In a fun little exercise today, the Wall Street Journal got in touch with a few of the people who John Paulson correctly bet couldn’t pay their mortgages, which resulted in him making $1 billion, and them having their homes foreclosed on. If you assumed that some of them wouldn’t be in the mood to offer kudos to Paulson and his team for coming up with such a sweet trade and killing it for their clients, betting on their demise, you assumed wrong! Jack Booket gives it up for JP this morning.
Mr. Booket, a 44-year-old heating and air-conditioning repairman, owed $300,000 on his three-bedroom home in Aberdeen Township. His house was one of thousands that wound up in a pool of mortgages that were referenced in the so-called collateralized debt obligation, or CDO, which Goldman created for Mr. Paulson. The hedge-fund manager invested heavily in a form of insurance that could yield huge gains if the borrowers grew unable to pay. In 2006, Mr. Booket got hit by a car while riding a motorcycle from a late-night party, was unable to find much work and couldn’t pay the bank. In October 2008, he lost the house to foreclosure and plans to move out by next week. He says he bears no grudge against Mr. Paulson and Goldman. “The man came up with a scheme to get rich, and he did it,” says Mr. Booket, who had refinanced his mortgage just months before the accident. “So more power to him.”
Aw, that’s pretty nice, especially considering that there are at least a handful of people who haven’t been kicked out of their homes trying to demonize JP for all this. And, just putting it out there to JP, do you what you want with it– a show of gratitude to Booket for the good press in the form of waving the minimum to get in on the action at P&Co probably wouldn’t be turned down at this time.
Stockholm Syndrome
Little did he know JP was actually driving the car
I still don’t understand why people are not taking fiscal responsibility for their own mistakes. Pay your mortgage and you don’t get foreclosed on. Quit blaming wallstreet for your inability to pay your obligations. Borrowers being able to walk away without taking a true loss is what is criminal to me.
I heard that JP has been working with Goldman for months now to create an instrument that will allow him to short the financial future of the Jersey Shore cast.
shit@#3…
By making a vapid comment as you did, you clearly indicate that you “still don’t understand” a lot of things.
The Guy from Delaware
@4 – I think Goldman and Corzine have already decided to do that, but to basically short the whole state of New Jersey into a pit. Bear, Lehman, Housing, Greece…..New Jersey.
@4 – JP doesn’t refer to Jonathan Peters does it?
(Those who know know)
@4
Pure gold
Shhhh Obama is on TV telling us how taxing the shit out of this city and destroying the last industry that creates wealth in this country is actually for the best for this nation.
I think we are really on the verge of greatness here. I feel like an astronaut from the Challenger shuttle the night before the flight…
Yes we can…
@7 – See you @SF.
(Those who know know SF=/=San Fran)
Obama sucks, the only reason why he is willing to tackle immigration reform is so that his Kenyan a$$ can stay in this country….
Fuck you overpaid under-talented Wall St. scumbags.
@12 Right back at ya, you overpaid under-talented AFSCME member!
3 = Trish Regan
There are I think 12 nonrecourse states. It’s a matter of state law whether an action for deficiency is permitted. Interestingly most of these states are bastions of conservatism and personal fiscal responsibility and moral probity. It’s also interesting that lenders seem to have no problem with making loans in the full knowledge that they can’t collect from the borrowers after foreclosure.
“the last industry that creates wealth in this country”
@9, you crack me up.
Booket’s moving out “next week”? Of course he bears no grudge…he hasn’t paid for housing for over 3 years
@9, you’re a delusional moron. Trading derivatives, M&A, and financial engineering is a zero sum game, not a wealth creator. Commercial lending and some areas of asset management create value, and eventually, some actual wealth. Other than those areas, it’s a bunch of douchebags running around placing and taking bets, creating products out of the primary lending and equity markets, arguing that they are providing “liquidity”, when in fact they’re only adding to the destruction when markets turn. But you think these services are “creating wealth” because your idiot employer hands you a reward for gambling the sucker client’s money. (Hard to have any pity for the clients either. Caveat Emptor, pension plan sponsor douchebag.) The problem is that uneducated right-wing crackpots like yourself think that these secondary market elements of Wall Street somehow add value to the country, when in fact it’s an institutionalized casino that every few years DESTROYS value and wealth, while making a fractional minority obscenely rich. And look at the stellar track record of the success of M&A and the massive wealth destruction from the majority of failed or value-decaying mergers – and the more “mega” the transaction, the more ridiculous the failure, with only a few successful exceptions. (don’t stop believing in synergy, though. It’s out there somewhere!) There’s nothing technically wrong (yet) with any of this activity, of course – it’s financial masturbation among a bunch of go-getter white guys who couldn’t think of anything else to do with their lives. But get a freaking clue and stop kidding yourself that most of these Wall Street sectors “create wealth” for the country. They create wealth for the fortunate few who are part of the club while subtracting from GDP when their shit blows up all over the country. Or do you actually think the sales commission on an Escalade trickles down?
- Guy hiding in Montauk
@10 – SF is now Pacha
when people are truly honest they always admit when they are wrong and suck
@17 lovely missive -
Go getter black guy
@17 Bravo
@2 Winner lol
ubiquitous@#17…
Your post is the best I’ve seen in some time. You obviously have a very clear understanding of how the sewer that is Wall Street actually functions.
Kudos to you.
The Guy from Delaware
p.s. TGFD likes Montauk too.
@2
No, no you’re wrong. They hire Blackwater to take out the homeowners for a flat fee.
Then they all default. Win-Win.
Oh
and @3
You are part of the people that still don’t have a clue. STILL.
@17 we all know the sales commissions on an escalade don’t trickle down…now on a ferrari…whole different story.
i hear that Goldman is developing a new product that will automatically locate and hit with cars the debtors of ABS that are being shorted by its best clients, ensuring that the borrowers will not be able to pay their obligations
He should have got that insurance. You know, the one that if you get hurt and miss work, it won’t hurt to miss work.
And they give you cash, which is as good as money.
Why would this guy have beef with Paulson? He re-financed his mortgage then stopped making payments. I’m sure he didn’t re-finance in a way where took a loan for less than what he’d put into the house. He made some money (plus had a cool place to live for a few years), Paulson made more money and the people who owned his mortgage (and the people who took the other side of Paulson’s bet) got totally hosed.
17 FTW.
Oh boo hoo, some laborer refinanced his mortgage that he couldn’t afford and Paulson guessed correctly so he got paid for it. Paulson didn’t kick the guy out of his house. The guy bought a house he couldn’t afford with a loan he couldn’t afford, good riddance to him for being the REAL source of this financial crisis — the retarded American middle class who overextended themselves in housing.
I’ll say it again…when the fuck did this website become overrun with bottom-feeding mouthbreathers who shill for Barry & his gang of Chicago thugs.
No one gives a fuck that your heart is bleeding. Wall Street makes money.
Back to Daily Kos with you! Back I say!
It’s lots of fun watching everyone point fingers. It gets a lot accomplished. How about: EVERYONE HAD A HAND IN IT AND DESERVES THE BLAME. Homeowners over-leveraged out of their asses… I like the repairman with the $300,000 mortgage, and that’s just small fries from what I understand. Now is he entirely to blame? NO, the system was designed and created to give this guy a chance to get that mortgage whether he deserved it or not (the SYSTEM = the GOVERNMENT, as witnessed by Fannie, Freddie, BS programs promoting every American owning a home), and he didn’t deserve it, obviously. But, in essence, the idea of every American owning a home, or having the OPPORTUNITY to own a home, IF EARNED AND DESERVED, is great. But the system doesn’t take into account whether it was deserved or earned, it says: “Every American Should Own a Home”, not “Every American should have an equal opportunity to Own a Home, if EARNED.” Now THAT would make sense.
Now, as for Wall Street, there is a real purpose to their existence. And, SHORTING mortgages in a perfect system serves a purpose, as a way to express an opinion that the system is overleveraged, which should resonate throughout the rest of Wall Street, and find its way into the pricing of mortgages written or backed on main street, but there is clearly a disconnect between the actions of wall street and main street. Now that is a failing of the system, and similarly exploited by the participants in the system the same way that mr Repairman exploited the system by getting himself a $300,000 mortgage.
How about the following: Transparency in financial transactions (Transparent Clearing Mechanism for all derivatives), properly linked compensation packages, removal of BS subsidies that further leverage the system and back it with taxpayer dollars, no more bailouts (also taxpayer dollars)? Can we get behind that?
-Guy who’s sick of all the fingerpointing and sick of the inability of anyone in a leadership position to get to the bottom of and address any of the problems that exist.
In 2006, Mr. Booket got hit by a car while riding a motorcycle from a late-night party, was unable to find much work and couldn’t pay the bank…..I would have shorted his mortgage too! What kind of an idiot parties it up and then gets on a motorcycle to drive home??
@TGFD,
I don’t get why you’re all over #3. This guy bought too expensive a house and stopped paying for it and lived in it for 16 months after foreclosure for nada. How is this guy the victim? Why should we feel sorry for him?
I usually think you’re take is pretty right on but I just don’t get this one. Is it irony lost on the post?
@33 – can you please define some terms for me?
1. “Transparent Clearing Mechanism”
2. “all derivatives”
3. “properly linked compensation packages”
4. “BS subsidies”
5. “the system”
Thank you. Properly defined, I can get behind the ideas. Without definition, those clever phrases are merely a bunch of pithy-sounding sound bite fodder.
@7 Jonathan Peters is doing SF arb, long trannies, short jersey shore
When did Michael Moore join the WSJ as a staff writer?
It’s a sad day when the Wall Street Journal succumbs to the populist yellow journalism that would one would have expected in the New York Times.
“I have an appointment at the welfare office to extend my benefits another two years but my car broke down! DAMN THOSE FAT CAT BANKERS! I’m sure it was damned Lloyd Blankfein who broke the fan belt on my Jeep Cherokee! The union hasn’t called me back, and no one is hiring 65-year-old assistant elevator operators anymore. I’ve had to subsist on my pension, social security, 401k, alimony checks, welfare, and unemployment insurance benefits for the past three years and I can’t pay my $800,000 mortgage on my six-bedroom house.” (Cue the nanotech violins.)
Dazed_and_Confused@#35…
TGFD wasn’t on DB last nite, but this morning your comment got me to thinking again about #3. If 3′s understanding of the mortgage problem is limited to “people are not taking fiscal responsibility”, then surely he doesn’t understand much, at all.
TGFD too believes that people should be responsible for their actions; however, the mortgage problem went way beyond that.
To understand my thoughts on the mortgage mess, down at the homeowner’s level, perhaps you could read the following excerpt from TGFD’s “Treatise on Women”. It is a very good summary of why TGFD is not too critical of the so-called sub-prime borrower, but as you read, please remember that the subject of the “Treatise” is Women, and not mortgages.
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What I find most distressing on DB are the cruel comments about “the little people, the ignorant, the dumb, the uneducated, the 50% fat, the poor”, and my personal favorite, the “pear-shaped” women. Why do they deserve your scorn, your arrogant condescension? What did they do?
Weren’t they little girls once? Didn’t they have thoughts of pretty little dresses, of tea parties, and dreams of being a ‘princess’? Although the place in which they lived would hardly befit a princess. And where are they now? Decades later they see the lines, the wrinkles, the fat, the near hopelessness. They may have little ‘princesses’ of their own too. Their husbands may be worried about losing their ‘menial’ jobs. Money is tight. There may be health issues, problems with alcohol, problems with abuse. Their teeth aren’t so nice any more. They can’t afford dental care. They don’t smile much.
And they’re not very good at math.
They listen to someone in a position of trust, a bank loan officer, a mortgage goon, or to some other bad actor in this dismal drama. “You can do this, now is a good time for you; prices are going up, you can build equity; I’ll do the paperwork, I’ll help you refinance later.” “Can we really? A home of our own? And with a yard, a place for the girls to play; we can have cookouts. I can plant some flowers; I love flowers.”
And so, the second act closes.
Now we are into the grim third act, the one that doesn’t want to end. The light of her American Dream has been extinguished. The nightmare ensues. Her husband’s job is shaky; maybe it’s even gone by now. Bills lie on the kitchen table, unopened and unpaid. “What will we do? How can we pay?” That mortgage goon is gone too, his office empty. There’s no equity either; there never was. “How could this happen? Where will we go?” The girls are fighting. The foreclosure man will be there soon. We can almost taste her tears.
I know you can’t help these people, but a little compassion for them, a little sensitivity to the difficulties they face might be nice. And no, I’m not a Liberal.
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The above excerpt was written by TGFD more than a year ago, and my “Treatise on Women” is still a work-in-progress, although I haven’t added much to it lately.
I hope TGFD has adequately explained why I believe that #3 is somewhat short in the understanding department.
The Guy from Delaware