Santelli on Predatory Lending: ‘You can’t cheat an honest man’
Look at about the 5-minute mark of this video — Janet Tavakoli debating Rick Santelli about predatory lending. You basically have a whole panel of CNBC goons pooh-poohing the idea that predatory lending took place, setting up the inevitable revisionist history that the 2008 crash was caused by individual homeowners borrowing beyond their means.
My favorite part of this comes roughly at the six-minute mark. Tavakoli has just deftly explained how a lot of the predatory practices worked — people with limited financial literacy were presented with long and complicated mortgage deals, and told they would have a fixed payment in perpetuity or a guaranteed re-finance, or were nailed by fraudulent appraisals. Then she mentioned the big one, the fact that investment banks then took all these mortgages and with eyes wide open securitized them and sold them off as worthy investments to suckers on the other end of the chain.
While she’s saying all this stuff, Santelli, who is one of the fathers of the Tea Party movement, is shaking his head furiously, video-scoffing at everything she’s saying. When he finally does get a chance to speak, this is what he says:
Here’s my problem with this. It takes two to tango. You can’t cheat an honest man.
You can’t cheat an honest man? What the fuck does that mean?
This whole scene sort of encapsulates what’s wrong with the Tea Party movement. The movement, and let’s admit this, has some of its roots in legitimate grievances about government waste and some not-entirely-inaccurate observations about what’s left of the American welfare state. Of course what resonates most with the suburban whites who mostly make up the Tea Party are stories about minorities and immigrants using section 8 housing, food stamps, Medicaid, TANF and other programs, with the Obama stimulus being for them a symbol of this ongoing government largess. The heat of the Tea Party movement comes from the racial frustrations that actually exist out there, in the real world outside New York and LA, as urban expansion and immigration increasingly throw white and nonwhite communities together, with white Tea Party types more and more often blowing gaskets over increased crime rates, declining school standards, and mislaid or wasted tax revenue.
That this perception that minorities are the prime or sole consumers of government entitlement programs is absurdly inaccurate — white people, for instance, are overwhelmingly the largest nonelderly recipients of Medicaid, making up 42.8% of the program’s rolls nationwide, compared to 22.2% for blacks and 27.9% for Hispanics — is beside the point. The point is that the Tea Party is built largely on this narrative of “personal responsibility,” where the central demons are unwed black and Hispanic mothers and absent black and Hispanic fathers, who are, let’s face it, not uncommon characters in the American melodrama.
Which is another subject for another time, but let’s just say this: the Tea Party movement contains a lot of people who are far more impressed by what they can see with their own eyes than with what, for instance, they read about. I’ve been to Tea Party events where global warming was dismissed by speakers who, without irony, pointed to the fact that there was snow on the ground outside. And while very few people have ever actually seen a CDO manager or a Countrywide executive, or were aware if it when they saw them, the Tea Party folks sure as hell have seen who their neighbors in foreclosure are.
The Fox/CNBC types have very cannily latched on this narrative to rewrite the history of the financial crisis. They know that Tea Partiers will go for any narrative that puts blame on poor (and especially poor minority) homeowners, because the idea of poor blacks and Hispanics borrowing beyond their means fits seamlessly with their world view. But this is a situation where poor minorities were really incidental to a much larger fraud scheme that culminated in a welfare program — the bank bailouts — that dwarfs the entire “entitlement” infrastructure. But the millions of people who are actually in the Tea Party movement seem to have absolutely no idea that their so-called leaders, the Santellis of their world, are shilling for tax cheats and crooks and welfare bums of the sort they would despise (perhaps even more than their black and Hispanic neighbors), if they could actually see them.
But thanks to people like these CNBC goons, they don’t see them, and probably won’t. The further we get from the crisis, the muddier all of this stuff is going to get.
p.s. I seem to be getting a lot of mail from Ron Paul supporters about this, claiming that I’m overlooking the early Ron Paul tea parties and suppressing his message. I actually like Ron Paul and have said nothing but nice things about him. I talk to people in his office regularly. But the Ron Paul tea parties and these post Feb-2009 Tea Parties are two different things. Certainly the current Tea Partiers see it that way. While these folks may have lifted some of the Paulian themes, they’re just physically different people. They’re mainstream Palin supporters, and the reason I find them ridiculous is because I was covering these people while the bailouts were happening and remember what was actually on their minds back then. Does anyone remember what the cause of the day was when the AIG bailout took place? It was the uproar from Palin supporters about Obama’s “lipstick on a pig” comment.
The reason I’ve always respected the Ron Paul people is that, even though I don’t always agree with them, they’re intellectually consistent and motivated by actual policy issues. These Teabagger types on the other hand are just a giant herd of video sheep being jerked around by snickering DC-New York types, who are very skillfully playing on their cultural paranoia and their economic and racial frustrations. When they were told to flip out about Obama’s “lipstick” comment, they did. When they were told to flip out about the bailouts, they did. I’m not saying that some of these people weren’t frustrated about the bailouts, to the extent that they even knew about them, before Obama got elected. But they did not coalesce into a mass movement against them until part II of the bailout was passed under Obama’s watch, and one should note also that their keynote speaker in Nashville a few weeks ago, Palin, was a bailout supporter.
The Paul people were upset about deficit spending and Fed corruption throughout and ardently opposed Bush’s policies throughout his presidency. These Teabaggers did not. They were the people inside the rope-lines at McCain and Romney and Rudy events, complaining about “those people” consuming social services money, while the Paul people with their protest placards were physically barred from coming near the events. I must have seen that dynamic a dozen times during the campaign. So to all those Paul people, I hear you. I’m not trying to say you weren’t on these issues beforehand. What I’m saying is, this new Tea Party thing, it’s different from your protests, not necessarily because the message is so different, but because of two things. One, it was inspired by major-network media figures. Two, the people at the protests are overwhelmingly different people. They’re dupes; the Paul movement is more like a real grass-roots organization.
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If we are going to play Class Warfare we are going to have to do a better job at drawing the battle lines. Those who have done the long term damage to the country are removed from the fray, content to let us misdirect our discontent in internecine squabbles of little consequence, while they finish cleaning out the cash register. It’s the banksters and politicians on one side and everybody else on the other. They got the cash and we got the bill. “There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.” Warren Buffett NYT 11-26-2006.
Make a choice. What side?
…”It takes two to tango. You can’t cheat an honest man.”
Spoken like a true scoundrel.
It is beyond depressing the more I hear – not because I don’t want/need to hear it but what can *I* do about it? Nothing.
I remember Michael Moore encouraging people to ‘take to the streets’. Fine, I see his point. I however, was the only person outside on my street. I went through the 5 stages of grief, got cold and went back inside the house.
Seriously. It is really demoralizing going to work like a zombie ( for those of us who still have jobs) day in and day out and I am not seeing any resolution that is remotely encouraging. What is a citizen to do?
It’s hard to read these things without going full postal. The most infuriating people to me are the Frank Luntz types who cynically manipulate the ignorance of the average American. And there’s plenty of it to manipulate. Since Reagan, they’ve portrayed the government to be the villian in everyone’s life so when they run on that platform and win, as they often do, they can’t turn around and make the government work for the average person or it will undermine their entire political philosophy. GRRRR. It’s like hiring cop-haters to be policemen and then wondering why they do such a lousy job.
Off topic, sorry.
Goverment is not the enemy, and it’s not my mommy either!
In response to another comment. See in context »But who or what really is the Tea Party? It is hard to imagine the initial Tea Partiers would ever embrace Palin yet all of a sudden she is the face of the Tea Party Movement. Where did that come from?
Matt, I think you are oversimplifying this issue a bit. I can see both sides to the argument presented by Santelli and Tavakoli. No doubt many were misled on the terms of their mortgages but does that mean we “cover” their errors? Regardless of how we got here the person who cannot any longer meet his/her mortgage obligations should forfeit the home s/he should not have been in in the first place.
As to the investment banks, it is clear they knew exactly what they were doing when they securitized these mortgages. They are the ones who should be surviving or failing based on whether they can operate without tax payer bailouts.
What does “deserve” mean? Financially, deserve? You mean, after these folks were told they COULD afford a house and the balloon payment came…where did “deserve” come in?
How about the bank? Got to collect a few years worth of payments (several thousand dollars) and then booted the people paying them so they can have an asset at the same price or higher to sell to the next sucker! Did the bank deserve the suckers they cheated into signing a loan document. Do they “deserve” the collect 24 months of payments only to kick those people and sell the house at an inflated price to the next people?
“Deserve” is a weird word to use.
In response to another comment. See in context »“You can’t cheat an honest man.”
Isn’t that actually code for; “You can’t fuck him; he’s too dumb” ?
And how bafflingly easy was it to vilify a well-intended organization like ACORN? They admittedly got busted engaging in some duplicitous activity, but let’s not kid ourselves, Acorn’s biggest crime was helping underprivileged minorities find affordable housing and fight back against predatory lending. And God forbid one cent of your tax dollars should go to meet those ends.
So here you have an organization that is actively trying to ensure that lower-class minorities don’t borrow (i.e., aren’t exploited) beyond their means, and they get their funds cut off in a mock trial of public opinion. It’s bigoted and two-faced of these Tea Party organizers who purport to be behind a populist uprising, but only as long as that population is white and middle-class.
The very idea that lenders were forced to make risky loans is absurd on its face! Yet that is the consistent meme being farted around the internets. The powerless bankers had no choice but to lend to the evil lower classes. Christ! Open a window!
Hi, Matt.
Yep, you got it, but I wouldn’t say they are rewriting history, as by and large that’s the one that was wrongly crafted from the beginning. I’ve been waiting for it to be corrected.
I wrote a piece on the subject,[ http://therleepost.blogspot.com/2010/02/hercule-poirot-it-was-underwriter-in.html ], entitled, ‘Hercule Poirot: It was the Underwriter, In the Study, With the Fraud Instrument’ to help clarify the facts.
Also, your comment towards the end about ‘if the teabaggers knew’ points so towards a core problem. The mass of people just aren’t interested in details, and that’s true of the ‘left’ as well as the ‘right’.
I’m writing a piece now about the details of the so called ’stimulus’ bill. Dems just aren’t willing to look at the details there; their leaders are just as duplicitous as teabaggers and Republicans.
-RLee
http://therleepost.blogspot.com
“You can’t cheat an honest man” is something my grandfather used to say. The full version is:
“You can’t cheat an honest man, because an honest man isn’t looking to get something for nothing.”
It never made a ton of sense to me, but the way he used to explain it is that scams usually operate by promising ridiculous returns for little or no effort, and an honest man isn’t tempted by such. In other words, in his view an honest man would be categorically immune to something like the Nigerian prince emails.
So the douchebag is saying that all the people who got foreclosed on are to blame because they should’ve realized they couldn’t afford a house. Omitting of course that the reason they couldn’t afford the loan was because of adjustable rates and other financial arcanery that they didn’t understand.
Here’s how W.C. Fields put it in a 1939 movie:
“As my dear old grandfather Litvak said (just before they swung the trap), he said ‘You can’t cheat an honest man. Never give a sucker an even break or smarten up a chump.’”
From the perspective of a con man, it probably is easier to take a guy who is looking for something for nothing. It is a stretch, though, to equate that with the housing mania. The housing market was presented as legit by pretty much everyone. Even the administration was cheering it on, a frequent bragging point being that home ownership was at the highest percentage in our history. Most people weren’t looking to flip a house: they just bought into the rhetoric of the day that houses were a smart investment.
In response to another comment. See in context »The goverment has a bridge to sell you, it’s called healthcare!
In response to another comment. See in context »No, the reason they couldn’t afford a house is because … they couldn’t afford a house. The arcane ARM loans were what made the houses and re-fies temporarily affordable to many. If everyone had been required to put down 20% and sign up for 30 year fixed mortgages like our parents and grandparents, far, far fewer houses would have been sold and refinanced, and later foreclosed.
Your grandfather had a point. For decades, everyone knew that banks required 20% down that and home value usually did not exceed 3x verified income. Generations of people lived with those standards. Everyone knew they couldn’t buy a house until they saved up the downpayment or got it from grandma or whatever. Everyone knew it made sense for the buyer to have some skin in the game. It was only fair.
When banks loosened lending standards so that anyone who could fog up a mirror could get a loan, red flags should have gone up in the minds of all reasonably prudent people. Doesn’t matter if the government says it’s “safe.” Reasonable people should know loans that deviate wildly from traditional standards are not.
Of course, that doesn’t mean the whole housing crisis is the fault of greedy consumers. Anyone who suggests that is a partisan ideologue. Many banks and mortgage brokers preyed on people who were financially illiterate, and WS firms securitized gazillions in shaky loans with the intent to pawning them off on Fannie and Freddie, and ultimately us.
Con men can’t be successful unless their marks are ignorant and/or greedy. To the extent Santelli focuses only on greedy consumers, he’s wrong. But many who were ignorant should have smelled a rat when being offered something that traditionally was too good to be true. That doesn’t absolve the con men, of course, who were the instigators. You can’t stand on one side of the political spectrum and point your finger at the other side. It’s not a partisan issue, or at least shouldn’t be.
In response to another comment. See in context »The tea party movement is being led by the nose by the very people who are responsible for the issues that anger them. The bail-out? Phil Gram, a leader in the movement created the monster that ate our economy. Out of control spending: George Bush the younger.
You can’t cheat an honest man? Tell that to the victims of Madoff.
Charles Koch: “I want my fair share… and that’s ALL of it.” December 8, 2009, http://pr.thinkprogress.org/2009/12/pr20091208.
In response to another comment. See in context »In the CNBC video, Tavakoli naively puts forth the predatory lending as the lead, that the consumer borrowers were pursued with complicated fraudulent deals they did not understand. Isaacs lied when he said it was not the banks, but the nonbank lenders. Santelli said it takes two to tango – the borrowers and the lenders acted together; he is right. Here’s how it happened: the borrower JUST HAD to have the house, and would do or say whatever it took to get approved, other than come up with cash. The banks were just as guilty as the brokers; see Bank of America, Wachovia, Wells, etc. The fraud did not precede the deal. We got creative when it became apparent the deal would not work using full documentation. The borrowers were in on it, and were not lied to. They got the full explanation from the broker (we knew what it took to get the deal done), and again from an attorney at closing, who went over the onerous terms in detail. There were a number of separate riders that had to be signed at closing, disclosing the rate and terms including how and when and on what basis the payment would be adjusted and what bad things would happen if… The borrowers got a full copy of the whole package. If the deal was a refi, the borrowers had 3 days to turn down the deal after closing. Regarding the banks that securitized the deals, they had staff to do the reviews of the loans before they were securitized and sold. They knew the programs were loose. If they did not do the business another lender would. If the lenders had to keep the deals on their books, if there were no secondary market where they could sell them off as AAA paper, many of the bad loans would never have been done. In short (?) everybody was in on the scam with eyes wide open, there was ample consumer protection then and we don’t need more redundant legislation now.
Your description of this process only strengthens the case against the lenders. It’s not hard to see how the inherent complexity of the process and the unavoidable need to rely on “experts” would severely and structurally disadvantage the average borrower.
Let’s say you have some education and possess the average American’s knowledge of finance and contract law. Let’s say that you have been renting a small place and want more space for your family, but you don’t know how much space you can afford. You are extremely responsible with your personal finances; you know EXACTLY how much disposable income you have every month. You recently were promoted and given a raise and a bonus, you see the stock market climbing every day and of the many people you know who recently have switched from renting to ownership, most have seen their property values increase. Let’s say further that the concept of a “housing bubble” is completely foreign to you, which would put you in the company of Alan Greenspan and Ben Bernanke. This deserves repeating: in the middle of an $8 trillion housing bubble, our nation’s leading financial markets authority repeatedly stated in public that there was no housing bubble. Not only would housing prices continue to rise but they would continue to do so from already unprecedented highs!
So let’s say you enter into a mortgage application process under these conditions. What defense do you have against the team of lenders, attorneys, brokers, and appraisers on the other side of the table? What negotiating leverage do you have? What technical knowledge can you hope to avail yourself of in the event that someone might, just might, have a slightly skewed financial incentive to sell you that damned house, even if you might not be able to afford it sometime in the distant future, at which point all risk will long have been passed to so many different parties that literally no one can keep track of it? (Santelli would probably reply with something to the effect of, “HELLLOOOO… Have you heard of hiring a LAWYER??? ARE YOU LISSSSSENNNING???” but that is so self evidently stupid in this context I will assume it’s not worth addressing.). And even if you were to be instinctively skeptical, on what basis would you question your lender’s conclusions, particularly when they are supported by attorneys, brokers and appraisers, all of whom have exactly the same financial incentives, i.e., to close the freaking deal?
And here’s a more subtle point, but one that is critical. As a potential first-time homeowner in the situation described above, you likely have never heard of securitization. In light of this, would you have ANY REASON TO BELIEVE that your lender DOESN’T ACTUALLY CARE IF YOU DEFAULT? Of course not. If you had learned of this fact and understood its implications beforehand, I think it’s at least likely that you might view your lender’s claims about affordability, appraisal value, etc. with a bit more skepticism, and feel more confident in that skepticism, even absent any additional financial knowledge. Rather, what we had was a situation in which you had reason to believe the opposite, that your lender actually had a financial incentive to keep you in your home, when it in fact did not. That’s perverse.
Put it another way, given the “hot potato” approach to default risk enabled by the securitization market, did anyone among the lenders, attorneys, brokers and appraisers have any financial incentive to NOT mislead its customers?
Of course there are bad lenders and borrowers as surely as there are good lenders and borrowers. But the incentives aren’t even close. And to broadly paint this massive clusterfuck of a housing crash — which comprised a pervasive and purposeful gutting of lending standards and capital controls across the financial sector — with the no-fault, “we all make mistakes” nonsense is to selectively ignore the overwhelming persuasive power of $8 trillion worth of economic incentives.
In response to another comment. See in context »That was an excellent response to the oversimplified notion that borrowers should have known better. Hey, we’re all human! Maybe we should all know better! But that isn’t realistic. The system was gamed from the beginning. Throw in the feel good “American Dream”–everyone should own their own home–the economy is fine– BS that came from the POTUS on down, what would you expect from people? At least in the garden of Eden, God warned Eve not to bite the apple, as opposed to telling her everyone needs a little fruit in their diet.
In response to another comment. See in context »Well stated
In response to another comment. See in context »History will ignore dunderheads like Rick Santelli.
The facts should lay to rest your concern that the truth about mortgage origination abuses. Remember. you can always look to the demise of Bear Stearns, Lehman Brothers, Countrywide, IndyMac, New Century, Washington Mutual, and a host of other defunct firms. Even FNMA and FHLMC. They all had one thing in common: subprime and/or alternative mortgage loans.
There are two specific issues though, albeit they are not mutually exclusive: mortgage origination abuses and a housing bubble. Yes, unscrupulous, predatory, and fraudulent practices took place on the loan origination side. That was the fuel to the fire, but it wasn’t the spark. As a society, we jumped off of the tech stock bubble looking for the next quick buck, and after tech stocks cratered who could argue with bricks and mortar? The lingering investment euphoria led to the belief that housing prices never fall, homes make good investments, and the momentum of ‘the next buyer’ will never end. As individuals, we got caught up in living beyond our means, leveraging up, and trying to make a quick buck. As a government, we failed to properly regulate lenders, the appraisal process, underwriters, and others associated with fueling the fire.
In the end, despite the public’s frenzy towards buying homes, the ensuing housing crisis would never have happened without the fuel: excessive debt. The spark wouldn’t have created a bonfire. So you simply cannot dismiss the lenders and packagers of debt.
I have a feeling that history isn’t going to ignore Santelli. He has created discourse, he is the man! So join your local Tea Party and ride the wave to the voting booth!
In response to another comment. See in context »Matt, I am not a Tea Party member, nor have I been to any of their events — but I do know several who do. And your characterization of them is off the mark.
Yes, they are pissed about government spending and largesse. But the ones I know who were two-shoes in before anyone had labeled it a “movement” were very articulate about their concerns. It was the TARP, it was the reflexive posture that government must fix things, and costs be damned for the patch.
I scoff at the notion that Tea Parties are founded out of xenophobia or resentment against Obama or racism — because Bush was president when it all began.
Now, did the later rallies attract that element? Yes. And it diluted the message greatly. It also diluted the aggregate IQ. But you’re not guaranteed to confuse an opposing demonstration with a rocket science convention, either.
You haven’t been to any progressive or socialist demonstrations, then — we’re all brilliant rocket scientists, in fact. It’s clear you’re no Einstein!
http://monthlyreview.org/598einstein.php
(Sorry, I’ve been waiting to use that line.)
In response to another comment. See in context »Quoting Einstein:
“…we should not assume that experts are the only ones who have a right to express themselves on questions affecting the organization of society.”
I have to agree with him: It *IS* a bad idea to assume that “experts” can know enough about something as complex as an economy and manage it from the top down.
In response to another comment. See in context »Bush wasn’t president when it all began. The Tea Parties began after a Santelli rant in February of 2009. I just went to a first-year anniversary event for the Tea Party.
And do you know what’s funny? Even at that event, people were pushing the line that the Tea Parties had begun after the TARP and the bailouts. One speaker even placed the Santelli rant in response to the TARP. Classic revisionist history, and this was just a year ago.
The Tea Party was 100% a post-Bush phenomenon.
In response to another comment. See in context »Matt, you are absolutely wrong. The tea party began during Ron Paul’s presidential campaign to replace Bush. The original tea partiers were as much anti-Bush as they were anti-Obama/Clinton. I am a Ron Paul supporter and was a member of the original tea party group. It WAS NOT Republican movement at that time and it was not post-Bush. You should have dug a bit deeper.
In response to another comment. See in context »anntink, that just isn’t true. While Ron Paul had a fund-raiser in 2007 on the anniversary of the Boston Tea Party, that was not connected in any way to the Tea Party Movement which came more than a year later.
Do a Google News archive search on “tea party” and you can see when the term started appearing in the news with the connotation it has now: the first quarter of 2009.
Fox News is a big supporter of the Tea Party Movement, and do you not recall their horror that Ron Paul was being voted the winner in their polls after all the GOP debates he was in?
(I agree with you that the original Tea Party Movement was not billed as a GOP offshoot, but it was pretty uniformly made up of die-hard Republicans who couldn’t stomach defending Bush’s record.)
In response to another comment. See in context »If I understand you correctly, you’re saying that the Ron Paul tea parties didn’t exist because you, Fox News or some other respected media, did not officially recognize us. We did in fact have tea parties long before the election whether recognized or not. We mostly had to film them ourselves since no one in the MSM was interested at the time. I suspect the success of our tea party inspired the Republican takeover after the election, which they did by simply outnumbering us. Fox News’ support of the current Tea Party has nothing to do with its origins. And finally, while many of our group were Republicans, many more were libertarians.
Attached is a photo of Ron Paul Tea Party held in Austin in 2005.
http://www.flickr.com/photos/14931195@N08/2117396276/
Also are a couple of interesting Youtubes:
http://www.bing.com/videos/watch/video/vegas-tea-party-down-with-fake-money/9ac2cf5058693b2b513e9ac2cf5058693b2b513e-1596477014636
http://www.bing.com/videos/watch/video/ron-paul-tea-party-sanat-monica/4f29a2cdacf86409bf124f29a2cdacf86409bf12-15971383
In response to another comment. See in context »Uh, no. The Ron Paul thing was not connected to the modern Fox/CNBC Tea Party business. The Tea Party in question absolutely, 100% began in response to a February 2009 rant by Santelli calling for a “Chicago Tea Party.” Check it out:
http://www.cnbc.com/id/29283701
I covered the 2008 election wire to wire and never once ran into the Tea Party, anywhere. I’ve since been researching it for a book and have attended meetings. Though many Tea Partiers actually believe it began earlier, when you ask them what inspired them to join, they inevitably point to the Santelli rant. This mass delusion that the Tea Party began at the end of the Bush presidency — when in fact most of the Tea Partiers were spending most of their time flipping out about Bill Ayers and Reverend Wright and supporting Sarah Palin, who was a bailout supporter — is really a fascinating thing. It would be obnoxious, except that a lot of these people seem to believe it.
In response to another comment. See in context »Yeah, I have been very confused lately by statements from people that seem to lump this current tea-party movement in with the Ron Paul fundraising activities of two years ago.
It’s just not true at all and I wonder what the motivation is for doing it – I guess it helps to give them some credibility and walk a little further away from the ‘we hate obama because we hate obama’ crowd.
The current tea-party movement sprung up in conjunction with Glen Beck’s weird 9/12 project which still exists somehow but is really just a smaller subgroup of the teabaggers.
When Beck starting promoting his first 9/12 demonstration/rally I think he realised that the numbers were going to be pathetic due to the ridiculous lead time between him announcing it on his show and the first actual rally.
So, Beck and Fox in general latched onto the Rick Santelli ‘tea party’ call, and created this teabagger movement, and Beck’s 9/12 project pretty much melded with it on the first day of those nationwide tea-party rallies that Fox promoted for weeks and participated in extensively.
And that’s where the loony part of the teabag movement comes from. The bunch of people who were motivated by Santelli were mostly fiscal conservatives who were generally quite rational about what they were unhappy about.
But at the first rallies, Beck’s 9.12 project turned up with Obama-as-Hitler placards and crazy birther bullshit, and this is the group that is contributing the racist element to their rhetoric.
Of course, since then the line between proper teabaggers and the 9/12 nutters has blurred, and some of the regular teabaggers have embraced some of the crazy’s ideas.
But that’s how I see the history of this ‘movement’. The 9/12 people will eventually be squeezed out because they have some financial and political momentum now and the fringe elements just won’t survive. And if you take the 9/12 tinfoil-brigade element out of the movement, the people who are left do have some very legitimate concerns and even some reasonable ideas for solutions.
In response to another comment. See in context »Based on what the Paulites are saying, it seems to me that the leaders of the GOP saw what had been going on with the libertarian wing of their party, and decided to co-opt it.
The GOP tried to take that energy and direct it in whatever direction they saw fit. Racism has worked pretty good for them since 1968 so why not try to get their base all riled up over the black president and all those minorities that couldn’t afford their mortgages.
What the GOP didn’t count on was that once they riled all those people up, the movement would become very hard to control. Although there are a number of racists that show up to do some teabaggin’, it seems like most of the anger is focused at big government and big banks. That seems less social conservative than libertarian to me. I’m pretty sure that’s not what Dick Armey intended.
In response to another comment. See in context »Are the Ron Paul people and the Tea Party all that different?
Similarities:
1) Racism. Check out Ron Paul’s voting record and public statements on civil rights and civil rights. His newsletter is similar. Try to find a difference between Ron Paul supporters and Tea Partiers on the issue of ACORN and Reverend Wright.
2) Pro-corporate agenda. Aside from banks, Ron Paul consistently speaks in favor of and votes in favor of corporations. He was a plaintiff in an early version of the Citizens United Case. Also, his position is sufficiently anti-regulation that it would be a surprise if he supports bank regulation other than the destruction of the Fed.
3) Religion: Not far from the pro-theocracy position
4) Taxes: flat tax
5) Social Welfare. Like the Tea Partiers, The Ron Paul position is that if someone is unemployed, that is their fault. See, for instance, the collaboration between the Ron Paul people and Jim Bunning no unemployment.
6) Environment. Ron Paul people and Tea Partiers share a the view that global warming is a hoax. Both, in service of their corporate masters, have been opposing all environmental regulation and protection.
7) Worshiping Ayn Rand
So — where are Ron Paul and the Tea Party potentially at odds?
A. Foreign wars
In response to another comment. See in context »B. habeas corpus — Although Paul did not bother to vote on the military commissions act so perhaps he is less of a supporter of habeas corpus than he has been saying
C. TARP
This is a reply to anntink’s followup to cruss’s comment, but there’s no ‘reply’ link on her post so I’ll reply here.
Anntink, nobody is saying that Ron Paul supporters didn’t have tea parties. We know they did.
But those events were 100% designed to raise money for Ron Paul’s campaign. They were not there as a forum for people to complain about the gummit, call Obama Hitler, or bring loaded weapons.
The Ron-Paul based tea parties obviously stopped occuring after his campaign ended.
Later, ofter Obama was elected, and the bailouts happened, and unemployment started skyrocketing, a new tea-party movement was started that had nothing at all to do with Ron Paul. It was a reflexive reaction to both Obama’s presidency *and* the bailouts and every other sign of corrupt and unconstitutional behaviour by the government.
The first major tea-party rally for this new movement was the day that Fox heavily promoted with many simultaneous gatherings around the country, and where Fox people like Hannity and Beck were there MCing the events at different places.
Now, *you* personally may have thought that this was a continuation of the movement you were involved in with Ron Paul. Or, your entire Ron-Paul-supporting local group might have migrated over to this new Tea Party movement as if it was the same thing.
But that’s not true for 99.99 percent of the people who turned up to tea parties around the country that day. It was a new thing, all about patriotism, guns, freedom and (for some of them) ‘who let that nigger in the white-house?’.
It just doesn’t make any sense to equate the two groups of people – as cruss says below, Fox was rigidly anti-ron-paul during the campaign but they *love* this new tea-party. And Ron campaigned on a platform that required the *immediate and unconditional* withdrawal of ALL overseas troops from their bases and return them to the USA.
The current tea-party crowd has been pro-war from the first day they gathered.
All this confusion occurred purely because Dick Armey and all the other GOP operatives who were fermenting the current tea-party movement realised that harking back to the boston tea-parties was a fantastic way to get people to get onboard even if *nothing* about the new movement had anything in common with the original tea party. They just stole the name from Ron Paul’s campaign and probably got a few members that way as well.
But it’s not the same organisation, doesn’t have anything like the same goals, and never has.
In response to another comment. See in context »Well, if your point is that their are racist over tones, it’s a bit superfluous to it all. Do you think if Obama was white as a sheep, the venom from the right would be any less?
In response to another comment. See in context »-Robert
http://therleepost.blogspot.com
Yes, I do think that. It is the exact same thing as “I don’t have anything against black people, I just don’t want one dating my sister.”
In response to another comment. See in context »That’s the “anything”, isn’t it?
….beofre we start looking for an hoinest guy to cheat in a loan deal….let’s see if we can find one honest senator or congressman
In response to another comment. See in context »Matt – I may see this differently than you.
The first of the “modern-day” Tea Parties happened here in Birmingham in 2003. It was a protest against a sitting Republican governor, for what was termed as an over-reach of state authority. Fire marshals had to turn people away.
In 2008, the same group of people kicked up protests against the TARP, under the local moniker of the Rainy Day Patriots.
Now, has a group of very ill-informed and somewhat racist reactionaries hijacked the “Tea Party Movement?” Yes.
And is the GOP just rock-solid stupid for trying to co-opt this hijacking for populist shits-and-grins? Yes, because it plays to the worst stereotypes, and it will backfire.
But the original sentiments behind the modern Tea Party idea predate Santelli. That’s why we’re disagreeing about where it’s gone.
In response to another comment. See in context »Matt,
In response to another comment. See in context »You may be technically correct that the santelly rant triggered the name for the movement, but I am not 100% convinced about your revisionist history claim. I remember the pure anger in my republican heart after TARP and writing to every congressman I could (like thousands of others). I remember his rant, and my feeling that I was glad someone was speaking out. I disconnected the rant from the movement in my mind, but have been sympathetic to the cause, even as I have lost sympathy for Santelli (who seems in bed with corrupt wall street). It is classic to use racism as a motivation for those you disagree with, and even more classic to say those you disagree with must be ignorant. I am suspicious of more bank regulations simply because Fuld is not in jail. What he did had to be illegal, and the government not seems complicit in corporatism. The regulation to cut crime should be to lock up criminals first, then perhaps we can consider limiting the movement of all poor people who tend to look criminal.
The Rant heard round the World was one of only many great Santelli rants. The day of the Tarp vote he was fighting with his own channel. He told Maria Bartoromo that he spends more time picking out a car then the Bush administration took spending a TRILLION dollars of the taxpayers money. If you don’t do your homework, you will look as stupid as Jon Stewart did( trying to take down Santelli.) Santelli has called out all administrations over the years. Matt we can’t do your work for you, please take responsibility for what you write. You really should apologize to your followers (and Santelli) for this piece, it is substandard work!
In response to another comment. See in context »The Tea Party people are right, Santelli has been against all of this well before Obama was in office. You just took a sound bite Matt and tried to make it more then it was. Rick has been over every aspect of this topic over and over. The blame goes all around, banks, gov. Freddie/Fannie and yes homeowners. Lucky for Rick, his many followers have documented these exchanges, just look on youtube. Tavakoli hasn’t said anything Santelli hasn’t brought up first. Like Rick said during the rant, this is how people feel. So the sentiment was there.(hamburgers before McDonalds) Do you know what’s not funny? That I think the people in the media like you are trouble making racist . One of the biggest problems people have is they can no longer trust the media, most journalist have no integrity. Like you, they make some crap up and pawn it off like truth. When you get paid to write, people think you actually know what your talking about. Then throw in the race card for no apparent reason and try to make us feel like it is only blacks and latinos that have caused this mess, while projecting your feelings onto people like Santelli. Santelli is one of the few good people left in the media.
In response to another comment. See in context »Yeah well… as you know… if the thieves want to keep on stealing then they have to blame the victims. And Lord knows they are addicted to stealing at this point… the withdrawal would be worse than an episode of celebrity rehab. They have no ability to see the carnage they have inflicted… they see the victims as willing participants.
Santelli, Beck, any of these assholes would gladly argue the other side of any issue if the pile of money was bigger on the flip side. They have the Tea Baggers right where they want them. Vulnerable and anger… we’ll all wind up voting the slave masters back into office this November… and they will gladly crack the whip
Aimlow Joe http://www.aimlow.com
back in 1998 – 2002 I was a commercial mortgage lender and a lot of us saw this coming even back then. we lent 50% – 65% at 16.5% interest, points up front and huge pre-pay…Then securitized these crappy loans with Bear Stearns…250 M per quarter.
the point is that as crap as those loans were and the large percentage that did go bad and fall out of the securitization, they were gold compared to the residential loans with virtually no underwriting that the investment banks were buying up. The banks knew the loans were shit…i think that they all thought they would get a bail out…bye bye lehman and Bear.
If Mr. Santelli is right, and by extension, then every investor in Madoff was dishonest.
Mrs. Santelli is an AssHat
The problem is, that’s not so far from the truth.
There were a great many Madoff victims who said things similar to ‘well, I always wondered why his returns were so much better than anything else, but as long as the money kept coming in, I wasn’t going to ask too many questions.’
And lots of them started with a small amount in Madoff, then gradually moved ALL of their money into his hands because the returns were so great.
I’m sure there’s plenty of people who were completely innocent, but there were also a LOT of Madoff investors who should have known better, and could have taken steps to protect themselves, especially the institutional investors. A lot of those should be in the slammer as well.
In response to another comment. See in context »Excellent blog post, Matt. There was an exchange last night on Michael Savage’s radio program where a caller managed to evade the call-screen system and actually challenge Savage on the tea party movement. The caller managed to say the movement is racist and pointed out the signs at rallies depicting Pres. Obama as a monkey, etc. Savage didn’t really allow the caller from Vermont to make his point — no surprise there — but if he had been given a chance, he could have said what you’ve mentioned here. Thanks.
“the Tea Party movement contains a lot of people who are far more impressed by what they can see with their own eyes than with what, for instance, they read about.”
this is a perfect description. i’ve debated with teabaggers a few times and ANY time i try to explain the graham-leach-bliley act or the commodity-futures-modernization-act their eyes gloss over and they ALWAYS just shake their head just like this dimwit in this video.
it’s so much easier for them to focus on food stampsand welfare than complexly larger and darker forces that have been beyond their control for the last 10 years or more.
much as they’ll try to deny it, most of these people were ardent supporters of the republicans, ignorantly cheerleading bush into two terms and now, knowing of the consequences, don’t want to deal with the deficit or taxes like adults (hello, senator bunning).
they blame ALL of this deficit and these problems on obama’s spending and warn you about a socialismaggedon that will never happen. and any time the debate gets tough for them they just ignore you whip out a quote from one of glenn beck’s latest idiotic rants.
Perhaps you should get smarter friends. There are plenty of coherent libertarians.
In response to another comment. See in context »I have to admit that it was certainly true that the people who put their John Hancocks to the adjustable rate mortgages with no money down were not “honest men” in the sense that the deal was so good, they took it where an honest man would have walked away from it. Their small bit of larceny, of “gonna get mine”, however, is nothing compared to the huge fraud of securitization of these same agreements. CNBC, of course, is nothing but a bunch of shills for the Wall Street casino. To expect anything helpful from them is to wish for rain in the Sahara.
it’s snowing outside, that must mean that climate change is a hoax.
the housing bubble burst, it must be because of minority homeowners.
i can’t see the curvature of the earth from where i stand, the earth must be flat.
The blonde “journalist” reminds me of a sports writer who’s too chickenshit to talk to an athlete about alleged steroid abuse for fear that she will no longer have access to the athlete. She’s a bs apologist for these criminals. She’s about as tough on the banks as Jim Nantz might be interviewing Tiger Woods. Ultimately Jim will have you thinking it more the fault of those dirty whores throwing themselves at poor Tiger.
At least Kudlow, who, like Jim Cramer is always wrong, is consistent. I wonder what bugs he and Santelli more; the fact that their golden goose, Wall Street has been raped and shamed and they didn’t get out of the gang bang fast enough, or that they knew there was going to be a gang bang but they just didn’t know where?
True cramer is an idiot liberal.
In response to another comment. See in context »“The further we get from the crisis, the muddier all of this stuff is going to get.”
Matt, buddy, this crisis isn’t going anywhere.
Please tell me you aren’t drinking the ‘recovery’ kool-aid. When all the bailouts, subsidies, tax credits and unemployment comp ends, and it has to some day, make sure you know someone with a submarine cause we’re ALL gonna find out what it truly means to be underwater and we’re not going to be able to just ‘walk away’ this time.
you’re a socialist, larry kudlow http://www.youtube.com/watch?v=Lkqb1pQrCcg
I suppose it could be labeled simply as stupidity, but what the Tea Party represents primarily is the face of intellectual laziness. Surely there are some individuals in this group who, as stated, may have legitimate issues with government waste but are far smarter than the empty cries regarding taking back the country, it being too late, and all the other bullshit. The Tea Party is vague enough to allow people riled up by douchebags like Beck and Limbaugh to combine all the dissatisfaction with their lives into the grotesquely simplified (and meaningless) battle cry of “taxed enough already”.
Matt – enjoy reading your blog. My comment is on the white people’s 42.8% share of non-elderly medicaid rolls nationwide. I think this is a bit misleading. Using the website you linked, the percentage of white people on n/e medicaid was 8.56% of the total white population compared to 23.86% for blacks and 23.10% for hispanics. I believe the differences in these percentages are where some frustrations lie..
Matt, I like and respect the vast majority of your stuff. However, I think this piece is weak on several levels. Essentially you’re taking a page from the body politic which you typically hate: Reducing a complex issue down to a bait and switch sound bite. You’re usually better than that.
I think you should have:
1. Defined the scale of predatory lending as compared to the entire housing mess.
2. Discussed what portions of the Consumer Protection legislation would plug any holes that led to #1.
3. Discussed why the existing legislation regarding #1 was not enforced.
I also think the leap from this discussion to Santelli’s purported Tea Party support to the race baiting bit was poorly executed. You pretty much come off as taring Santelli with that brush. In the video he’s saying that the folks doing the Predatory lending should be sued, so I don’t think he is trying to blame the poor – and by your train of thought in this post that means minorities.
A sensible comment at last!
A CBC Fifth Estate documentary (Canadian version of PBS Frontline/CBS 60 minutes), which can be seen here: http://www.cbc.ca/fifth/2009-2010/house_of_cards/ documents predatory lender that wound up working for Lehman Bros.
In response to another comment. See in context »Sorry, that should have read “working with Lehman Bros.” not working for.
In response to another comment. See in context »To your central point, honest people are more often than not the easiest to cheat. People tend to project their own character on others. So, many honest people fall for a scam because they assume the perpetrator is being likewise honest with them. Santelli is a lying prick.
I’m sorry, but tea baggers are nothing more than hysterical white racists carrying misspelled signs who are so stupid that they rail against things that are actually in their own self-interests. It’s scarey and disheartening that so many ignorant people can be herded together and manipulated so easily by the likes of Santelli and Dick Armey.
Don’t you just love the word assume? To take to be the case or to be true; accept without verification or proof; “I assume his train was late” What’s scarey is how many ignorant people are herded together and so easily manipulated by the likes of trolls like Taibbi.
In response to another comment. See in context »Totally misleading article. Santelli had nothing to do with the origins of the recent tea party movement. It was started by Ron Paul supporters (although quickly taken over by Republican strategists). Santelli was a late-comer, who tried to jump on the bandwagon. The misrepresentations of race of those on Medicaid was also disappointing. Manipulation of facts to make a point is the type of journalism I was trying to escape.
How in the fuck is this article misleading? Arguing that Santelli was a “late-comer” to the Tea Party is beyond ridiculous. Do some research. You can probably youtube his bullshit rant from February 19th 2009 which was a main catalyst of the “movement”.
Also, how were there misrepresentations on the race matter pertaining to Medicaid?
I must say, calling out Matt for “manipulating the facts” gave me a hearty laugh. I’m not trying to blow Taibbi on his own blog, but Jesus, he’s the one journalist out there with a pair of fucking testicles between his legs when it comes to taking on assholes like Santelli.
In response to another comment. See in context »If Taibbi has such big cahoonas, I’d love to see him debate Santelli on CNBC. I’ve seen Mr. Big Balls on MSNBC, stumble on and on about toxic assets. The turds on that channel had NO idea if anything he was saying was right. It was a joke all around- HA! Sounded to me like he was passing off Sorkins stuff as his own. I may be wrong. So harmabum let’s all see how big his pair is. I will bet on Santelli. I just hope this isn’t about you talking dirty about Taibbi.
In response to another comment. See in context »You might try and read the existing comments before posting stuff that’s already been covered.
The fact is, the Ron Paul tea party fundraising events have no relationship of ANY sort to the current tea-party movement that started after Obama took office.
The only relationship is that the people who started this movement were enchanted by the ‘tea party’ name used to invoke memories of historically patriotic events.
There may well be Ron Paul supporters who have joined this new Tea Party bandwagon, but the people who ran the Paul fundraising had nothing whatsoever to do with the current tea-party stuff.
In response to another comment. See in context »Ron Paul’s tea parties were not just “fundraising events.” They were also political protest movements, including protest against the Federal Reserve. Nevertheless, you guys seem determined to rewrite history in your own image so I’ll leave you in peace. If you were really interested in the truth of the origins of the tea parties, you’d check with some Ron Paul people, but I doubt you’ll find any of them among the current tea party crowd.
http://www.bing.com/videos/watch/video/vegas-tea-party-down-with-fake-money/9ac2cf5058693b2b513e9ac2cf5058693b2b513e-1596477014636
In response to another comment. See in context »When, if at all, will you be commenting on the Vanity Fair story?
Matt – years ago I read a passage in ‘Gone With The Wind’ wherein Ellen O’Hara explains to Scarlet the realities of black people. “Always remember, dear…you are responsible for the moral as well as the physical welfare of the darkies God has entrusted to your care. You must realize that they are like children and must be guarded from themselves like children, and you must always set them a good example.”
Every damned time I listen to someone like Tavakoli excuse someone from responsibility for their mistakes because that person was too ’simple’ or ‘innocent’ or ‘naive’, I just hear Ellen O’Hara all over again patting the darkies on the head, except Ellen’s words are now reworded into Tavakoli’s PC speech of the 21st century. PC speech doesn’t disguise that it’s still the same condescension, same belittling and dehumanizing of people as too childlike to care for themselves. Bull! This kind of thinking is what got us and Fannie Mae and Freddie Mac into the hot water we’re now in.
Matt, I totally agree with you that the bulk of the financial crisis does not consist of the unfit homeowners who bought houses they couldn’t afford. The worst damage was done by the banks and brokers who first gave mortgages to people who couldn’t afford it, than bundled those same worthless mortgages as AAA value. Dollar for dollar, I would say that the damage of the banks/brokers was 4 to 5 times the damage inflicted by the unfit homeowners. That being said, however, the ‘Ellen O’Hara’ mode of thinking is what started this ball rolling in the first place. Before there could be bundling of worthless mortgages, there first had to be the worthless mortgages themselves. And those worthless mortgages could not have been made without the government, Barney Frank, Freddie Mac and Fannie Mae, etc., all buying into that ‘Ellen O’Hara’ style of thinking as they enacted legislation that demanded banks give mortgages to people who couldn’t afford them.
And those home buyers KNEW they couldn’t afford those houses. You can’t get around it – those people knew. I don’t buy this crap about ‘confusing’ language in the mortgage papers. Bull! Those people knew they couldn’t afford that house on their own terms – but they bought it anyway. So enough with the ‘poor little them’ PC talk. It’s time to hold people accountable for their actions. After all, if we hold Goldman and AIG and the banks and brokers accountable for their actions, than we must hold ALL of the people responsible, which includes the homeowners themselves. Enough with this damned ‘Ellen O’Hara’ mentality. It’s gone with the wind.
“After all, if we hold Goldman and AIG and the banks and brokers accountable for their actions, than we must hold ALL of the people responsible, which includes the homeowners themselves.”
Ummm…can you please explain how we held them accountable? Last I heard we essentially gave them a fat check which then went into bonuses…
That’s the most infuriating part about all of this. NO ONE was held accountable for their actions. If they were, we would have Sweden’d the banks, spent the money correctly, and thrown all those assholes out on the street. Instead we essentially gave a blank check to a bunch of jerk offs that got us into this situation in the first place AND let them keep their jobs.
In response to another comment. See in context »Okay, dharmabum81 – you got a good point. (I wish you didn’t and my 401-K also wishes the same.) Yes, we did NOT hold the banking/broker assholes accountable and instead rewarded them. However, the main point my beautifully eloquent (well, at least I think it was) post wanted to address was Tavakoli’s damned ‘let us absolve the innocent, naive childlike home buyer of their sins’ PC-crap.
In response to another comment. See in context »I see what you’re saying, but the main problem is that the financial people are professionals, the average person is not. We can have all the regulation in the world, but our system can not (and will not) work without some basic level of ethics involved. The problem is that these guys don’t care who they fleece…even if it’s millions of people as long as it means they can add a few more zeros to their bank account. Truth is, it’s sickening.
Let me give you an example: How much of an outpouring of rage would there be if doctors started overtly prescribing meds that were directly HARMFUL to you. Sure, we should know what we’re taking and the uber responsible person would look up whatever the pill was before taking it regularly. But at the same time, the doctor is a professional and should give off some level of trust that what you’re going to take isn’t going to kill you.
That’s what these guys did. Sure the people should have known they couldn’t afford these loans, but when you have a professional in the business across the desk doing everything they can, dropping financial jargon and whatnot, to make you believe you can afford it….then why wouldn’t most people believe them? Essentially these guys pulled of one massive sleight of hand trick which has left them rich, thousands of people with no homes, and millions with jacked up bank accounts.
Also..I’m truly sorry about the 401K, it’s awful watching this bullshit happen to people. I’m a 28 year old teacher in LA and we’re feeling this economy HARD…so I sympathize…
In response to another comment. See in context »In response to the rant on welfare moms (common during Reagan as well) and immigrants, I have for years advocated that ANYONE receiving money from the federal government -all of the tax credit/grants/subsidies / contractor payments (for things like low income housing credits for developers rampant with fraud and for a lot more money) should have to go to a building with a big sign that says WELFARE to pick it up. It is all the same thing except packaged with a different label and the color of who picks up the check is different. Most people would roll their eyes at me, but it is all the same. They used to do the same when I would simplify insurance as just government guaranteed gambling–insurance companies essentially gamble that they can make more money off of the premiums paid than what they pay out and they get breaks from the government to do so. People might then realize all the ways federal funds are disbursed and to whom. Agriculture subsidies for corporate farms anyone?
You absolutely CAN cheat an honest man. Or at least attempt to. Obviously, Mr. Santelli is not familiar with either USA/Curry v. Fairbanks (281,100 FTC-certified victims) or FTC v. EMC/Bear Stearns (86,000 FTC-certified victims).
He is also obviously blatantly ignorant of Mortgage Servicing Fraud in general. Maybe if he read Kurt Eggert’s “Limiting Abuse and Opportunism by Mortgage Servicers” or Katherine Porter’s “Misbehavior and Mistake in Bankruptcy Mortgage Claims” or Maureen McGrath’s 2004 testimony before the House Subcommittee on Capital Msrkets, Insurance and Government Sponsored Enterprises – http://www.house.gov/financialservices/media/pdf/061404mm.pdf , or attended one of Attorney Max Gardner’s Bankruptcy Bootcamps maybe he’d learn something. Or am I asking for too much?
I agree with you wholeheartedly…the only issue I take with you Matt is this line
“The further we get from the crisis, the muddier all of this stuff is going to get.”
not that this isn’t the case, because I constantly have to re-argue basic tenets of what caused this particular collapse almost every other day from people who go so readily back to the narrative of “Those” people getting liar loans collapsed the system…
no I don’t think it is gonna get muddier because we aren’t are headed away…but headlong into another Crisis because NONE OF THE MONKEYSHINES HAVE STOPPED!!!
I hear that. I think what I meant is, as we get farther from Sep 2008.
There’s an attitude with some of these people that almost resents the notion that any problem might have an explanation that’s more complicated than a TV sound bite. If you can’t explain it in ten seconds, then you must be hedging or deceiving somewhere.
This ongoing propaganda that the crash was caused by irresponsible homeowners is like an additional and particularly obnoxious part of the con. In 2007 half of all subprime lenders qualified for prime loans; you have to think that most of those people were pushed into the ARM-type deals because the brokers made four, five, six times the commission. People were lied to, told they would pay fixed rates, or promised a refi if rates went up, all kinds of crap.
So they get sold these deals, which then get pawned off to some other victim who thinks he’s buying AAA bonds or whatever; then that same guy who bought the bad mortgage ends up paying taxes to bail out all these assholes who did this to him, including the banks who bet against his home loan. And after all that, then this same guy gets BLAMED for the crisis.
You almost have to admire the balls of people who can say this stuff.
In response to another comment. See in context »Matt,
I was in total agreement with everything you have said on this post until this reply. While I still support your basic tenets regarding scumbag lenders and tea-baggers, I have to correct you on your assumption that half of all 2007 vintage sub-prime loans qualified for prime loans (I assume you mean a conventional “A” loan, or a loan that conformed to FNMA/FHLMC underwriting standards). That is just not true. Under both systems, the qualifications for a loan in 2007 under either system made it very difficult for anyone self-employed – i.e. someone without a W-2 – to get a FN/FH loan. In addition, FN/FH’s charter specifically prohibited originating loan greater than $417,000. And there was the not insignificant cost of mortgage insurance in a conventional loan if you couldn’t put down 20%, which many borrowers back then couldn’t afford, but they wanted a house anyway. Most loans in CA, NY. NJ, three of the most populous states, and many other specific zip codes couldn’t qualify either because homes cost much more than that. Yes, some of these borrowers were steered into sub-prime and Alt-A mortgages, but many of them went to jumbo A programs.
Sub-prime and Alt-A mortgage programs invented terms like no-doc, low-doc, stated income, stated assets, etc, which came to be known as liar loans. These people weren’t pushed into the loan, They were willing accomplices. They reached, and unfortunately, the system let them in. If the system worked they never would have qualified for a loan at all.
To that end though, One of previous comments addressed this well. The homeowner may have taken too much risk, but no one in the system alerted them to this risk because at the end of the day, the originator didn’t have any skin in the game. They sold the risk forward before any money was exchanged. All of their money was made up front. They saw this moral hazard and they exploited it by selling teaser rates, option ARMs, jacking purchase prices to pay for up-front improvements, and many other abuses. But if Wall Street conduits didn’t care about underwriting standards, and the ultimate investor who bought the package didn’t care either, why should the table funder?
In response to another comment. See in context »One more thing… By far, the biggest problem was in 100% LTV loans. Why would anyone lend to a borrower where there was no equity in the home and no recourse to the borrower? This was lending lunacy. Of course the lender was going to foreclose on these loans one day. The borrower had nothing to lose!
In response to another comment. See in context »Yes, but there’s also an issue with familiarity. What they can see with their own eyes, sure, but we tend to the same thing. It’s just that we live in a different universe and see different things with our own eyes. We are people or know people who work in finance, we went to college with their kids, we research this stuff for a living. Regardless of the complexity of detail, we understand the shape of banking and finance. That’s real to us.
I started life very poor, but from educated stock, in the big city. I lived in the ghetto, and I still didn’t “get” it (or so I was told). A friend of mine who grew up in the projects once looked at me like I was crazy when I said it was a myth that some women have babies to get more welfare coverage. People from poor communities know lots of people who don’t adhere to the values of right of wrong in the larger community, so it makes perfect sense to them that these fuck-ups have something to do with this. Just like we know our night just got a lot worse if a group of shithead iBankers sits down at the next table. For a lot of people, business people are the pillars of their communities, if for no other reason then their ability to highly function.
I’m not saying they’re right in their analysis, of course. Especially since most of those with underwater loans don’t really come from the “unrespectable” part of these peoples’ societies. My only point is that we all see things through our most familiar prisms.
In response to another comment. See in context »No excuses this time, get a lawyer.
In response to another comment. See in context »Matt…correct Tea Party began with Feb rant…I watched it live that day. I think it might have been after they announced they were committing the remaining unused TARP that morning. Doesn’t really matter. The movement was quickly hijacked by the neocons an more importantly their masters. Santelli is actually a very astute “blue collar capitalist”….more in tune to the “real corruption” going on than maybe you realize. yes, he does have some misplaced ideology with some conservative roots that hamper his thought process but I have followed as an investor that watches the daily market “noise” and he really is someone that you would find is disgusted with the banksters and what they are doing to the country and our constitution. In fact (knowing your style)…I think you would find him more like Durden than you may want to believe. Santelli has fought openly on air with many of these scumbags and is still standing (which means he has pulled some punches) but it mostly means the little guy loves him..He has distanced himself from the Tea Party as soon as he saw it was hijacked…Anyway he makes a nice target now for the left that really doesn’t know he is one of them. Its how the system works..divide, conquer, and obfuscate. gl man stay with this.
Anger is good. We’ve been screwed. If you aren’t angry, you aren’t paying attention.
But, it is really important to understand what has happened in this country, so you can direct your anger at the appropriate target. It isn’t the little people (immigrants, poor people, minorities, etc.) that have screwed us, it’s the greedy fat cats. Until the Teabaggers smarten up on this crucial point, they’re just punching themselves in the face. And the Foxagandists will continue laughing at them, behind their backs, all the way to the bank.
Once the Baggers and Eggheads finally agree on the true culprits, and join together against them, they’ll be unstoppable. But until they do, the Greedheads are going to continue robbing us in broad daylight.
Thanks for reiterating the truth about who is receiving “welfare” in this country — whites have always been the largest group of recipients. But how about stats on foreclosures? Is any one aware of what the racial/ethnic proportions are? My expectation is that they will mirror the general population, but it is also not unreasonable to think that predatory lenders targeted minority communities.
Matt, do you think there is anything to a third party emerging out of/because of the next midterms? If the Tea Party gains legitimate traction and actually gets anybody elected it will force Republicans hard right (even worse than now), the Democrats will extend their sex appeal to the WASP communities (Westchester, et al), bringing even more conservatives under their tent, and the left will feel squeezed. This leading to a mass exodus of liberals from the Democratic party. What do you think?
I’m obviously not Matt, but you make an interesting point-the emergence of any serious third party in the U.S. would take years and strings of victories in small local elections before they could likely win a Senate seat or present a candidate for president that stood a chance. I read (unfortunately I cannot remember where) that this is precisely what the TP is doing. City councils, school boards, that sort of thing.
In response to another comment. See in context »Matt,
Locating blame within individual decisions of people who have poor credit as well as within the concept of financial literacy is a complete an utter farce…
First, there is only one state (Iowa) who mandates K-12 financial literacy but who knows for long since education budgets across the nation have been systemically cut & dwindling for years. Two, Elizabeth Warren talks about this concept of blaming the individual: she calls it ‘the immoral debtor myth’…. Like flooding the market with 10-100 times more access to expensive credit isn’t just like drug trafficking using zero introductory rates as the dime-bag appetizer …. Three, Bill Black has been huge in pointing out the systemic and intertwining nature of financial fraud at all levels (Countrywide, Indymac, Ameriquest)… And over the past few years you have had some things to say about these issues from the investment bank side too… Yeah right individuals are the only ones to blame…
Now, if I could get Moody’s to rate that piece of shit triple fucking A
Who is Santelli kidding; he is a stakeholder along with all those other CNBC whores; There is only one answer: retain white male power for the next few generations by changing the rules, creating oligarchal structures, and cutting social supports; all while yelling open up your free markets; that is until China wants to buy Exxon; then it protect our nut..
It would be impressively large Samantha Bee Balls and Shaft if someone on CNBC could just say listen: were heading towards 9 billion people, resources are fixed, we have massive systemic debt in a global marketplace, our ecosystem is semi-poisoned and heating up with expected costs to be in the 100’s of trillions over the next decade; look white men need power; who is going to manage this? At least then people could get prepared for the ass-rape that is about to happen as we shift risk from corporations onto individual families (health, retirement, joblessness)…. Now that would be a more honest ballsy…
Anyone see Stewart last night, Bee’s interview was schiznitalicious…. Thanks for getting me revved up and pissed off tonight Matt; Tonight, No showing it to the Laker girls
Peace
The anti-poor people and minorities mentality of the Tea Party is just one symptom. The illness is class conflict, and the Tea Party is on the wrong side. They were first exposed to politics during the Reagan era. That’s an era which was characterized by massive propaganda campaigns by conservative media, which promoted the idea that business is the side you’re on and that government is the enemy, and that markets equal freedom, so criticizing markets means criticizing freedom. If there are ever any economic problems, it’s the result of government power and authority. That’s exactly the critique Marxist conflict theorists give, except against capitalism (and government, but it’s at least partially democratic).
This is in many ways a reverse of the usual sense of class conflict, which was prevalent earlier last century with the socialist, anarchist, pro-labor, and even elderly movements. The line from Usual Suspects, “The greatest trick the devil ever pulled was convincing the world he didn’t exist,” sort of applies here.
The right-wing media are especially known for their harsh, inflammatory rhetoric, because they know they’re fighting a class war. They’ve convinced the Tea Party, so we get behavior which you wrote about. Another egregious example of this reverse sense of class war was during the ACORN scandal, when a fever of rabid fury spread throughout the right-wing. They don’t mind so much when rich people do everything in their power to avoid taxation, only poor people – partially because rich people can afford to do it legally, but also because they made it in the FREE market, therefore we can’t criticize them.
Barry Lynn wrote a book – “Cornered: The New Monopoly Capitalism and the Economics of Destruction” which seems to be catching on among the left, in which he highlights the similarities between private government and public government. It’s odd how stating a truism garners so much acclaim.
[...] Santelli on Predatory Lending: ‘You can’t cheat an honest man’ – Matt Taibbi… [...]
The most impressive aspect of these tea parties has to be how much special interests and the RNC have gotten people to argue against their own self interests. I think Mitt Romney’s quote during CPAC basically summed it up:
“America will not endure government-run health care, a new and expansive entitlement and inexplicable and surely vanishing cuts in Medicare.”
Medicare = good. Government-run health care = bad. I’m sure you all have seen the signs at tea parties, warning the government to “Keep the Government out of my Medicare.”
There seems to be a serious disconnect between the tea party “messages” and reality. Facts aren’t important anymore. What seems more important to these people is changing reality to conform to their opinions, rather than the other way around. I wish these people would wake up and see how badly they’re being played.
absolutely.
“The Republicans’ grotesque distortions of Obama’s record have become a matter of dogma for the GOP’s new grass-roots base. A recent poll found that only two percent of Tea Partiers are aware that the president enacted the largest middle-class tax cut in history. A staggering 44 percent, by contrast, believe that Obama has increased their taxes — and only 16 percent blame the current economic catastrophe on Bush, who ran up record deficits by slashing taxes for the wealthy.”
-Tim Dickinson
http://www.rollingstone.com/politics/story/32537691/the_gops_dirty_war
and all of this from a group of people who were drawing hitler mustaches on Obama only 2-3 months after being sworn into office.
In response to another comment. See in context »I think 98% of the Tea Partiers had it right. The tax cuts in the stimulus bill were larger than Bush’s 2001 cuts only if you use a convoluted logic that doesn’t count most of the Bush tax cuts. Bush’s tax cuts phased in over ten years, but only two are counted. The GOP is not the only party capable of distortion.
I am not a Tea Partier; I voted for Obama. Of course, I didn’t vote for Obama to cut taxes, make deals with Big Pharma, or mandate private health insurance but rather to increase the FICA cap and raise taxes on upper incomes. Ah well.
In response to another comment. See in context »[...] Shared Santelli on Predatory Lending: ‘You can’t cheat an honest man’. [...]
Oh don’t worry, Matt, we’ll all get a chance to revisit the causes of the financial crisis in late 2010/early 2011 when Alt-A mortgages and leveraged commercial real estate comes crashing down in a heap of poorly-examined assumptions. Only this time, there won’t be a convenient scapegoat of overstretched homeowners in inner city Baltimore and South Central to pin it on.
What is everyone getting so worked up about? I just watched this ridiculous CNBC clip – -is this the kind of drivel that goes on during the day when I am working hard to keep food on the table for my family?
This looks like the Brady Bunch for the Nordstrom crowd. Talking heads in boxes, smiling and frowning like Greg and Marsha Brady – everyone trying one-up the other – no one actually staying on point. Geez, these idiots are starting to sound like this blog.
I will observe that Matt Taibbi seems to have some built-in bias against the Tea Party folks which may affect his journalistic ability. While I don’t know much about the Tea Party nation or what they stand for, I don’t understand how you can complain that no one is taking to the streets to challenge our government and then when people do, you criticize them for not challenging the “right” things.
It seems to me that Matt (and others) just want to control the nature of the challenge. Guess what? In the real world, you don’t get to control everyone else’s opinion. People can be wrong. People can be dangerously wrong. Isn’t that exactly what Bush was, dangerously wrong? And now, President Obama is dangerously wrong on the bailouts?
Finally, on the Racism thing, sorry, I just find it more manipulation from the Left. Since I grew up in rough and tumble Irish neighborhood in a working class, eastern town, I learned early that race didn’t mean much to us folks who didn’t have any money, didn’t make the rules and spent the day literally fighting to get to the next day unscathed. Racism doesn’t mean much when a Black kid could punch you in the face and take your shoes just as much as the White kid could?
But Matt and others will continue to look at the world through the distorted prism of racism as though if we solve that particular puzzle, somehow all the other problems will be fixed over night. They won’t. Because money rules America, not race. Rich Black people (or Asians, or Hispanics or Pakistanis, or whatever) will try to keep me down just as much as anyone else because it’s about power and control and they’re afraid that if it’s about merit that they won’t measure up so they rig the game.
100% agreement.
In response to another comment. See in context »In about 2006 I found myself hanging out with some Southern second-tier college educated frat boy types who were working for Wells Fargo. You know, they went to a decent school that was big enough that you could get through without having to write extensively on The Second Sex. Anyway, they were decent enough, provincial binge drinkers, but perfectly affable. They wrote loans and one of the guys was talking about how it was Well Fargo policy to not give someone a policy that was detrimental to them, “But,” he said, “some people are just so stupid. You try to explain it to them and they don’t get it.” Of course these boys took commissions or were compensated in some way for their loans (remember, this was 2006). I could see from the changes in his expression that I blew this kid’s mind when I said, “But it’s not okay to take advantage of people just because they’re dumb.” I’m telling you, the thought had never, ever crossed his mind.
In any case, honest people never get cheated is something that conmen say to explain to themselves why they feel no guilt. Violent people and those who occupy various places in the criminal constellation use the same reasoning, in my experience. “Hey, this is a world where you either eat or get eaten. If you don’t hit first, you’ll be hit.” You know, people creating the very conditions they claim to be protecting themselves from, since they can hold themselves up as an example of how immoral the world is.
In any case, it’s uncivilized. The bottom line that people like Santelli refuse to acknowledge is that it’s not okay in a civilized size to be dishonest, period. It doesn’t even matter if the poor schlubb sitting across from you is dishonest, you don’t get to be. In that statement he and his ilk say more about their own satisfaction with barbarism.
It is a shame about the Tea Partiers. We’re all mad about so many of the same things, but people tend to look for cause and effect in their own universe, not in some abstraction. I work in the financial world, but I sure as hell don’t meet too many lower middle class types with gobs of credit card debt, no insurance and bad financial products.
Sorry kdavidson, you have it backwards. Conman can only cheat a willing partner, you know someone looking for that little extra they know they don’t deserve. (Freelunch!)Cons offer something to good to be true, the willing person takes the bait. If ignorance is your defense, try it on the laws of the land. Charlie Rangel, that’s Taibbi’s hero, I guess he didn’t know that he owed the IRS hundreds of thousands of dollars, going back a decade, along with ” I didn’t know I had to pay taxes” Geithner, head of the treasury. How about “Gee officer, I didn’t know I was going 20 mph over the speed limit! How about “Mom, I didn’t know how late it was!” Is that simple enough for You, do you get it? Stop reading Taibbi’s lies, he is a hack. Do your own homework kiddies believing this idiots lies is no excuse for your ignorance. Besides isn’t he a shill for the rich democrats like Pelosi? The Teapartiers know the media shills that hide behind blogs are a big part of the problem.If Taibbi had any guts or any of his article were true, and not slant, he would go on CNBC and call out Rick. This will not ever happen, because he is a no talent, lying, coward. P.S. Santelli said, “Come out of your Mama’s basement and let’s debate this face to face!” BTY, Goon means real man (urban dictionary). Ha!
In response to another comment. See in context »Where do you get these ideas? Can you point me to something where Taibbi says anything positive about Rangel, or even Pelosi?
It’s clear from the way you just throw names, which are completely unconnected to one another, against the wall that you get your bogeymen from a specific source. I’m supposed to hear the word “Rangel” and even though there’s no association between him and Taibbi, I’m supposed to think something about Taibbi, and then I’m supposed to think something positive about someone he criticizes.
I’m gonna blow your mind right here. Taibbi has criticized Pelosi EXTENSIVELY. So, wait… that must mean that she’s okay. Or, no, the Santelli is bad since he’s in her company, wait… Confusing, right?
So, you think that people who took those loans should be arrested? Then you think a crime has been committed, in which case everyone who had anything to do with it — which is all of Wall Street, etc., are culpable. Actually, I think we’re in agreement about that.
Rangel is corrupt (and it’s been known for YEARS, which is a whole other discussion… I come from the left of you, obviously and I am OUTRAGED, just like I was OUTRAGED about Duke Cunningham, and bidless war contracts, etc., as I’m sure you were). It doesn’t follow that because he is corrupt, people who took out loans were corrupt. Those two things aren’t connected to each other. That’s like saying that because I have blue eyes, everyone in Detroit has blue eyes… it just doesn’t have anything to do with anything.
I take your point about people being out for too-good-a-deal. But why is gaming the system and being actively greedy — hey, you don’t think there’s anything wrong with wealth accumulation, right — okay for some people, but not okay for home buyers?
My point, though, was only this: It doesn’t matter what anyone else is doing. It’s not okay to be a cheat. Period. It’s not okay to hurt people for your own advantage. Period. And when people make statements like the one that Santelli made, he’s excusing it. THAT is more like, “Oh, it doesn’t matter if I was going over the speed limit, so were other people.” Or, “It doesn’t matter if I don’t pay my taxes because other people cheat the IRS, too.” It’s not okay when Rangel does it, and it’s not okay when I do it, and it’s not okay when people knowingly rip other people off. Period.
Speaking of getting called out, wasn’t Santelli decline and invitation to go on John Stewart’s show? I think he was even scheduled, but canceled at the last minute. That’s just sad. I’m also pretty sure that Taibbi would be show up front and center to debate Santelli. He’s famous for throwing a pie full of horse sperm in the face of the New York Times’ Russian Bureau Chief.
You should read some of his stuff. You might agree with more of it then you think. Seriously.
In response to another comment. See in context »LOL, can you show me where Santelli says anything about minorities, blacks, Latinos,or being for banks for that matter? I think those are Taibbis tactics you are describing. It took you long enough to get what i’ve been talking about. Your last paragraph about Jon Stewart, Taibbi and Horse Sperm just about sizes up this blog and its followers. What’s your point about going on Stewart? Santelli is on T.V. everyday, he debates any of them,all of them at once even,many times a day without a telepromter,I might add. I read on pg. 6 that Santelli told The Daily Show over a week before, that he didn’t feel this was a time to make light of this serious issue. I really respect the fact he didn’t go.I’m sure Stewart at this point knows better. Maybe his brother Larry (NYSE) set him straight?
In response to another comment. See in context »1) Can you show me where I said anything about Santelli saying anything about minorities? No? Then why are you asking it?
2) YOU said that Taibbi was a “coward” for not already being on Santelli’s show. If he is, why isn’t Santelli a coward for not showing up to Stewart? You and I both know that Stewart was certainly NOT making light of the issue. It bothers me that you have different rules for different people, when it suits conclusions you’ve already drawn in spite of the evidence.
3) My inbox has been getting dinged all day with your desperate attempts to provoke people into having silly spats with you on this forum. No one else has been posting except for you. No one is biting (except me, I guess) because you’re presenting yourself as someone with a bizarre fixation on posters to the post instead of as something with anything relevant — let alone meaningful — to say. You seem unhinged.
In response to another comment. See in context »[...] Continue reading here… [...]
Dear Mr. Taibbi,
Having come of age, as it were, as a member of a prestigious capital markets group (circa the advent of the ABS business and prior to the mistakes and malfeasance of Rubin, Graham et al); the days when a well-oiled Moral Compass was still mandatory on Wall Street. Even then, however, “the Shark Aesthetic” (Bite the Bleeding) governed the uninformed, mob rule of Market sentiment. Haven’t the Tea Party promoters merely co opted a Zeitgeist of the same stripe?
Also, with Deficit-related issues so central to their raison d’etre and resultant acceptance, why is it not clear to them that what they fear most and are girding up to rail against, (i.e., deficit explosion and the unimpeded plundering of the public Treasury) occurred, fait accompli, some ten years ago (e.g., repeal of Glass-Steagall and the “modernization” of the Financial Services sector) in the year 2000? They are, indeed, a tad late to That Party.
I, too, abhor the “circle of frauds” allowed by said legislation. In fact, while a mere Three Hundred Billion dollar operation, I am currently challenging SLM Corporation’s student loan activities in the Federal Court, District of Massachusetts, as this virtually unregulated conspiracy of convenience, hard-wired to the DOE for reimbursement of any alleged “losses” is, for me, ethically beyond the pale.
Publicly funded, guaranteed profits for private corporations created by the cynical manipulation of the, now, antiquated or entirely nonexistent original purpose entity, including reliance upon “implicit” government guarantees, is an obscene abuse of the Public Trust and a national disgrace.
Payments from the DOE at one hundred cents on the dollar strike me as well beyond the “implicit”, however.
JT Easthill
There is a famous photo of a group of Nazis standing around jeering at an old Jewish man who is being forced to scrub a sidewalk with a toothbrush. I think was taken in Vienna after the Anschluss.
This mentality came back to me as I watched the clip: Santelli and the blonde woman, occasionally abetted by the other guy, “video-scoffing,” bullying, ridiculing, interrupting and otherwise piling on as Tavakoli persistently but politely tries to make her point.
Laying aside the merits, or lack thereof, of the two “sides,” — as fashioned, Idiot-America style, by CNBC — the sheer rudeness and nastiness of the “pro-Tea Bagger” side of this pseudo-debate is redolent of the Brownshirts.
I think this is actually a good thing. Unlike the slick propaganda of a Hal Riney, with his soothing “Morning in America” ads soft-selling an avuncular Reagan, the heavy-handed propagandists of CNBC are resorting to far cruder forms of demagogic persuasion, which basically boils down to encouraging the audience-mob to join in the group-jeer of a patient, reasonable person who’s exercising super-human patience just to try to get her point across.
This may satisfy the blood-lust of the ultra-right-wing, but the meta-message of bullying does not strike me as one that’s likely to win converts from the muddled middle.
Here is a link to one of the photos I had in mind:
http://www.historyplace.com/worldhistory/genocide/jews-vienna.jpg
I’ve got a few questions for those who believe that the people who are now facing foreclosures all over the country need to shoulder ‘their share of the blame’ for the implosion of the global economy.
Before the questions, I’m going to stipulate that the premises I’m starting from seem to be the premises of people that hold this view. And those premises are that subprime borrowers either a)knew they were getting over their head and did it anyways due to some lack of character, or b)didn’t do their financial homework and caveat emptor as they say. That’s a bunch of crap I believe, but we’ll start there anyways.
In this imaginary world where people either suffer from delayed gratification issues or are just plain stupid, you are still left with the problem that a bunch of banks and finance companies, presumably in the business of making prudent loans, suddenly decided, en masse, to scrap their standards and give a mortgage to anyone with a pulse.
So here’s the question. Why did bankers do that?
Banks are in the business of lending. They have years of experience in checking your ability to pay. Why would the banks suddenly decide that a part-time cashier was eligible for a $300,000 mortgage?
Wall Street firms Hoovered up the mortgages that would never be paid. Why did they do that?
Banks also relentlessly pushed credit cards onto people with little to no income. Why would bankers do that?
It’s pretty dispiriting to see one group of screwed over Americans blaming another group of screwed over Americans for their problems. That the wealthy are able to rob us right in the open, and a segment of the populace is willing to believe that those wounded in the heist not only brought it on themselves, but also helped bring everyone else down with them is not surprising given the propaganda narrative, but it’s a dreary thing to think about nonetheless.
Broc, I believe the phrase that you are looking for is “least sophisticated debtor”.
As far as the WHY of this debacle it’s obviously based on greed. It’s the HOW that needs to be focused on. If you’re paying attention you’ll notice that, very quietly, insurer after insurer is beginning to run into financial issues. Radian, MGIC, PMI, etc.. They are all beginning to refuse to cover certain housing/mortgage market related claims. Why? Because the insurance policies (like private mortgage insurance) that were in place, that everyone seems to have forgotten about are being decimated by claims.
Additionally, there is the issue of what is known as “note insurance” that covers the individual tranches of securitized trusts. When individual notes become “non-performing” or “default” claims are put in against the note insurance policies. The disclosures of the policies themselves are right in the various 8-k, 10-k, 424b5 etc. SEC filings. The question surrounding them is – What do they cover? Do they cover the face value of the note when it went belly up? Do they cover the original loan amount? Or do they actually pay out on the full 15 or 30 year stream if income that would have been realized had the note performed for it’s full term?
These are just a few of many questions that still need to be answered.
Then there are all of the “questionable” signatures and employment histories popping up on various assignments of mortgage. Attorneys Lynn Szymoniak and April Charney have separately been data basing signatures and employment histories of individuals purporting to be VPs and/or Secretaries of everyone from MERS to Deutsche to C-wide to American Home Mortgage, etc. Attorney Szymoniak has documented some of these publicly. http://www.scribd.com/doc/25420484/Fabrications-Forgeries-Comparing-Signatures-Titles-on-Mortgage-Documents and http://www.scribd.com/doc/26634238/Laws-and-the-Signatures
So, I guess the question is, “How long before people get tired of these games and actually demand that criminal investigations begin and charges be filed?
In response to another comment. See in context »Hey…you are correct about looking into how it happened.
But, my ‘why’ questions weren’t meant to be taken seriously by anyone with a brain. There was a big market on Wall Street for crappy debt, hence a boom in crappy debt. There’s the real ‘why’.
No, the ‘why’ questions were directed to the ‘blame the victim’ set. They are for them to answer. Under their assumptions of either gluttony or stupidity on the part of subprime borrowers, they still have no explanation of exactly why our financial class decided it was a good idea to lend all that money to a bunch of gluttonous, stupid people unable to pay it back.
Point is, you can attribute whatever personal characteristics you’d like want to subprime borrowers. It is irrelevant to understanding why the global economy has fallen apart.
In response to another comment. See in context »