I personally think the ratings agencies were the biggest culprit... the fact that they are not in jail is astounding. Yet here they are 'downgrading' the US and other countries. Who are they? How do they reach their ratings?
Transparency is needed. For how they rate companies, governments and for those that deal with consumers... how they calculate their ratings as well.
Yes...S&P downgraded the U.S.....I laughed so hard I almost ripped my gut. Like S/P has any credibility? I tend to agree with you when discerning level of criminal activity. Did S/P even peruse the toxic paper they were rating?
Of course not. Wall St. was demanding paper, and they were going to get it.
See Goldman Sachs' ABACUS scandal. It's the same story...make billions, pay millions in fines. A perfect business model.
My friends were closing on a home in 2006, the builder wanted them to use their appraisers, they went with their credit unions appraisers, the appraisal was $20,000 different. The deal almost fell through, so I know what you mean by fraudulent appraisers!
Never in the history of the industry, were there so many players in a fraud of such proportion. And everyone was happy for a reason.
Higher selling price means higher commission for realtor. Appraisers were pressed to hit a number, so the lender can make more on points/fees. Typically, a lender will lend 75% of appraised value. During the boom, lenders were lending 125% of appraised value. They were actually pressuring buyers to take the extra money. Of course, they were also pushing sub prime terms on people with A credit, claiming that an interest only, ARM is beneficial because they'll have a couple of years to invest the extra money, and have a big chunk to put down when they rewrite after the balloon.
Never in the history of lending, was every player so corrupt. And it all happened, because Wall St.'s new trading tool was debt. Lenders wrote as much as they could, knowing it would be lost in a sea of garbage before the ink dried.
