Wall Street Faces Fury Over Subprimes

[flashl]

Source: Yahoo Business

Regulators Hope to Make Wall Street Pay for Its Role in Subprime-Mortgage-Fueled Housing Bust

BOSTON (AP) -- Regulators are trying to punish Wall Street for mortgage finance practices that expanded home ownership and spread risk among a host of new players -- but also may have duped borrowers and investors who supplied cash to fuel a housing boom that's turned bust.

A handful of state securities regulators and a couple foreclosure-blighted cities have fired the opening shots with lawsuits trying to prove that investment banks and big lenders are guilty of more than just bad business decisions and failing to foresee looming mortgage troubles. Some regulators say greed and fraud underlie much of the subprime mortgage mess that has spread across the broader housing market, triggering a spike in foreclosures.

...

States have responded by tightening rules governing how lenders and brokers arrange mortgages and are compensated. But lawsuits and administrative complaints are the main tools regulators use to seek fines against companies accused of wrongdoing, or to set examples to deter bad behavior.

"What they can't enforce through regulation, they will try to accomplish through suing," said David Bizar, a Hartford, Conn.-based attorney with the firm McCarter & English who defends against subprime mortgage lawsuits brought by consumers and regulators.

Yahoo Business

Read more: http://biz.yahoo.com/ap/080218/subprime_wall_street.html

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FBI, lawsuits, regulations, and the SEC waking up from a coma may solve some future problems but not all of today's problems,

[aquart]

1. Ain't nobody gonna buy what they don't trust.

[annabanana]

2. I confess... this "bleeding heart liberal's" heart

is not bleeding for this crowd.

[dweller]

3. Some regulators say'greed and fraud' underlie

much of the subprime mortgage mess...

isn't that just another term for 'Cheney and *moron' ?

dp

[Buck Turgidson]

4. The Subprime Primer

funny....sad

http://www.economistblog.com/2008/02/16/a-subprime-primer/

[unblock]

5. as usual, it's easier to go after the big pockets than the sort it out

now, i'll be the first to acknowledge that the big pockets often are to blame. the big pockets let them feel the can survive getting caught, so there's certainly the temptation to try to get away with something.

but in this case, there's a distinction between the originators and the wall street financiers. wall street created lending guidelines and the originators ignored them and defrauded the investors on wall street. wall street might have had an inkling something was amiss and perhaps failed to be as diligent as we might like, but the problem, er, originated with the originators.


now, of course, the distinction is a bit blurred when some investment banks played both roles. e.g., citibank originates mortgages and is obviously a big wall street player. but the point is, it's the originators that were supposed to enforce the lending criteria, and figured out ways to get unqualified people into more house than the proper guidelines would permit.

[Amonester]

6. yeah, but house prices will ALWAYS go up (said the morons).

gee... wonder where they got their MBAs...

same places where the pretzeldent got (or bought) his?

[Quantess]

7. Good article.