Apparently there's some kind of protest on near Goldman Sachs on Broad Street today. Gawker dot com, a media and celebrity gossip site, reports that twenty or so protesters are chanting and waiving signs outside of Goldman. Security, of course, was summoned and the protesters apparently took off to march up Wall Street.
The best part of all this, of course, is the cause: the protesters are protesting predatory lending. Of course, since Goldman doesn't originate residential mortgages and made money last quarter shorting mortgages, it's a bit odd to protest them for predatory lending. If anything, they engaged in predatory anti-lending. Details!
I Predict A Riot [Gawker]
Posted by , Nov 28, 2007 1:11PM
Prostesting "Predatory Lending." Nice, probably the same crowd that used to protest certain ethnic groups higher reject rates on loan applications. Ultimately, any mortgage borrower with anything but a non-jumbo conforming loan should be thanking banks and Wall Street for mispricing risk for the last several years.
Posted by SDH , Nov 28, 2007 1:13PM
why the hell doesn't gawker report on what they claim to be about and leave shit like this up to Dealbreaker.com. And why is it that Gawker got this and you didn't? Those guys will break anything, media related or not.
Posted by ian , Nov 28, 2007 1:21PM
Goldman sure as shit securitized subprime mortgages.
Posted by , Nov 28, 2007 1:26PM
"non-jumbo conforming" is redundant but otherwse good point 1:11
Posted by Anal_yst , Nov 28, 2007 1:29PM
Having never been a mortgage broker or banker or whatnot perchance I'm missing something, but what exactly is jumbo about a loan over $470k? Is this a relic figure from the 40s or 50s when that amnt would actually buy you something JUMBO?
Posted by , Nov 28, 2007 1:30PM
Is this the same group that was on CNBC like 40 minutes ago asking Wall Street to use the bonus money to bail out homeowners?
Posted by ha wait they did what? , Nov 28, 2007 1:37PM
@ 1:30 - are you kidding? Someone actually did that, and CNBC actually put them on air????? HAHAHAHAHAHA
Posted by girl , Nov 28, 2007 1:42PM
@ Anal_yst...I think it's jumbo for about 99% of the population to whose existence we are ever so oblivious ;)
Posted by , Nov 28, 2007 1:43PM
Have they heard of 'T-A-X-E-S'? HOw much more bailout do they want?
Posted by , Nov 28, 2007 1:47PM
http://www.cnbc.com/id/15840232?video=600797339 listen to this clown
Posted by michael schumacher , Nov 28, 2007 1:47PM
GS sure as hell sold the rest of the world tranches of credit that were leveraged 10x,20x and 30x against the loans in question.
The real strategy (or as we've come to find out LACK of strategy) was that Citigroup thought that it could just roll over all these shit loans (disguised as AAA rated paper) FOREVER and collect the monthly spreads on them. That no one ever stood up and asked the one question that should have given pause to the whole process "what if home values drop?"
Wall Street employs thousands of people with educations that cost many billions that allow many thousands of years of experience and the best that they can come up with is: Hold and Hope
Good luck with that....
MS
Posted by michael scott , Nov 28, 2007 1:49PM
it's colored greens
Posted by Hizza , Nov 28, 2007 1:52PM
Did anyone else notice that Erin Burnett is wearing a leather blazer today? How very sub-prime of her. Why didn't gawker break that doozy?
Posted by , Nov 28, 2007 2:01PM
The guy who wrote this on Gawker (Pareene) is a perennial Street hater (like all other assorted hippies out there) - calling people here assholes and so on. Wouldn't be surprised if he was part of the group planning this stuff - and hence got to know of it before anyone else.
Incidentally he is a geeky 22yr-old college dropout who got fired from his 'job' as a blogger from a dc blog for having an affair with some really ugly married chick at work. His angst is logical.
Posted by , Nov 28, 2007 2:16PM
1:37, it's true. See the 1:47 link for the CNBC video.
Posted by IBD , Nov 28, 2007 2:19PM
My god..how did this women actually get on CNBC....I mean I know she just wants to "axe" us a question...and "we would not turn down any money"....why can't this country lay as much blame on stupid consumers who overstate their income to get a larger mortgage or opt for IO or ARMs, yet know they can't make their payments when they adjust. I guess everyone gravitates towards the money.
Posted by s7.5 , Nov 28, 2007 2:23PM
the conforming loan limit is $417,000, the median new home price in the U.S. is around $250,000 (and falling). the conforming limit is calculated every year based on agggregate U.S. home price appreciation so no, this is not a holdover from the 40's and 50's it is just the current index that sets the limit on size of loans that can be guaranteed by government agencies
Posted by 1-2 , Nov 28, 2007 2:26PM
I'm still lost at the irony of people claiming these (former) mortgage originators were predatory lending. I mean, if someone is unable to afford a big screen TV it isnt the salesman's job to make them buy a smaller one; it's the purchaser's responsibility. They were predatory borrowers: taking advantage of the investors who they are now chastising.
Also, this should (but wont) teach the government to stay out of markets for moralistic reasons. They went out and said, "lend to the poor...lend to the poor...dont charge too much...just lend." So they did. Now all those originators are out of jobs (some rightfully) and the houses the "poor" bought are going to be repo'ed because they couldn't have paid for them in the first place. Everyone loses--except for my boy Kyle Bass at Hayman Capital. Btw, for a better critique of the gov't check out yesterday's OpEd section of the Journal.
Carney, give your fine readers your insight on the new "anti-predatory" lending laws that are only going to be a field-day for the scumball lawyers (not you of course).
1-2
Posted by michael schumacher , Nov 28, 2007 2:30PM
IBD-
Because it was not the individuals that leveraged up capital on the backs of these bad loans. Blaming the individual is one thing but it is entirely different when the bank margins itself into insolvency because it is in a race to compete with the Goldman's of the world.
No one made the banks engage in making a poor decision ALOT worse by having the strategy that the next buyer was assuming the risk......since that "next buyer" does not exist you see what happens when a 10% drop in home values are exacerbated by the amount of stupid leveraged decisions currently being housed in L3 accounting area's.
Having someone with the ability to pronounce the word "ask" would have been a smarter move for that organization however the people at CNBC knew well in advance what she was going to say and more importantly how she would say it.
Part of the continued "containment" philosophy that is espoused at every opp.
But I guess selling watches from the back of a van in the dead of night is good for all of us. cough....Citigroup.....cough.
Posted by anonymous , Nov 28, 2007 2:33PM
ditto s7.5 - the only YTY decline in the conforming loan limit was from 1989 to 1990. From the year 2000 to 2006, the conforming loan limit has increased 65%. Kind of puts the housing bubble in perspective.
Posted by Neal Hutchinson , Nov 28, 2007 2:38PM
Please remember that GS securitized billions in subprime mortgages over the last few years. I'd guess overall revenue on this was 4%-can't say what the profit margin was. Thus Paulson and Steel at Treasury got some pretty big bonuses on the backs of poor borrowers who are now getting foreclosed.
Posted by bill , Nov 28, 2007 2:48PM
Let's face it, Wall Street showed it only cared about the current year bonus to the detriment of the subprime idiots, the companies they worked for and the confidence of the entire financial system.
Fraud and incompetence will have to be bailed out by taxpayers in the end.
Posted by IBD , Nov 28, 2007 3:00PM
Michael,
I agree that the banks are at fault and are and will continue to suffer. I staunchly oppose any proposed bailout for them too. The leveraged products you are discussing were sold to qualified investors (hedge funds, pension funds), who are expected to understand the risks involved in the products they are buying. Banks soon discover if a qualified buyer rejects their products then they themselves are forced to hold this illiquid and risky products themselves (now being marked to model).
Predatory brokers and banks who orginated mortgages illegally should be punished. However, perpetually blaming someone else for one's own stupid mistakes is pointless.
If banks become insolvent due to their own creations they should fail, and the investors who spent no effort reviewing the risk they were investing in during boom times should lose their money too. This country should get away from the mentality that anything is "too big to fail." If we want banks to account properly for risk then they must properly experience the effects of their decisions.
Posted by just me , Nov 28, 2007 3:06PM
who cares about yesterday? blah, blah, blah....as for me, I'm getting some some pieces of female tail from the midwest lately. I even had one loser chick offer to fly into manhattan so I could test drive the goods. I hope the subprime mess never goes away 'cause it makes these farmers' daughters ohh, sooooo horny.
Posted by WS , Nov 28, 2007 3:09PM
Let's face it, the protest was a fraud,
no one put a gun to anyones head to take out loans/mortgages that were risky or couldn't afford,
These people who will lose their homes or can't afford payments, that's their fault, no one told them to buy a house they couldn't afford,
and now of course, they want a handout once more, because of course, that's the American way,
Well, let the invisible hand of the market help them, they dseserve nothing more than investor education on how to make financial plans.
The American Taxpayer suffers enough, we don't need to bail idiots out who can't make informed choices when getting a mortgage.
Posted by WS , Nov 28, 2007 3:10PM
Let's face it, the protest was a fraud,
no one put a gun to anyones head to take out loans/mortgages that were risky or couldn't afford,
These people who will lose their homes or can't afford payments, that's their fault, no one told them to buy a house they couldn't afford,
and now of course, they want a handout once more, because of course, that's the American way,
Well, let the invisible hand of the market help them, they dseserve nothing more than investor education on how to make financial plans.
The American Taxpayer suffers enough, we don't need to bail idiots out who can't make informed choices when getting a mortgage.
Posted by michael schumacher , Nov 28, 2007 3:16PM
>Predatory brokers and banks who orginated mortgages illegally should be punished. However, perpetually blaming someone else for one's own stupid mistakes is pointless.>
So by your rationale if the banks did'nt know what these tranches consisted of they would be immune from any sort of culpability?
Is it not a bank's job to FULLY disclose what product they are selling to it's clients???
In many cases these banks were sold a bill of shit by the brokers....stating that the actual product was an "AAA" rated instrument. We now know that they merely placed a small portion of higher rated instruments with quite alot of junk...but it got rated at "AAA" so the banks represent them as such.
If they do not know what the hell they have then don't sell them. Offloading risk to the next buyer works fine.....until you do not have that "next" buyer..which is where we are at currently. They knew what they were selling and posing as apologists at this point is being rewarded with bailouts.
But that wouldn't generate the precious fee's they all need to survive.
let's really call this mess what it is: it's about protecting credit spreads that vanished in August.
Posted by michael schumacher , Nov 28, 2007 3:25PM
WS-
But we can bail out banks each and everyday who took those loans and leveraged themselves on THE SAME BET THAT HOME VALUES WOULD CONTINUE TO RISE.
Screw the consumer and bail-out the banks who made the same stupid decision almost 30x over.......
Don't get me wrong there are ALOT of consumers who need to get hurt because of stupid decisions......but it does'nt stop there. You think that we would be in the current credit "issue" if it were just only bad decisions made by individuals????
Think again.....try a little research before you blame the current ills of the market on consumers.
Blaming the consumer for the current problems that Wall Street is having is akin to handing out speeding tickets at the Indy 500........it only started with bad loans......exacerbated by pure and utter greed on the part of the banks and brokers.
But I hear that "it's all contained" too...
MS
Posted by WS , Nov 28, 2007 3:36PM
We shouldnt be bailing out the banks either, the only reason that is happening is because people like Jesse Jackson are screaming for it in order to protect poor people from losing their homes.
No bail out for banks or consumers. Let them reap what they saw!!!
Look at citi, it bailed itself out the other day with a a private investor, not the tax payer.
Posted by WS , Nov 28, 2007 3:37PM
We shouldnt be bailing out the banks either, the only reason that is happening is because people like Jesse Jackson are screaming for it in order to protect poor people from losing their homes.
No bail out for banks or consumers. Let them reap what they saw!!!
Look at citi, it bailed itself out the other day with a a private investor, not the tax payer.
Posted by Matt , Nov 28, 2007 3:50PM
current credit "issue" if it were just only bad decisions made by individuals???
????
So are you balming the computers? Aliens? Cyborgs?
Last I check ALL decisions were made by 'individuals' and the ones selling a CDO, the one buying it and the one taking out the underlying mortgage are gifted with the same powers of intellect (at least that is what the underlying belief is behind all claims of equality).
Blaming the consumer for the current problems that Wall Street is having is akin to handing out speeding tickets at the Indy 500
In which retarded world? Is that even logical?
But blaming the baks is definitely like blaming the car manufacturer for building a car which some moron raced, crahed and died in - after all if there was no car then there would be no race, right?
And you argument of deflecting blame from the end user - the person who took out a loan he couldn't afford (assuming no fraud on part of brokers) - is based on a strawman argument that banks are being bailed out hence consumers should.
But who argues in favor of banks being bailed out? And more fundamentally, being bailed out with PUBLIC TAXPAYER money?
If city wants to create an SIV guranteed by other private participants - its their wish - as long as NO taxpayer money is involved. The only was Citi will learn is if it is hurt now.
Yes - this credit bubble - as was the case with every prior bubble - was the result of irrational expectations by many many many 'individuals' - including homeowners as well and people financing them. Now that it has burst, everyone who those who were later speculators will get hurt. The early speculators have made good with their gains.
And there are idiots who got into the game without knowing head or tail about what it was about. Some ended up making money - others will fail. I mean if you bought millions of dollars worth of AAA CDO's without even knowing what CDO meant - are people supposed to shed tears for you?
Posted by creamer , Nov 28, 2007 4:15PM
my god. the SIV issue is small-fry. you have NO IDEA what it is like out there!
Posted by Matt , Nov 28, 2007 4:51PM
Really??? Tell me more about it ......
Posted by Evaluator Speculator , Nov 29, 2007 5:48AM
so they are protesting low interest rate loans to their brethren who should not have been allowed loans in the first place....or are they protesting goldman making money off a market move that they did not create but were smart enough to profit from...
confused idiots - if it's not a tax bailout for the ineligible/poor, their attitude is that it's bad - fuck them...
Posted by michael schumacher , Nov 29, 2007 10:48AM
>>I mean if you bought millions of dollars worth of AAA CDO's without even knowing what CDO meant - are people supposed to shed tears for you?>>
That is exactly what the banks are playing right now...."please help bail us out with more rate cuts because we securitized all these loans that no one wants to buy so WE need to be bailed out.
The system that is ENTIRELY controlled by the lenders (i.e.banks) knew EXACTLY what they were doing with approving no document 300% loans because they all thought they were selling them off and having the next buyer assume the risk. Well there are no "next buyers" (which ironically is what got Chuck Prince fired for his stupid dance comment)
Blaming people for taking advantage of a system that is broken is not the cause.....it's the system that is broken not the individuals that use it. The fact that the banks exacerbated poor decisions by making EVEN POORER ones is what is being bailed out here.
Grow Up Matt and face reality....not the bad loan you're neighbor has that the bank is exchanging for cash via the repo. window that is causing the market to soar so that we can be consistently lied to about every single economic indicator that the gov't puts forth.
Yes that's that bad consumer who took out a loan to occupy a house that Wall Street now has leveraged over 30x because they all thought that home prices would never drop.
Nice try....
Posted by michael schumacher , Nov 29, 2007 10:52AM
>>I mean if you bought millions of dollars worth of AAA CDO's without even knowing what CDO meant - are people supposed to shed tears for you?>>
That is exactly what the banks are playing right now...."please help bail us out with more rate cuts because we securitized all these loans that no one wants to buy so WE need to be bailed out.
The system that is ENTIRELY controlled by the lenders (i.e.banks) knew EXACTLY what they were doing with approving no document 300% loans because they all thought they were selling them off and having the next buyer assume the risk. Well there are no "next buyers" (which ironically is what got Chuck Prince fired for his stupid dance comment)
Blaming people for taking advantage of a system that is broken is not the cause.....it's the system that is broken not the individuals that use it. The fact that the banks exacerbated poor decisions by making EVEN POORER ones is what is being bailed out here.
Grow Up Matt and face reality....not the bad loan you're neighbor has that the bank is exchanging for cash via the repo. window that is causing the market to soar so that we can be consistently lied to about every single economic indicator that the gov't puts forth.
Yes that's that bad consumer who took out a loan to occupy a house that Wall Street now has leveraged over 30x because they all thought that home prices would never drop.
Nice try....
Posted by Matt , Nov 29, 2007 12:40PM
That is exactly what the banks are playing right now...."please help bail us out with more rate cuts because we securitized all these loans that no one wants to buy so WE need to be bailed out.
Strawman strawman strawman!!! When did anyone talk of bailing ANYONE out? Yes, Anegelo Mozzilo is no different from the subprime lenders he lent to when he sayd 'capitalism isnt perfect' - both tried to make hay while the sun was shining and now want to shove there mistakes onto others. Oh hell yeah it is perfect as long as the govt doesnt step in between.
All your arguments for a bailout for the borrowers hinges on the argument that banks will be bailed out. But who supports paying Citi and Countrywide with taxpayer money? So Citi was 'bailed out' by Abu Dhabi - completely private transaction and perfectly fine.
If Warren Buffet and Bill Gross want to use their substantial personal fortunes to 'bail out' needy borrowers - once again that is perfectly fine.
All the same, I didnt purchase a house, didnt get the option value of home price appreciation, didnt get any tax deductions on mortgage payments, didnt build up any equity in any asset and instead filled my landlords coffers. Why should I now be made to pay for those who chose to speculate?
Why didn't subprime borrowers put up in a trailer park instead of a 150k house if theu couldn't afford it? Why did they feel the need to extract all equity to pay for jazzy home renovation and fancy cars? Will someone now take all that away from them and make them pay back-taxes on all mortgage tax deduction before bailing them out?
The only way people will remember the lesson of NOT SPECULATING and NOT LIVING BEYOND THEIR MEANS if they are hurt once doing it. The only way shareholders will learn to buy into fundamentally value oriented companies and not speculatively bid up prices is when they lose actual money on a wrong investment.
And beyond all this, what exactly is the solution you are proposing? That non-homeowners like me should cut out taxes for all those homeowners in the form of taxes so that they can keep their speculative gains?