'I-Banker' Now Officially a Smear

You know what: People across the country decided to get mortgages they should have know they couldn't pay for. It's funny how it's now all the bankers' fault. Did these people ever run the numbers themselves?

uppereast: That is a touch disingenuous. All SE participants know that prices are set by the buyers. Home purchasers sold maortgages, middleman securitzed, middlemen sold them to investors, foreign govts, hedge funds, whoever. The pipeline ran dry in mid 2007. Then Investment and Commercial banks decided to buy all the securtized mortgage products, that generally, they themselves created. They did this to the tune of $1,000,000,000,000 notional amount. Yes, homeowners bear the brunt. But easily, the last trillion dollars worth was Wall streets. If Wall Street hadn't bought the paper, home purchasers couldn't have sold, and not bought that last speculative, bubble priced house. The party would have ended 18months earlier, at a lower price point, at a lower indebted point and at a lower terminal loss point.

So, the logic is Wall Street is at fault for allowing homeowners to continue making the same dumb mistake?

10022: man man, reading comprehension anyone. "Yes, homeowners bear the brunt. But easily, the last trillion dollars worth was Wall streets."

upeast: one other thing "You know what: People across the country decided to get mortgages they should have know they couldn't pay for. It's funny how it's now all the bankers' fault. Did these people ever run the numbers themselves?"
let's look at it simply. I take a shot on 200k house and mortgage and get it wrong and lose my house. wall Street (the smartest guys/girls from the best Universities) makes a trillion dollar bet and gets it wrong and loses their job, bonus and their firm goes out of business. "Did these people ever run the numbers themselves?"..You can probably answer that one yourself.

10022: man man, reading comprehension anyone. "Yes, homeowners bear the brunt. But easily, the last trillion dollars worth was Wall streets."

You should try that reading comp thing yourself... notice how I said CONTINUE.... I was talking about the last trillion.

and wall street did not create complex financial vehicles based on derivatives of bad mortgages given to people who didnt understand the terms of their mortgages that were written by thousands of ivy league wall street lawyers who made these agreements so easy to understand. for further explanation see section 3.1 subsection 2.a XXX

don't have to, I'm a math guy.

petr: exactly, don't trust whitey.

the bottom line is that greed at every level went unchecked, not just the bankers. irresponsibility was rewarded and still is with all the bailouts. the responsible ones will be left holding the bag.

It is everyone's fault. Human nature. Stop trying to find one person or group. What about the government that pushed Fannie and Freddie so hard to lend to people that should never have purchased? What about all of the greedy investors that could not get enough mortgage backed securities. We are all at fault.

funny that bankers blame the ordinary people who buy property with mortgages for not understanding the terms of their mortgages, but the same bankers cast no blame for themselves and wall street still not understanding the damage they did themselves with derivative financial vehicles based on the mortgages they knew they were seliing to unqualified people. You bankers set the terms of these mortgages, decided who they should go to, then you created complex derivative investments based on these bad loans that multiplied your own risk exponentially.

but you a holes blame the mess on individual homeowners! Too f'iing funny.

jvstier - it is not everyones fault. ultimately banks made the loans. bankers created complex instruments on top of those loans to multiply the problem.

Stop passing the buck. It is such typical republican behavoir - create the problem yourself, dont take the blame for your actions/policies, and try to pass the buck to everyone else except yourself.

The problem was created by democrats, with giveaways to groups like ACORN and pushing for everyone in america to own a home, even if they couldn't. And, of course, Barney Frank completely screwing up Fannie.

Of course dumbass homeowners and Wall Street took it to another level.... but, for a guy talking about buck-passing... WOW, PERFITZ, DID YOU JUST PASS THE BUCK...

I actually would have no problem with it if they simply packaged and sold the product. At that point, you could just say they were greedy fxxxing a-holes. That is actually the expectation. But the problem is, they did that, then when the buyers dried up they warehoused all the inventory on their own books till they bankrupted themselves. Now they were pretty fxxxing stupid to that. So thats the rub, you can be greedy or stupid, but to blatantly and willingly be both is shameful!

Getting back to the topic of the thread--I-bankers are now largely extinct. Feel a bit sorry for all those kids in MBA programs at the moment, they will have to reinvent themselves--and the spiel they give recruiters--in a hurry.

absolutely.

interestingly enough, MBA used to be a 2nd tier degree 20-30 years back. It was the kids who couldn't make law school or med school (or had C averages, Bush anyone?).

It may very well return to that status...

Interesting that any US qualification is considered 1st tier.
It's ridiculous that you can try multiple times to get into law or med school.
In the UK you got one shot at the age of 18 and if you were not exceptional then, then good bye.

princetonbabe -- you feel sorry for students? Feel sorry for those with kids and real responsibilities.

We all knew, anyone sitting on this board who's been holding out to buy, that simple economics has not been in play for years. We've all been waiting. What I'm amazed at is that these banks kept this crap on their books. Be the middleman, sell it off to China, whatever, butevery drug dealer knows not get hooked themselves. Fools.

hedge funds seem to be still doing well, i do returns for a couple and great great great bonuses in comparison to last year, despite one of their firms being in front page of crain's for being mbs-heavy..so much for "transparency" touted by big elephant sec

"Interesting that any US qualification is considered 1st tier.
It's ridiculous that you can try multiple times to get into law or med school.
In the UK you got one shot at the age of 18 and if you were not exceptional then, then good bye."

And the UK schools have fallen behind the US rather quickly. Hell, even the Financial Times notes this...

I've heard they're trying to adapt more of the US model.

> hedge funds seem to be still doing well

Are you defining "doing well" as half going out of business, or the other half losing the majority of their revenues?

I'm talking about the quality of people accepted.
Lower barrier to entry in the US for higher ed.
How do you feel about a doctor that failed their pre med 20 times before finally getting in?

I meant how do you feel about being treated by that doctor?

> I'm talking about the quality of people accepted.

we have more colleges, so of course so. But our top colleges are MUCH more selective, and have a much higher caliber of folks than the UK colleges do.

> Lower barrier to entry in the US for higher ed.

That in itself is a good thing.... we have more highly educated folks in this country. And, at the peak, our most highly educated are higher caliber here than in the UK.

> How do you feel about a doctor that failed their pre med 20 times before finally getting in?

Easy... I avoid 'em. Same way the Yankees don't call up minor league baseball players. And how I don't eat at Burger King and then complain that NY cuisine isn't good.

We have more, and we have better... neither of those things is bad...

The problem was caused by the most common of all human traits: GREED. This was evident on Wall Street, Main Street and K Street (Washington land).

The problem wasn't taking the risk. The problem was hiding the risk. You have to look at which transaction in the chain-of-risky-greed hid the risk. Subprime borrower to banker? No, the banker knew the risk was there, no fault to subprime borrower. Banker to other bankers? Yep, that's how these things got packaged up into AAA rated bonds. Bankers to municipalities and other investors? Yep, again, rating crap as AAA.

Similarly, and this caused much of the above, renaming "insurance" as "credit default swap" in order to bypass insurance law. Fault there lies solely with the bankers.

The smallest amount of blame lies with the borrowers.

no the wall street "bankers" had no idea of the risk. They are just dumb ass paper pushing patsies that got used by the guys at the top. Now they have to worry about the govt coming after them legally, and to claw back their bonus money while the guys at the top who made off with the most are hanging out with W and his father laughing at us all.....

I have to agree with perfitz here. Wall Streeters had no idea the risk they were taking. Part of it was, they were fine without a black swan event... but they didn't know that a black swan event would take everything down.

exis.. .there is a bell curve in anything in life... my wife's a doc and even she has a list of "specialists" that she refers to.... America still has the best health care (at the top) that's why Foreign Medical Students all try to come to america... then they go back home and become that country's #1 doc in that field....

shrimpie.... you are borrower therefore it must be that you had the least blame in this fiasco... yeh... the banker put a gun to your head and said take this mortgage. LMAO. r u indeed just stupid, ignorant or both (that would be choice C).

petri.. is that stmt from the left brain? or right?... FYI... "President Bill Clinton repealed the Glass-Steagall Act which had prevented the coupling of investment banking and lending" and Greenspan left CDS and all other derivatives outside of the regulatory body... me thinkz he might have worked during Clinton's time..... oh... yes I'm a socially liberal fiscally conservative Republican.. :) So go do you're business with your man "friends" it's okay by me :)

> hedge funds seem to be still doing well

Really, now...

Hedge-Fund Assets Slumped 48% Last Year on Losses, Withdrawals

By Saijel Kishan
Jan. 14 (Bloomberg) -- Hedge-fund assets fell 48 percent in
2008 because of investment losses and client defections, lowering
fees earned by most managers, according to TrimTabs Investment
Research and BarclayHedge.
Assets slumped to $998.4 billion at the end of December from
$1.92 trillion a year earlier and were at their lowest level
since July 2004, when they stood at $976.7 billion, the firms
said in a statement today. Hedge-fund investors withdrew a record
$148.8 billion in December.
“Approximately two-thirds of industry revenue comes from
performance fees and we estimate that 81 percent of hedge funds
were under water last year,” Charles Biderman, chief executive
officer of Sausalito, California-based TrimTabs said in the
statement.
Hedge funds lost 18.3 percent last year, according to Hedge
Fund Research Inc., the most since the Chicago-based firm began
tracking data in 1990.

nyc10022... plenty of blame to go around.... but I believe the elimination of natural breakages in the financial system through the non-regulation of derivatives is at the root of this fiasco. These derivatives tied insurance firms, i-banks, commercial banks, international trades, gold, gas/oil, home mortgages and the US gov't (with Fannie/Freddie) into one big counter-party circle jerk without an out.

"no the wall street "bankers" had no idea of the risk. They are just dumb ass paper pushing patsies that got used by the guys at the top"

I was referring to the guys at the top. They didn't invent credit default swaps because they were too stupid to realize this was really insurance, but just so happened to avoid all the laws regulating insurance.

Maybe there was some stupidity there when packaging them all up, maybe not. But "being stupid" doesn't absolve them of responsibility. My original point still stands - the bulk of the responsibility lies with the bankers, not the mortgage holders.

Subprime borrowers also aren't stupid. Well, a lot are, but think about their reasoning. "My credit sucks. I can't get a loan. Except if I buy this house I can't afford, I get to live their, pay you a tiny teaser rate, possibly cash out (while the bubble was inflating) at a large personal profit, but I risk holding the hot potato... in which case, you'll ruin my credit, but that's exactly where I started anyway..."

No, the subprime borrowers (either through coincidence or intent) made the smart move by accepting these loans.

"live there", correcting my own grammar/spelling

just so there isn't any misunderstanding... shripmie = tech_guy :)

w67thstreet, I see your soap operas must be over. You're now online and in between receipe.com and goodhousehusbands.com, you are trying to feel intelligent and on SE. People cannot understand a word you say, that's why nobody responds to any comments you make.

Have you folded your wife's work clothes for tomorrow? You know how she gets when she thinks you've just been doing a Peg Bundy all day long.

w67thstreet, do you still think that Goldman Sachs only rents and aren't land owners? Have you looked across the Hudson River yet from your Harlem housing project to see the tallest building in NJ?

Yup, it's owned by Goldman.

Or have you been in the vicinity of the WTC and seen their new HQ building on West Street when you were waiting taking the bus to the unemployment office to renew your unemployment benefits? That's owned by Goldman also.

Get a clue, loser. And grow a pair as well. Mr. Mom is so 1980s. Men have evolved and enjoy leaving their apartments to contribute to society again.

oldie... Goldman buys and leases as the market determines... hell they'd buy your wife to do dishes if that was cheaper than leasing her... get it? I'm not for or against one method versus the other... all I've ever said is that on an absolute, historical, relative basis, RE ownership is the greatest path to wealth destruction at the moment, whereas leasing is the smart move.. ie. you lose $ for $ for every gain in rent decrease your tenants are demanding... and why am I so smug you ask? As you (w67th) are a commercial property owner in NYC proper? ahhhhh.. it's a little piece of paper called an LC that is supported by a bank supported by your tax money.....

You and I am very similar.... we make money by sending out a bill(s) every month, if we are un-leveraged we would be totally happy about the decrease in our "in" price (be it residential rental properties or commercial rental properties) as there were absolutely NO deals in the last 5 years..HAAAAAAHHHAAAAAAAHAAAAAAA... oldbuyer I AM YOUR FATHER!

To keep this interesting pls let me know when your tenant asks for a rent decrease :).. OBTW... it's double coupon day on Depends at CVS... I just finished clipping my coupons from the Sunday Times :)

one other thing... of all the posters on these boards.. you are by far the most hate filled and least appreciated here... we all talk about you behind your back... no don't turn around... I'm talking about you in cyber-space :)... no... don't look to the sky either... oh jeeez.. put that rotary phone down.... a cop's not gonna go looking in cyber-space for a "punk." Enjoy the rent decrease and just let me know when I should start looking at the obits to buy a rental building for cheap :)

I'm still stunned by the "hedge funds are still doing well" comment. hol4-- What the ef are you smoking??? If they're still in biz, their gates up, will never reach their high water mark, and have had to lay off loyal to pay the guarantees.

BTW, Goldman is in NUMEROUS buildings downtown.... most of which they are renters in.

Hedge funds may be doing miserably in general and locking their investors in; that doesn't mean their golden-haired boys (and girls) didn't get some mega-change bonuses for 2008 nonethelesss. Bonus reductions are only for the 'little people' (at BoA, Citi, RBS, UBS, etc.) to paraphrase Leona Helmsley . . . And some hedge funds, I believe, are still holding their own, or treading water, anyway