Banks' Self-Dealing, Fake Demand Made Financial Crisis Much Worse

ProPublica:

Over the last two years of the housing bubble, Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history.

Faced with increasing difficulty in selling the mortgage-backed securities that had been among their most lucrative products, the banks hit on a solution that preserved their quarterly earnings and huge bonuses:

They created fake demand.

Read the whole story: ProPublica

Comments

[Nichole Boultas]

06:35 PM on 08/30/2010

Two words: shocking and unbelievable. How in the World did they get away with it?

[Js420]

05:05 PM on 08/30/2010

Its been a plug. Until conservatives put people before profits we will not see recovery. Unless we secure a strong 60+ filibuster proof majority in November. the next two yrs will be very similar

[Jennifer Hill]

12:09 PM on 08/30/2010

To all my friends who don't understand how corruption and greed in the financial system have led to the collapse of our economy. This is a great analysis - now we just have to do something about it, really do something, no really something meaningful.

[lvdragonlady]

03:56 AM on 08/30/2010

Only one answer and that is GREED and if Americans continue to allow BIG BUSINESS to control their lives then NOTHING is going to change.

[exmate]

06:48 AM on 08/29/2010

“1. Carthago delenda est (English: "Carthage must be destroyed") was a Latin political phrase which was popular in the Roman Republic during the latter years of the Punic Wars against Carthage.

2. Unless Wall Street cleans up its act, another phrase comes to mind. "Via Vallum delenda est". (Wall street must be destroyed).

3. As a result of the insatiable greed of people in our financial institutions, aided by some ignorance of economics and/or indifference of our lawmakers, the finance/banking/money function has taken over our economy and has brought it to its knees.

4.It adds little or nothing to the value chain of goods and services in the USA. *It is the tail wagging the dog. It is a malignant tumor.

5. It is a pathological process. It is a vampire sucking the blood od productive business enterprise in the USA.

6. Unless this pathological process is treated, it will bring down the entire organism.

exmate, MD , MBA”

[Janzee12000]

09:01 PM on 08/28/2010

This was somewhat an interesting story. What has perplexed me abt this whole meltdown was the statement that money managers were "standing in line" to invest in CDO's (claim by Blankfein). Yet afterward it was claimed that these investments were sooo complicated that the creators couldn't be fired because they were the ones who "knew" how to untangle these very "shiatty" investments. I was hoping this story might shed some light on, "if these CDO's were sooo complicated then is it a true statement that investors were "asking" for these products or more likely, led and "SOLD" these products with cheap car salesman tactics? If the latter then I would hope that once things are untangled justice will follow?

/to much to ask?

[OldSelfHere]

03:14 AM on 08/28/2010

oh by the way.. on the bail out.. did it ever occur to you that most of you dont own enough stock to be of a category considered worthy to protect.. that it was not your assets that the bail out funds were appropriated to protect?
Over 90% of the wealth in this country is controlled by the top 1% .. and guess what.. you paid approximately $43,000 per person to make sure they did not lose any money!
Who bailed out the homeowners that are losing their jobs? Who bailed out the unemployed.. oh yes the party of NO wanted them to be left out in the cold.. but the rich man.. oh yes we gotta protect his money!
DUPED.
Too Big To Fail? Not!.. too much of the rich mans money lost ya mean!

[OldSelfHere]

03:08 AM on 08/28/2010

Well, I just got back from the State Fair here in Oregon. I recently attended the local County Fair too,, I talked to all the politicians and political parties at both.
I cannot believe what I am seeing! I cannot believe what I am hearing!
I would like to know how many people are aware of the plot uncovered in 1932 to create a corporate domination of our country?
I hate to ask.
I am afraid of the answer!
All of you are here yapping away about these distractions that you are being fed!
Get to the root of the problem! Quit being distracted by BS!
Read the book "The Plot To Seize The White House" by Jules Archer.
To think that these people could be named openly and in Congressional hearings (of which the final report said that all allegations HAD BEEN PROVED no less) and not be tried in a court of law is totally beyond my belief!
The similarities between 1932 and today are amazingly striking!
But your government and the local school districts made sure you remained ignorant.. well now you are aware of it...
THINK , DAMMIT THINK!
I fear it may be too late.. but time will tell.. will the citizens wake up and realize they have been duped (SUCKERED) before it is truly too late?
Dont be so damn stupid!

[IndyFem]

11:21 PM on 08/27/2010

Nothing new here....this is from PBS...
The unregulated stock market in the 1920's was made for Joseph Kennedy. With nerve and intelligence, he ruthlessly manipulated the market, using accomplices and pliant journalists to boost a stock artificially. Then, at its peak, he unloaded the stock and reaped the benefit. Kennedy told friends he needed to make this easy money fast -- "before they pass a law against it." All through the Prohibition years, there were stories that he made still more money importing illegal liquor -- bootlegging -- and he forged alliances with the underworld that would endure throughout his life.
Common Party Loyalists....we have let these political crokks have their way for a very long time...guess it got outof control, huh?

[frank day]

09:16 PM on 08/27/2010

What pains me most is that we were forced to bail these people out because the system was " too big to fail". What went on may not have been illegal, but there should be consequences for the people who made extraordinary profit by destroying our economy. Instead, we've handed them a blank check book as we look the other way.

[dukeitout]

10:00 PM on 08/27/2010

There was a lot of illegality involved. Some indisputably flagrant crimes occurred which should involve juries and verdicts and prison time for the criminals. They almost destroyed our country.

[jimboy71]

11:36 PM on 08/27/2010

Almost?

[Wendy Davis]

09:02 PM on 08/27/2010

http://www.youtube.com/watch?v=wxkdmL3iMCY&feature=related


Rolling Stones - You Can't Always Get What You Want (but if you try sometime, you might find you get what you need)

Live

[Artos]

08:38 PM on 08/27/2010

I recently rented a movie from Netflix called " American Experience: The Stock market Crash of 1929". It was very enlightening. In order to understand just how underhanded those who deal in the selling of Stocks can be people need to revisit past history. When one thinks about this kind of situation, the double dealing and lying of these people one is tempted to ask "How is this possible?", when instead they should be saying, "How is this not par for the course.". Many would say that the idea that these people could safely conspire together to pull off these ripoffs. I say this is just par for the course, and that they have plenty of capability to get away with their conspiracies safely. They did it with Enron and who's to tell whether the Bush administration weren't in some fashion helping them accomplish that ripoff. With Government complicity all is conceivable.

[dadw5boys]

11:07 PM on 08/28/2010

The problem is we do not have Patriot Banker like J.P. Morgan who locked all the Banker in the USA in a room and told them they would not leave there alive unless the pledged so many Billion Dollars to the Federal Reserve so Banking in the USA could reopne it doors in a few days.

Not since Madline Albright lock Yasser Arafat in a room and told him he would be shot if he tried to leave have we had someone willing to risk it all for what they belived in. We need these kind of Patriots back again who love the USA more than the money.

[plzgetreal]

06:07 PM on 08/27/2010

Kind of like Enron with the California 'energy crisis' a while back.

Time for these thieves to do some jail time......

[DASChicago]

05:45 PM on 08/28/2010

I've always believed that Enron was a "test run" that the bush's were very much aware of.

[wordsfromawoman]

05:55 PM on 08/27/2010

These bankers should be criminally pursued for fraud. Surely, there must be something with which we can nail these b@st@ards.
www.wordsfromawoman.wordpress.com

[IndyFem]

05:53 PM on 08/27/2010

The thieves have little to fear....all of their "blood money" is invested in off-shore businesses and accounts...Catch 'em if you can."

[Artos]

08:40 PM on 08/27/2010

Even more to the point they know that their money has the best politicians and Supreme Court Justices that they can buy with it. With all that going for them, why should they worry.