Banks are making more off mortgages than ever before, refusing to pass on lowered interest rates from federal policy, including the purchase of trillions in mortgage-backed securities by the Federal Reserve, to consumers. This isn’t really the enigma that the New York Times’ Dealbook makes it out to be. It’s simple collusion. Nobody offers 2.8% mortgage rates, so nobody gets them. As a result, the spread that banks capture on their mortgages widens.
|By: David Dayen Wednesday September 19, 2012 9:33 am|
|By: David Dayen Monday September 10, 2012 8:37 am|
I don’t need a source to tell me that there will be no criminal charges arising from the Residential Mortgage Backed Securities working group, the task force set up to “hold accountable” those financial institutions who crashed the economy through misdeeds in the securitization process. Take only this piece of evidence: all of the subpoenas so far issued by the RMBS working group have been civil in nature, not criminal. That’s about all the evidence I need.
|By: David Dayen Sunday September 2, 2012 12:55 pm|
The upshot of Ben Bernanke’s speech at the economic symposium at Jackson Hole, Wyoming, at least to most interested observers, is that the Federal Reserve will enact a new round of quantitative easing at their next policy meeting the week of September 10.
|By: David Dayen Thursday August 30, 2012 1:39 pm|
Citigroup has settled a class-action lawsuit with shareholders over how Citi managed subprime securities during the financial crisis, a second-order fraud unconnected to the actual fraud of securitization and knowingly selling the bad securities in the first place.
|By: David Dayen Sunday August 26, 2012 1:00 pm|
The last financial crisis can be blamed in large part on runaway securitization. Wall Street giants sliced and diced mortgage loans into bonds that they sold around the world. They claimed that they diversified the mortgage pools so that even a few defaults would not undermine the value of the securities, and they offered tranches of the bonds at a decent yield. As global demand increased for the securities, Wall Street pressured originators to close more and more loans, regardless of creditworthiness. This caused a bubble in prices. Moreover, financial innovators took the lower-tranche loans and cut them up into once-removed securities, making bets on bets on the housing market that were allegedly “safe”. We all know how this ended, and how the securitization bubble took a crash in housing prices and made it exponentially worse.
So now we’re poised to do that all over again.
|By: David Dayen Wednesday August 15, 2012 1:35 pm|
Jed Rakoff is the federal judge who has engaged in a lonely crusade against the SEC’s practice of slap-on-the-wrist settlements against the nation’s largest financial firms. The SEC and Citigroup took Rakoff to court, essentially, to get their settlement on some mortgage-backed securities deals approved. Rakoff has a lawyer now, and he argued before the 2nd Circuit Court of Appeals that he required more information to properly conduct oversight.
|By: David Dayen Friday August 10, 2012 6:40 am|
Goldman got off for two separate things here, detailed in this contemporaneous report on the SPSCI report: one, the securities fraud elements of lying to their investors and profiting off their lack of disclosure; and two, lying to Congress about it. The Justice Department didn’t see a problem with it. So any upstart investment bank looking to make it in the world, you have your marching orders. You have to lie to your investors, take the other side of the bet on the deals you offer them, and when questioned about it, obfuscate and obstruct the investigatory body. That’s the way to the top.
|By: David Dayen Thursday August 9, 2012 1:40 pm|
Goldman Sachs announced in a regulatory filing that the Securities and Exchange Commission has closed their investigation into the firm misleading investors on a $1.3 billion subprime mortgage-backed security deal.
|By: David Dayen Wednesday August 1, 2012 10:10 am|
The SEC managed to lose a layup of a case against former Citigroup executive Brian Stoker, in a case which revolved around CDO sales where Citi has already agreed to pay fines on the grounds that they misled investors and took the other side of the bet. The jury literally gave the SEC a message.
|By: David Dayen Monday July 23, 2012 6:30 pm|
A little over five months after the inking of the foreclosure fraud settlement, and around three months since a federal judge blessed it and allowed it to go forward, people have begun to wonder whether the signature piece, the money pledged toward “credits” for a variety of actions, including principal reduction, has gotten off the ground. This Orlando Sentinel article is not encouraging and gets the confusion and dismay right.