patrick.net

Whistleblowers (in every field) walk a fine line. If they do what's right, they lose their job, their income, their reputation and their ability to make a living. If they continue with the status quo, they're complicit.

If I'm ever wealthy beyond belief (fat chance), I'd like to set up a fund to help whistle-blowers while their lives are torn apart doing the right thing.

Leigh--

There were subsequent attempts to help troubled homeowners, but TARP wasn't one of them. I'm pretty sure it was sold as an emergency attempt to stave off financial armageddon. I'm not sure if it was really necessary or not, but there were lots of stories at the time about the whole financial world imploding after Lehman collapsed...

tatupu70 says

Leigh–
Unless I’m terribly mistaken, TARP money was LOANED to banks. Not given. But I agree that US taxpayers will foot some of the bill. My point is that it was far from a free ride for the banks. Many went under and the large ones lost hundreds of millions/billions on this mess.

Bank shareholders lost millions. Bank management pocketed millions with what could at best be called a web of lies and deceit with the complicit help of congress and the regulators. So far none have been sent to jail or had their ill gotten gains taken away yet.

No it isn't tarp that made money for the banks. The banks made money at the discount window. They made money with loans you and I cannot get, and leveraged them to buy treasuries, a certain profit. This is how JPM and GS could have 30 trading days in a row without a loss. Please don't confuse tarp with the real bailouts and the real taxpayer burden.

Also, Tatu, they don't care about the smaller banks. You say the small banks lost money. So what? The international banker cabal is concerned about big banks and about them getting bigger and swallowing smaller banks. It is a consolidation of money and power.

Oh, and I forgot. Yes, the shareholders were thown under the bus but the levered up corporate bank bondholders made a killing and didn't have to take a haircut at all. It was a scam.

GaryA says

Oh, and I forgot. Yes, the shareholders were thown under the bus but the levered up corporate bank bondholders made a killing and didn’t have to take a haircut at all. It was a scam.

I'm just not one to believe in conspiracy theories--call me a skeptic I guess. It seems more likely to me that banks were going after the quick buck and either not worrying about or not understanding the long term risk involved in these loans. It's hard to believe that this was done on purpose... If so, how did it work out for Washington Mutual? Or IndyMac?

I guess I figure the higher uppers of the banks would be rather intelligent people that got taken over by greed. Like I've said many times before, how could you NOT see that this was insane, that this was unsustainable, that housing prices were inflated? Why the hell were banks lending?!

So are you saying that these big bankers don't know how to do their job. Heck, maybe I' should apply, I saw this coming though I never would have guessed how ugly it was gonna get.

GaryA, see my earlier NYTimes link at 7:08am. I think the banks did make money using TARP funds.

Leigh says

I guess I figure the higher uppers of the banks would be rather intelligent people that got taken over by greed. Like I’ve said many times before, how could you NOT see that this was insane, that this was unsustainable, that housing prices were inflated? Why the hell were banks lending?!
So are you saying that these big bankers don’t know how to do their job. Heck, maybe I’ should apply, I saw this coming though I never would have guessed how ugly it was gonna get.

Good questions. They should have seen it coming... I think you probably could have done a better job than the clowns that were running things.

Tatu, you have an organization of investment banks, who were able to sell securities in the form of CDO's that were rated AAA by scam organizations at the mercy of the investment banks that thought of the securitizations scam in the first place. You had the Fed looking the other way while ahomeless guy in Florida went to the signing for 4 no money down products, and you don't think it was a conspiracy? You had shadow banks that were lent money by the big banks, on a wholesale level to make these loans and originate absolute crap, with the Fed looking the other way the whole time.

I must remind you Tatu, that off balance sheet banking was permitted in 1997 at Basel 2. The groundwork was set for easy money loans throughout the western world. Easy down and the allowance of 40 percent of income was used in Europe. In the US and Canada there were no money down loans.

I suggest to you that this was a nearly worldwide scam and conspiracy. FDR would have told you that these things don't happen by accident!!

GaryA says

Tatu, you have an organization of investment banks, who were able to sell securities in the form of CDO’s that were rated AAA by scam organizations at the mercy of the investment banks that thought of the securitizations scam in the first place. You had the Fed looking the other way while ahomeless guy in Florida went to the signing for 4 no money down products, and you don’t think it was a conspiracy? You had shadow banks that were lent money by the big banks, on a wholesale level to make these loans and originate absolute crap, with the Fed looking the other way the whole time.
I must remind you Tatu, that off balance sheet banking was permitted in 1997 at Basel 2. The groundwork was set for easy money loans throughout the western world. Easy down and the allowance of 40 percent of income was used in Europe. In the US and Canada there were no money down loans.
I suggest to you that this was a nearly worldwide scam and conspiracy. FDR would have told you that these things don’t happen by accident!!

Lack of oversight was a major cause of this mess, but I don't think it was a conspiracy--just poor policy decisions.

I think allen greenspan pretty much summed it up, when he said banking, accounting and most businesses are so complex that the only way to catch cheats is to have someone actively turn people in. Oversight doesn't work because it's so easy to hide and manipulate things if you want. The SEC often doesn't find anything until someone blows the whistle.

It's really poor policy making at these companies, in the end they are the ones who can twist and turn any regulation to read how they want it.

No, no, no. Greenspan tried to fight any oversight of derivatives. He knew exactly what was going on, criminal behavior at the highest levels, including his own. The Fed looked away while tried and true underwriting principles were abandoned. That did not happen by accident. Basel 2 was not by accident.

The double talking BIS stood watch while the central banks allowed off balance sheet banking, a method by which you hide your bad loans. This was a conspiracy to hide and defraud. http://www.webofdebt.com/articles/basel.php This Ellen Brown article is required reading for those attempting to understand the credit crisis. Basel 3 wll raise capital requirements through the roof, just like Basel 1 did to Japan. This is a warning to Americans to fix your balance sheets, including walking away from your debts if you can. http://dontpaycreditcards.com And do not trust the Basel accords, which have the effect of causing bubbles and of profiting off of them.

Did you guys know that Basel 2 not only allowed shadow banking but also low capital requirements. And that AFTER Basel 1 allowed tight capital requirements on Japanese banks. Basel people KNEW WHAT WOULD HAPPEN with low capital requirements and off balance sheet banking. CONSPIRACY.

pkennedy says

I think allen greenspan pretty much summed it up, when he said banking, accounting and most businesses are so complex that the only way to catch cheats is to have someone actively turn people in. Oversight doesn’t work because it’s so easy to hide and manipulate things if you want. The SEC often doesn’t find anything until someone blows the whistle.
It’s really poor policy making at these companies, in the end they are the ones who can twist and turn any regulation to read how they want it.

The SEC activily audits local companies like the ones in SV on a 4 year rotation. The same is true with other industries like banks, health, mfg, and others. If your a public company, especially a big one, you will be audited as sure as the sun raises each morning. I been through 6 myself. Not to mention each company gets audited by an independent accounting firm each year and interim periods prior to the press release. So chances of twisting any regulations is a fruitless one. You will most likely be fired, and your career will be over before you know it and you will never work in this or any town ever. Real Estate is the only place you can go, if you havent gone to jail by then.

Exactly Thomas, it was a conspiracy to allow an absence of underwriting. See my post above yours about the low capital requirements of Basel 2 in 1997 that accompanied the off balance sheet banking. Conspiracy!!! This timeline I put together is simple but exposes the conspiracy: http://bank-abuse.com/BankScamTimeline.html