrow more. The guys who put pressure on Fanny & Freddie to reduce lending standards to criminal levels. Who funneled lobbying money through F&F (influence laundering), to get legislators to reduce standards, and to create programs like CRA.

      They AREN’T worth what they were being paid. I’m hoping they have reservations at some our better prisons.

    3. We are realistically speaking about roughly $12-$15 Trillion dollars that needs to be written down and written off of the books of all sorts of various companies including the Government within the next 2 years. The $700 Billion “Bail Out” bill was like trying to put out a forrest fire with a water pistol… Not going to happen!!!

      Most people in the actual industry and not the main street media or everyday folk understand this completely and that is part of the reason the market is not behaving as the Pols would like.

      It is not as if Betty and Jeff down the street are investing specifically for their 401K, but rather giant funds driven by insider wall street folks are. This money is big enough for a bonus plan for these stooges, but not nearly enough of a sum to do any “Bailing Out” of the little people. Heck the CEO from Lehman made $500 Million and so did Paulson when he left Goldman Sachs. That is $1 Billion from just (2) guys!!!

      Sorry folks but move it along because this ain’t the “Bal Out” you were looking for…

      The American people know what we need, but no one is listening to us!!!

      1. JOBS!
      2. FACTORIES!
      3. ENGINES OF GROWTH!
      4. HONESTY!
      5. INTEGRITY!
      6. MORALITY!
      7. AN ENTIRELY NEW SET OF POLITICIANS!!!

      What we got however was…

      1. LAYOFFS!
      2. OFF SHORE TAX BREAKS!
      3. HIGH SPEED COLLISION!
      4. LIES!
      5. CORRUPTION!
      6. DECEIPT!
      7. SAME OLD SAME OLD!!!

      So what are “We” the American people ging to do about it? That is the question facing us “NEAR TERM” We can change this game in a hurry if we want to by voting each and every incumbant out of office. A whole new set of folks ready, willing and able to serve the actual people of this country, and not each other and big business at tax payers expense!!!

      You throw out all of these bums and give them all a taste of what we are getting and things “WILL CHANGE” you can count on that. They will change quickly too so as not to find themselves in the same situation down the road. Nobody likes to lose a job and if all you have to do is the first 7 to maintain one, and a damn good one at that, then you will do it. I have zero doubt about that!!!

    4. Stu,

      You just pointed something out, that kind of scares me.
      don’ get me wrong, you are absolutely correct, but I don’t think any of this was unforeseen. Now , if this was all planned (an economic collapse) and the whole country crashes into despair, what you are calling for would come next. But, here is a scary thought.

      LAYOFFS!
      2. OFF SHORE TAX BREAKS!
      3. HIGH SPEED COLLISION!
      4. LIES!
      5. CORRUPTION!
      6. DECEIPT!
      7. SAME OLD SAME OLD!!!

      This is the EXACTLY what the National Socialist German Workers Party ran on 1930’s.

    5. Well not exactly… but you get the point.

    6. And it is EXACTLY what has happened in America in 2008!!!

    7. history repeats itself, man progresses in science and technology but the same old drama plays out in love, war, religion, greed and politics.

    8. Great post, Stu.

    9. This is EXACTLY what happens when you leave politicians in office for FAR TOO LONG!!! You eventually have them sitting in a position where as the FOX is GUARDING the HEN house!!! We have had this situation for far too long in this country (30-35 years) with career politicians residing over decisions that conflict with several parties they know personally. Look at the who’s who in charge at Fannie and Freddie over the past two decades and you will find ties to politicians all over the place. Mostly Democrats, but Republicans fed at the trough as well. Both parties are to blame in what I consider a scandal at this point over there…

      News out yesterday just added fuel to an already very well lit fire that is now a virtual blaze and we need to toss some water on it quickly to put it out…

      http://www.foxnews.com/story/0,2933,432501,00.html

      As reported on Fox and elsewhere as well we see more of the same from the same old crowd in Washington… Please read the story, but here is just a snippet for you:

      WASHINGTON — Unqualified home buyers were not the only ones who benefitted from Massachusetts Rep. Barney Frank’s efforts to deregulate Fannie Mae throughout the 1990s.
      So did Frank’s partner, a Fannie Mae executive at the forefront of the agency’s push to relax lending restrictions.
      Some are raising new questions about Frank’s relationship with Herb Moses, who was Fannie’s assistant director for product initiatives. Moses worked at the government-sponsored enterprise from 1991 to 1998, while Frank was on the House Banking Committee, which had jurisdiction over Fannie.
      “It’s absolutely a conflict,” said Dan Gainor, vice president of the Business & Media Institute. “He was voting on Fannie Mae at a time when he was involved with a Fannie Mae executive. How is that not germane?
      “If this had been his ex-wife and he was Republican, I would bet every penny I have – or at least what’s not in the stock market – that this would be considered germane,” added Gainor, a T. Boone Pickens Fellow. “But everybody wants to avoid it because he’s gay. It’s the quintessential double standard.”
      A top GOP House aide agreed.
      “C’mon, he writes housing and banking laws and his boyfriend is a top exec at a firm that stands to gain from those laws?” the aide told FOX News. “No media ever takes note? Imagine what would happen if Frank’s political affiliation was R instead of D? Imagine what the media would say if [GOP former] Chairman [Mike] Oxley’s wife or [GOP presidential nominee John] McCain’s wife was a top exec at Fannie for a decade while they wrote the nation’s housing and banking laws.”

      People we NEED to get these cronies the heck out of there before they ruin OUR Country for good!!!

    10. I hear you Stu, but the banks and special interests would just get their claws into the fresh,green, blood that would replace these cronies.

      I keep thinking about the problem we have with “special interests”. I can’t think of a system that could avoid them.

      The only option would be to get rid of a Federal Gov’t. and go back to individual states. There would still be special interests, but at least on a smaller scale, contained with in each state.

    11. Sadly , I have no hope of anything changing due to the fact that the masses have historically accepted or settled for less. Not to mention our country is much larger , making it hard to rally a majority.

    12. od, you are looking at this all wrong… Once you get the newbies into office you press for quick rule changes for lobbyist and campaigne contributions. You have to remember how scared these folks are going to be going out of office and moving into office. You must take advantage of this and press for sweeping changes immediately… striking while the iron is hot. This can certainly work and why not try it atleast. What other options do we have as a country to take back control? Sure we can sit back and say whoa is me, or fight on!!!

      A vote is a very powerful tool when forcing change. Just ask those in Iraq or Tibet for example. This country has the tools well in place to use for the American tax payer to be heard, but we just have not used our powers for 3-4 decades. No better time to start than the present I say. Election right around the corner… how appropriate for us to have this scenario line up as it has for us.

      This is set up to have the biggest sweeping change in our nations political history if we can vote 70% – 80% of these morons out of office. I know we can’t get them all realistically, but maybe 100% of the lifers and 60% – 70% of the rest of them would be a great start! Enough to force some serious change for sure!!!

    13. I found these two opposing videos on youtube. Tell me which one is correct, or at least “mostly” correct?

      http://www.youtube.com/watch?v=1RZVw3no2A4

      http://www.youtube.com/watch?v=6rpoYvsc3ho

      I’m on the fence.

    14. in my opinion it was not CRA at all. It was low interest rates, massive leverage and the investment banks alphabet soup securities creations jumping into our industry forcing everyone to compete or die, which lowered standards across all lenders, banks and Agencies. If not for the investment banks the extremes would have never been seen. Countrywide was a simple (yes large) mortgage banker until 2004. They were turned bad by the investment banks.

    15. Well then, thank god for the ending era of investment banks.

      Did you hear how the AIG pricks are spending their bailout at the St.Regis this week? Shameless.

    16. The investment banks changed everything forever and look where they are now… extinct!!! That says something…

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    18. I can’t believe that none of these financials wizards didn’t realize what could happen. What i do believe is they didn’t care because they were “getting there’s”.

      I don’t think we can rely on the policticians, congress/house of representatives to look after us. This has been the mistake.

      I think it’s time we looked after ourselves as ‘we the people”. We have had imbalance in your financial system for too long and it’s the little guy on the street that’s holding the world up, not these yo yo’s.

      People need to get together and make decisions on how they would like our country to look like, just like the forefathers did. Only not separated by groups,
      We are all in this together.

    19. […] (Level 2) Banking Systemod on America’s Mark-to-Model (Level 2) Banking SystemMarie on ‘60 Minutes’ Brought it Home Last Nightadmin on America’s Mark-to-Model (Level 2) Banking System Recent PostsAmerica’s […]

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