If you haven't already read this book, I highly recommend that you do. Go now and order it from Amazon or download it onto your ipod. No one, and I really mean no one, could tell this story like Michel Lewis.
You don't need to know all the details about collateralized debt obligations and credit default swaps to understand that something was indeed very, very wrong. From the ratings agencies such as Moody's to the whales on Wall Street, only a handful of people truly understood the underlying risk of the sub-prime backed debt and its shockingly wrong AAA rating, and how to hedge against it.
Until Solomon Brothers led the way for the big firms to go public, effectively transferring the risk from the firm's partners to the shareholders, these kind of prop trading debacles couldn't have happened. Finally, when the whole system broke down, the cost of Wall Street's bad bets, and they were indeed bets, in fact pure speculation, not reasoned investments, the taxpayer had to foot the bill with TARP funding. OK, so there was a little shuffling. Bear Stearns was sold to JP Morgan for $2 a share. Bank of America was forced to take over Merrill Lynch. Lehman Brothers went all the way under. Morgan Stanley got absorbed into Citigroup.
Meanwhile, the Wall Street whales still got their huge bonuses at the expense of the taxpayer.
Was fraud committed, well that depends on how you define "fraud". Surely CDSs weren't being marked to market by Goldman Sachs and Morgan Stanley in an equitable way and CDOs were purposefully overvalued. Did Goldman Sachs take trading positions against their clients, well that depends on your definition of "trading positions" and "risk management". Goldman's smart guys clearly acquitted the firm in their Senate testimony.
By the way, if all of these financial scams are reminding you of the 1920s, we all have Sandy Weill and Robert Rubin to thank for the repeal of the Glass-Steagall act. Thanks guys for enriching your posse and leaving the little people to pick up the bill.
Home
»
government corruption
»
government waste
»
subprime mortgage backed bonds
»
the big short
»
wall street
» The Scam Of The Century
Wednesday, May 19, 2010
Popular Posts
-
The contact form has now been fixed! Just so you guys are aware.
-
BCBG printed silk dress on sale for $174 at bcbg.com Chanel "Coco" Ring for $6950 at Beladora.com Chanel 'Coco' Earrings ...
-
Kim Kardashian , born October 21, 1980 is an American “model” and “actress”. It is difficult to identify the nature of her “career”, bes...
-
Graffiti (singular: graffito ; the plural is used as a mass noun) is the name for images or lettering scratched, scrawled, painted or mark...
-
Angie Varona - Sexy Celebrity 2012 Angie Varona - Sexy Celebrity 2012 Angie Varona - Sexy Celebrity 2012
-
Leaving aside the vom-inducing colour palate and the clashing straps and wedge pattern, I have to ask what on earth is going on with that so...
-
Do want Hnnngghhh I'm jelly of the cat Sweet mother of Motor boat season! I'm 12 and... Holy smokes! I'm 12 and what is this? An...
-
Britney Spears 2011 , born December 2, 1981 in McComb, Mississippi and raised in Kentwood, Louisiana, is an American singer and a pop cultu...
-
I suspect that you read all the major shelter magazines Architectural Digest, Veranda, Elle Decor, etc. And I'm pretty sure that you too...