On Wed, 30 Jan 2008 09:30:17 -0500, JimH wrote:


He promptly blamed the lender as he said he did not know what an ARM
was. Doh!

Summary of sub-prime write-downs in Q4
UBS $13.7 bln
Citigroup $13.7 bln
Morgan Stanley $10.3 bln
Merrill Lynch $8.4 bln
HSBC $3.4 bln
Bank of America $3.3 bln
Deutsche Bank $3.1 bln
Barclays $2.7 bln
Royal Bank of Scotland $2.6 bln
Credit Agricole $2.3 bln
Bear Stearns $1.9 bln
Credit Suisse $1.9 bln
JP Morgan Chase $1.6 bln
Goldman Sachs $1.5 bln
Wachovia Bank $1.1 bln
Lehman Brothers $0.8 bln
SunTrust Bank $0.6 bln
Total: $72,900,000,000 and counting!

I guess the lender didn't know what an ARM was either.

wrote in message
...
On Wed, 30 Jan 2008 09:30:17 -0500, JimH wrote:


He promptly blamed the lender as he said he did not know what an ARM
was. Doh!

Summary of sub-prime write-downs in Q4
UBS $13.7 bln
Citigroup $13.7 bln
Morgan Stanley $10.3 bln
Merrill Lynch $8.4 bln
HSBC $3.4 bln
Bank of America $3.3 bln
Deutsche Bank $3.1 bln
Barclays $2.7 bln
Royal Bank of Scotland $2.6 bln
Credit Agricole $2.3 bln
Bear Stearns $1.9 bln
Credit Suisse $1.9 bln
JP Morgan Chase $1.6 bln
Goldman Sachs $1.5 bln
Wachovia Bank $1.1 bln
Lehman Brothers $0.8 bln
SunTrust Bank $0.6 bln
Total: $72,900,000,000 and counting!

I guess the lender didn't know what an ARM was either.

Yep, the lenders screwed up big time. How in hell they thought the loan
recipients were going to be able make the payments when the ARM kicked in is
beyond me.

60 Minutes had a piece on the debacle last Sunday. Simply put is was greed.
All along the food chain people/institutions were getting there commission.
It some respects it was kind of like a Ponzi scheme.

The 60 Minutes story reported that it was extremely easy to get a loan and
figures on applications were not even verified.

"BAR" wrote in message
. ..
JimH wrote:
"D.Duck" wrote in message
...
"HK" wrote in message
...
http://tinyurl.com/2cqv7t
In my mind a lot of the blame for the home mortgage crisis belongs
squarely on the shoulders of those that received the loans.

In their quest to get into a home they failed to analyze what
could/would happen when the inevitable rate changes came along.

That doesn't excuse the lenders. "There's a sucker born every minute".


At what point of the deal did the lenders put a gun to the buyers head
and force them to sign?

Minors and idiots should not be allowed to enter into contracts. I put
most of the blame for this on Congress and the lenders.


Minors already can't enter into contracts, at least in NY. Not sure if
that's federal law, or state. Idiots...it would be tricky to limit them from
entering into contracts. It would wreck the economy, since you're talking
about 54% of the country.

wrote:
On Wed, 30 Jan 2008 09:30:17 -0500, JimH wrote:


He promptly blamed the lender as he said he did not know what an ARM
was. Doh!

Summary of sub-prime write-downs in Q4
UBS $13.7 bln
Citigroup $13.7 bln
Morgan Stanley $10.3 bln
Merrill Lynch $8.4 bln
HSBC $3.4 bln
Bank of America $3.3 bln
Deutsche Bank $3.1 bln
Barclays $2.7 bln
Royal Bank of Scotland $2.6 bln
Credit Agricole $2.3 bln
Bear Stearns $1.9 bln
Credit Suisse $1.9 bln
JP Morgan Chase $1.6 bln
Goldman Sachs $1.5 bln
Wachovia Bank $1.1 bln
Lehman Brothers $0.8 bln
SunTrust Bank $0.6 bln
Total: $72,900,000,000 and counting!

I guess the lender didn't know what an ARM was either.


Why should the execs worry with their golden parachutes?

"JimH" wrote in message
...

"D.Duck" wrote in message
...

"JimH" wrote in message
...

"D.Duck" wrote in message
...

"JimH" wrote in message
...

"D.Duck" wrote in message
...

"HK" wrote in message
...
http://tinyurl.com/2cqv7t

In my mind a lot of the blame for the home mortgage crisis belongs
squarely on the shoulders of those that received the loans.

In their quest to get into a home they failed to analyze what
could/would happen when the inevitable rate changes came along.

That doesn't excuse the lenders. "There's a sucker born every
minute".


At what point of the deal did the lenders put a gun to the buyers head
and force them to sign?

That's my point, the home buyers must share a lot of the blame for
their decisions.

I realize that.

The lenders played on the consumers ignorance.


Perhaps, but perhaps not.

But if someone is signing for a 6 figure loan without knowing the type
of loan or if the payments fit into their budget I have no sympathy for
them.

The Cleveland Plain Dealer ran a series of stories about a couple of
these poor *victims*. In one case a lady was given $500,000 as an out
of court settlement for the death (drowning) of her son at a church's
pool. She buys a house (cash), a Lexus and then promptly blows the rest
of the money in a short time.

Not having money left she tries to get a loan off the equity in her
house and signs for a loan she could not afford. She loses her house.
Poor lady.

Another example is a guy earning $75,000/year signing into an ARM with
payments at around $800/month on his $130,000 house. Over a short time
the rates went up and his payments jumped to $1,300/month which he said
he could not afford. He eventually lost his house to the lender.

He promptly blamed the lender as he said he did not know what an ARM
was. Doh!

BTW: He also spends $1,200/month on the lottery.

You just keep reinforcing my argument.


Doh, I realize that. What I am also reinforcing is the fact that the
banks should not be blamed at all. You seem to put some blame on them.
That is *my* point.

Not true. I don't hold the lending institutions blameless at all. They
were accepting applications where the figures were not even verified.

I very clearly stated in my initial post "That doesn't excuse the lenders."

JimH wrote:
"D.Duck" wrote in message
...
"JimH" wrote in message
...
"D.Duck" wrote in message
...
"JimH" wrote in message
...
"D.Duck" wrote in message
...
"HK" wrote in message
...
http://tinyurl.com/2cqv7t
In my mind a lot of the blame for the home mortgage crisis belongs
squarely on the shoulders of those that received the loans.

In their quest to get into a home they failed to analyze what
could/would happen when the inevitable rate changes came along.

That doesn't excuse the lenders. "There's a sucker born every minute".

At what point of the deal did the lenders put a gun to the buyers head
and force them to sign?
That's my point, the home buyers must share a lot of the blame for their
decisions.
I realize that.

The lenders played on the consumers ignorance.

Perhaps, but perhaps not.

But if someone is signing for a 6 figure loan without knowing the type of
loan or if the payments fit into their budget I have no sympathy for
them.

The Cleveland Plain Dealer ran a series of stories about a couple of
these poor *victims*. In one case a lady was given $500,000 as an out of
court settlement for the death (drowning) of her son at a church's pool.
She buys a house (cash), a Lexus and then promptly blows the rest of the
money in a short time.

Not having money left she tries to get a loan off the equity in her house
and signs for a loan she could not afford. She loses her house. Poor
lady.

Another example is a guy earning $75,000/year signing into an ARM with
payments at around $800/month on his $130,000 house. Over a short time
the rates went up and his payments jumped to $1,300/month which he said
he could not afford. He eventually lost his house to the lender.

He promptly blamed the lender as he said he did not know what an ARM was.
Doh!

BTW: He also spends $1,200/month on the lottery.
You just keep reinforcing my argument.


Doh, I realize that. What I am also reinforcing is the fact that the banks
should not be blamed at all. You seem to put some blame on them. That is
*my* point.

The banks are selling the loans. They advertise the loans, they entice
and encourage the buyers sign on the dotted line. The banks have some
culpable in the sub-prime problems. They guys who bought the mortgages
are culpable too. Nobody gets away from this without some responsibility.

wrote:
On Wed, 30 Jan 2008 09:30:17 -0500, JimH wrote:


He promptly blamed the lender as he said he did not know what an ARM
was. Doh!

Summary of sub-prime write-downs in Q4
UBS $13.7 bln
Citigroup $13.7 bln
Morgan Stanley $10.3 bln
Merrill Lynch $8.4 bln
HSBC $3.4 bln
Bank of America $3.3 bln
Deutsche Bank $3.1 bln
Barclays $2.7 bln
Royal Bank of Scotland $2.6 bln
Credit Agricole $2.3 bln
Bear Stearns $1.9 bln
Credit Suisse $1.9 bln
JP Morgan Chase $1.6 bln
Goldman Sachs $1.5 bln
Wachovia Bank $1.1 bln
Lehman Brothers $0.8 bln
SunTrust Bank $0.6 bln
Total: $72,900,000,000 and counting!

I guess the lender didn't know what an ARM was either.

I am very familiar with the real estate industry. Originators make
their money by getting loans approved. They were fudging info on
applications, builders where over pricing the homes so they could
finance the sub-prime rates and rebates etc, knowing the homeowner would
be in deep **** when the rates went up.

On Wed, 30 Jan 2008 14:46:18 -0000, wrote:

On Wed, 30 Jan 2008 09:30:17 -0500, JimH wrote:


He promptly blamed the lender as he said he did not know what an ARM
was. Doh!

Summary of sub-prime write-downs in Q4
UBS $13.7 bln
Citigroup $13.7 bln
Morgan Stanley $10.3 bln
Merrill Lynch $8.4 bln
HSBC $3.4 bln
Bank of America $3.3 bln
Deutsche Bank $3.1 bln
Barclays $2.7 bln
Royal Bank of Scotland $2.6 bln
Credit Agricole $2.3 bln
Bear Stearns $1.9 bln
Credit Suisse $1.9 bln
JP Morgan Chase $1.6 bln
Goldman Sachs $1.5 bln
Wachovia Bank $1.1 bln
Lehman Brothers $0.8 bln
SunTrust Bank $0.6 bln
Total: $72,900,000,000 and counting!

I guess the lender didn't know what an ARM was either.

There is a curious dynamic going on in the sub-prime blame game that
is annoying me to no end.

Think about what 72 billion is compared to the 13.7 Trillion dollar
economy. Pocket change. And it's being written down in value so next
year, it's as if it didn't exist and you start over.

Due to Greenspan's laissez-faire attitude towards national money
supply, there was an excess of capital that was available for loan
floats - in short, lots of cash that needed to be invested or put to
work in some fashion.

Once you have people throwing money at you, it's natural to take
advantage of it. It's also natural for people to over estimate their
ability to pay down debt based not on yesterday, but on tomorrow. Hey,
want a low rate ARM for two years at 2% on $500K - hell, I can flip
the house in two years for a $800k the way the real estate market is
going - whoo hoo!! They don't think about what happened in other
bubbles that happened yesterday - the future becomes fact even if it's
based on fantasy. Additionally, everybody knows somebody who knows
somebody who made a cool $500K selling their house. Yep.

So, what happens now is that banks are holding huge amounts of asset
debt - mortgages are like accounts recievable (only different) and
considered assets. And what do you do with assets - you try and
increase their net worth over time multiplying their asset value. And
what's a good way to do that? Why sell the mortgage debt to long term
investors.

Which led to complex financial investment instruments like CDOs, SIVs,
CDO squared, CDO-n (in which CDO collatarized over CDO which
collatarized other CDOs), etc., basically slicing up bits and pieces
of mortgages into holdings for investors. Take one with $100K,
another with $200k, another with $50k and sell a $350K mortgage to
these three investors and collect the servicing fee - a cool .5% or so
of the total package. Do that a few times over and your are making
more money which you can dump back into...well, you get the point.

Once you get locked into a cycle of derivitive debt, all bets are off
because the incentive is to make more money - a classic bubble.

So, to put it plainly, nobody is really at fault (other than those who
practiced outright fraud which is a very minor part of all this).

With one exception - Greenspan and that's only because he kept the
money supply too high. Having said that, it's not his fault either
because he did what he had to do to get the economy on track after
'87, '92 and 2001.

Everybody owns a piece of it. The real question is what to do about
it.

My opinion is the same as Jim Cramer and Barney Frank - let the US
Treasury buy the assets of the mortgage insurers and basically put
them out of business. Then take the good assets and sell them off to
somebody like Buffett (or others) with an incentive discount, take the
lousy assets and junk 'em for what ever they can get. That will
stabilize the market.

Then you can put the insurance companies back into the game by putting
rules in place that brings the mortagage lending practices back to
what worked before - verification of income and ability to pay based
on monthly/yearly income and expenses.

In short, put some sanity back into the market.

That's my story and I'm sticking to it. :)

This reminds me. I wonder what the local dentist (NOYB) is putting up
with nowdays?

Short Wave Sportfishing wrote:
On Wed, 30 Jan 2008 14:46:18 -0000, wrote:

On Wed, 30 Jan 2008 09:30:17 -0500, JimH wrote:


He promptly blamed the lender as he said he did not know what an ARM
was. Doh!

Summary of sub-prime write-downs in Q4
UBS $13.7 bln
Citigroup $13.7 bln
Morgan Stanley $10.3 bln
Merrill Lynch $8.4 bln
HSBC $3.4 bln
Bank of America $3.3 bln
Deutsche Bank $3.1 bln
Barclays $2.7 bln
Royal Bank of Scotland $2.6 bln
Credit Agricole $2.3 bln
Bear Stearns $1.9 bln
Credit Suisse $1.9 bln
JP Morgan Chase $1.6 bln
Goldman Sachs $1.5 bln
Wachovia Bank $1.1 bln
Lehman Brothers $0.8 bln
SunTrust Bank $0.6 bln
Total: $72,900,000,000 and counting!

I guess the lender didn't know what an ARM was either.

There is a curious dynamic going on in the sub-prime blame game that
is annoying me to no end.

Think about what 72 billion is compared to the 13.7 Trillion dollar
economy. Pocket change. And it's being written down in value so next
year, it's as if it didn't exist and you start over.

Due to Greenspan's laissez-faire attitude towards national money
supply, there was an excess of capital that was available for loan
floats - in short, lots of cash that needed to be invested or put to
work in some fashion.

Once you have people throwing money at you, it's natural to take
advantage of it. It's also natural for people to over estimate their
ability to pay down debt based not on yesterday, but on tomorrow. Hey,
want a low rate ARM for two years at 2% on $500K - hell, I can flip
the house in two years for a $800k the way the real estate market is
going - whoo hoo!! They don't think about what happened in other
bubbles that happened yesterday - the future becomes fact even if it's
based on fantasy. Additionally, everybody knows somebody who knows
somebody who made a cool $500K selling their house. Yep.

So, what happens now is that banks are holding huge amounts of asset
debt - mortgages are like accounts recievable (only different) and
considered assets. And what do you do with assets - you try and
increase their net worth over time multiplying their asset value. And
what's a good way to do that? Why sell the mortgage debt to long term
investors.

Which led to complex financial investment instruments like CDOs, SIVs,
CDO squared, CDO-n (in which CDO collatarized over CDO which
collatarized other CDOs), etc., basically slicing up bits and pieces
of mortgages into holdings for investors. Take one with $100K,
another with $200k, another with $50k and sell a $350K mortgage to
these three investors and collect the servicing fee - a cool .5% or so
of the total package. Do that a few times over and your are making
more money which you can dump back into...well, you get the point.

Once you get locked into a cycle of derivitive debt, all bets are off
because the incentive is to make more money - a classic bubble.

So, to put it plainly, nobody is really at fault (other than those who
practiced outright fraud which is a very minor part of all this).

With one exception - Greenspan and that's only because he kept the
money supply too high. Having said that, it's not his fault either
because he did what he had to do to get the economy on track after
'87, '92 and 2001.

Everybody owns a piece of it. The real question is what to do about
it.

My opinion is the same as Jim Cramer and Barney Frank - let the US
Treasury buy the assets of the mortgage insurers and basically put
them out of business. Then take the good assets and sell them off to
somebody like Buffett (or others) with an incentive discount, take the
lousy assets and junk 'em for what ever they can get. That will
stabilize the market.

Then you can put the insurance companies back into the game by putting
rules in place that brings the mortagage lending practices back to
what worked before - verification of income and ability to pay based
on monthly/yearly income and expenses.

In short, put some sanity back into the market.

That's my story and I'm sticking to it. :)

On Wed, 30 Jan 2008 16:01:54 +0000, Short Wave Sportfishing wrote:


Then you can put the insurance companies back into the game by putting
rules in place that brings the mortagage lending practices back to what
worked before - verification of income and ability to pay based on
monthly/yearly income and expenses.

Regulation? Damn, how un-Republican of you. ;-) What you say makes a
lot of sense, but this subprime fiasco seems more like Tulip Mania than a
classic bubble. I mean, what were they thinking, or not?

Did you here about the French trader that lost $7 billion? Somebody at
Societe Generale was asleep.


In short, put some sanity back into the market.

That's my story and I'm sticking to it. :)