"A Walk In The Park" - A High Level Banker's Take On #OccupyWallStreet... And Other Musings

Tyler Durden's picture

By Russ Certo, head of rates at Gleacher

A Walk In The Park

The life of man upon earth is a warfare…   Job 7:1

Let them call me rebel and welcome, I feel no concern from it; but I should suffer the misery of devils, were I to make a whore of my soul          Thomas Paine

Be not deceived.  Revolutions do not go backward.       Abe Lincoln, May 19, 1856

We will either find a way or make one…Hannibal

Where the people fear the government you have tyranny. Where the government fears the people you have liberty.
John Basil Barnhill (1914).

I am not the friend of a very energetic Government.  It is always oppressive.  Thomas Jefferson

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Excerpts from “Rules for Radicals” Saul Alinsky  1971                                                                                

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The first radical known to man who rebelled against the establishment and did it so effectively that he at least won his own kingdom-Lucifer        Saul Alinsky (A.K.A SA)

The organizer is constantly creating the new out of the old.  He knows that all new ideas arise from conflict…     SA

This is the job of today’s radical-to fan the embers of hopelessness into a flame to fight…    SA

A Marxist begins with his prime truth that all evils are caused by the exploitation of the proletariat by the capitalists…     SA

Change means movement.  Movement means friction.     SA

In the Declaration of Independence, the Bill of Particulars attesting to the reasons colonists felt that England had been guilty of, but listed none of the benefits…     SA

Compromise is a word that carries shades of weakness, vacillation, betrayal of ideals, and surrender of moral principles.      SA

Change comes from power and power comes from organization.     SA

The first step or organization is community dis-organization; fan the latent hostilities of many of the people; search out controversy; stir up dissatisfaction.     SA

The target should be the banks that serve the steel, auto, and other industries…     SA

Fat cat bankers….     SA

We must begin with where we are if we are to build power for change, and the power and the people are in the big middle-class majority…     SA
Any organizer knows, as a particular tactic grows out of the rules and principles of revolution…     SA

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Alinsky’s techniques and teachings influenced generations of community and labor organizations, including the church-based group hiring a young (Barack) Obama to work on Chicago’s South Side in the 1980s…    

Chicago Sun-Times on the cover of “Rules for Radicals”

http://www.amazon.com/Rules-Radicals-Saul-Alinsky/dp/0679721134#reader_0...

Millionaires and billionaires….BHO

If you’re on the cover of a best seller, you have a responsibility.  Last Thursday I walked from Town Hall in N.Y.C to Wall St. wearing my navy blue pin-stripped suit, asking for directions to the NYSE from PROTESTERS and ORGANIZERS.  You should have seen the look on their faces.  Kill em with kindness and a smile. 

Everyone was there.  SEIU, ACORN, Longshoremen and other organizers, faceless, unemployed, faceless employed, moms, dads, and lost souls.  I felt like a lost soul during a slow motion walk near frozen in time.  There were almost more press corps than protestors but they achieved one of their goals, virtually shutting down a major grid of commerce in one of the most travelled corners of the nation, Wall Street.  Ironically, I was on my way to a conduit in support of affordable housing goals aided by a bunch of  bankers in the iconic figment of capitalism, the NYSE. 

It was a surreal walk accentuated by Contrast and Conflict, my own and others  For me there was a conflict of the realization of a mis-understood marriage and divorce of catalyst Congressional public policy initiatives and government sponsored support, in which I was in route meeting, and with private partner capitalist mandates of mortgage finance, me. 

I’ve been asked often in my own community recently, “What is Occupy Wall St.?”  I sense the answer is different for different people.  A dis-organized expression for many.  But a highly organized expression for others from the likes of quotes from organizers above.  Caroline Baum asked demonstrators AND HERSELF the question recently.  Just as I side-stepped the blitz with a silhouette of a Bull in the distance.   http://www.businessweek.com/news/2011-10-06/anti-wall-street-protests-ig... An organizer?!$!$%

I ask what is a banker?   Who are these evil people?   Is it loan officer?   FX trader, teller, IG trader, taxable fixed income salesperson, middle office operations employee? 

I strongly suspect the 99% is not aware of the intimate linkages of public policy-private partnership between big government and big business in the past and in the present.  Is history about to be written or rewritten?   Is there a correct or accurate written history?   I wonder if Boston Tea Party is described accurately?  Factually accurate if there is such a thing in revolution?  Who is Occupy Wall St.?  Who are banks?  What are liar loans?  How many people’s mortgages are worth less than the value of their home (8 million). Who are your friends?   Which side of the isle of Congress espouses your views?  Where is the genesis and chronology of blame?  Who is John Gualt?  

Have 99% of the Haves or Have Nots analyzed loan data?  Severities, LTVs?  Some would suggest that the largest percentage (near 35%) of certain vintage loans, the worst performing otherwise known as “liar loans”, weren’t even originated by banks but by one mortgage finance company named Countrywide.   How awkward.  I didn’t have enough time to dissert that to man unpacking sleeping bags from the van.  Was there speculation?  What is a vintage? 

This may lean partisan but is Main Street aware of the genesis of  specific Congressional initiatives to court mortgage finance companies?  Barney’s (Frank) action plan specifically targeting Countrywide to increase affordable loans?  Speaker of the House, Nancy Pelosi, Senate Banking Committee Chairman Chris Dodd, Senate Budget Committee Chairman Kent Conrad, Former CEO of Fannie Mae, Jim Johnson, Secretary of HUD, Alphonso Jackson and dozens of others in Congress received off-market non-economic favorable mortgage financing from Countrywide as friends of Angelo.  I am a banker on the way to try to partner and help make more affordable loans by increasing liquidity to support housing formation!#$$^#^^@.   http://en.wikipedia.org/wiki/Angelo_Mozilo.   Gretchen Morgenson has consistently written about these things.  

Mortgage companies, Congress, HUD, Fannie.  Is there an information, education, socio-economic, emotional, disconnect?  Will history be documented accurately?  The history of civilizations.  One percent Barron’s, a periodical of money, suggest the protestors should occupy the place that’s the real SOURCE of the problem-Capital Hill.  Will anyone see it that way?  Should they?  Does it make sense?  Likely not, that is why I reflect on the Popular Delusions of Mankind and the Madness of Crowds.  http://online.barrons.com/article/editorial_commentary.html. 

Especially, since 2008.  The Madness of Crowds by Mackay.  http://www.amazon.com/Extraordinary-Popular-Delusions-Madness-Crowds/dp/...

This hasn’t been lost on Gretchen Mortgenson of the NYT.  One would think that the NYT times would have certain partisan leanings.  Gretchen has been steadfast in documenting the facts and genesis of the mortgage crises which I’m sure you can attest with a few search engine searches   Can you discuss bank’s role in crises without partner Congress?  Is that lost on the lost?    This weekend Gretchen again makes the LINKAGE highlighting the 98th annual convention of the Mortgage Bankers Association.  Gretchen must have been able to get a hold of the list of registrants as she lists quantity of attendees by firm.  “Fannie and Freddie, still the socialites” from the NYT.  http://www.nytimes.com/2011/10/16/business/fannie-mae-and-freddie-mac-st...

Randall Forsyth in Barron’s talks about a mis-match of skills (or lack thereof) of the unemployed and those sought by employers.  Isn’t this really the debate that occupies Wall St.?  Is also occupies the Fed as Forsyth highlights, as did I last week in rudimentary note, that the notion that “the central bank alone cannot determine unemployment and inflation through its monetary manipulations”, according for Forsyth.  One should be extremely careful in understanding the consequences of policy, particularly in light of the order (or dis-order) of the day linked to failed policies. 

In case you missed my note or the Up and Down Wall St Column, the upshot is that the Fed opined in its most recent minutes released last week that it “could include specific objectives for unemployment and inflation.  Nor can it do much about other structural impediments such as regulatory issues.  I didn’t write this, a renowned financial author and professional did.  In other words the Fed could set some targets for the jobless rate, currently stuck at 9.1%, and indicate that it can keep interest rates low until it sees that rate come down meaningfully.  HOWEVER< said differently as I have queried often, why are central banks bailing out poor fiscal decisions by governments and consumers alike?  It was subtle verbiage in this week’s minutes which has gimmick policy implications, which ultimately affects a slew of market valuations and capital structure optimization.  I didn’t hear anyone summarizing about this last week.  We will watch as these communications of desired transparency for the Fed continue.  http://online.barrons.com/article/SB500014240527487034927045766229929709...

In the same piece, Forsyth notes the Fed’s pledge of holding interest rates near zero until 2013 could backfire, implying that it could be more than a year and a half until the economy gets moving.  So why hire now?  In other words, the Fed’s dire proclamations are having the unintended consequence of having a perception become a reality, negatively impacting the viral feedback loop of confidence on consumption.  Quantum physics Heisenberg Uncertainly Principle, the act of measuring an outcome changes the outcome.  The Fed’s actions may ensure outcome. 

Lacy Hunt of Hoisington echoes the same, that unintended consequences have superseded the Fed’s professional aims.  QE2 CAUSED the current slowdown as rising equity values only helped the 1% Haves but higher energy and commodity prices, food and fuel, decimated the real incomes of the 99% Have Not average family.  I paraphrase a bit here but extremely interesting points regarding unintended consequence, law of opposites.  I see similarities to major themes in markets. 

Consider QE2, the end of QE2, and twist.  Technical micro trees from the forest themes associated policy easings in the form of ASSET PURCHASES to extrapolated asset price performance but were trumped by macro step back forest of a central bank Chairman is either protecting your cash flows or diluting/devaluing them.  Easings or targeted asset purchase ironically dilute the storehouse and end of program run off realities preserve performance as a relative tightening preservation of fixed cash flows.  In essence, other that grandiose and inaugural QE1, the entry and exits of other policy ruminations effected the exact opposite response Lacy and Randal pointed out.  Since the actual start of twist, the curve has steepened and nominal and mortgage rates are higher, at least for now.  Interest rate outcomes respond well to vigilance and less so to helicopter liquidity droppings. 

Barton Biggs, as readers know, authored one of my favorites “Wealth, War, and Wisdom.”  I will borrow a major tenet from the book and apply it to major global markets in the last several weeks or even last week and to the comments from Barron’s above.  I am not an advocate of efficient market theory but Biggs purports the nuance that historically, WWII in this case, the collective wisdom of markets often accurately discount inconceivable outcomes by the masses.  He studied asset performance, not during the Great Depression, but during more onerous WW2 when the practical reality was one of living in a subterranean subway for survival from Axis.  Shockingly, he backdated and found that collective psyche of markets, asset performance, and wealth preservation often discounted the future probability of outcome in major battles of the war. 

You don’t need to look at news footage of Wall Street protestors to know that banks are among the most hated of sectors.  In the U.S. the S&P Financials is the worst performing sector of the year, down 21%.  The Stoxx European banks are down a heftier 30% in local currencies.  Many major financial entities are down closer to 40%.  http://online.barrons.com/article/SB500014240527487034927045766230319099...

Dare I say that the irony of unintended consequences and collective wisdom of markets not just Fed policies or wartime scenarios MAY see Occupy Wall Street as the cover of Time Magazine and collective discounting.  Of elections.  Maybe, price actions reflect extreme sentiment.  However, maybe the great dissatisfaction of this day may in fact be statistically impacting election outcomes.  Has popular sentiment become so impacting that the James Carville observation, “it’s the economy, stupid” has extrapolated a reverse course statistical policy outcome?

Oil and gas gained 10% on the week.  Norway was the largest European gainer this week up 7% as its proxy to energy export.  There was a 7% move in financials, 12% S&P gains since early last week, up on the year, longest streak in 6 months, 5.5% Euro gains off the low of early this month after September posted biggest USD one month gain since 2008 crises, 10% appreciation of risk and commodity and growth oriented Brazilian real, Ausi dollar……collective wisdom of markets.  Or maybe, some players anticipated the Barron’s Cover Story, “Time to Buy!” financial institutions.  http://online.barrons.com/article/barrons_cover.html#articleTabs_panel_a...

Is it as simple as pent up extreme sentiment, European political resolve, stronger retails sales or value investing?

What about bonds and what do they make of all this?  After the benchmark Treasury yield plummeted in September to 1.627%, its lowest levels since the 1940s, the 10 year yielded 2.22% late Friday, up sharply from 2.08% at the start of the week.  The 30 year at 3.205 vs. 3.025, a dramatic pullback in the face of operation twist.  Unintended consequences, law of opposites, macro Chairman easing create inflation aspirations trumping micro technical asset purchase twist schemes.  Forsyth, Lacy, Barton, Occupy.  http://online.barrons.com/article/SB500014240527487034927045766230413489...

Maybe, three fold European plan taking place: new bailout for Greece, effort to shore up banks, and reassuring insurance backstop mechanism firepower.  (I have strong opinions on this newfound concept of insurance so let’s talk off record.)  Maybe, bond and equity markets alike are responding to central banks achieving their goals, of creating inflation.  “Euro Zone’s Inflation Jumps FAR Above Target.”  The annual rate of inflation rose in September to 3% from 2.5% in August. http://online.wsj.com/article/SB1000142405297020400230457663044366795749...

Collective wisdom of Schumer Bill.  On October 6, 46 Democrats and 16 Republicans joined to pass the Schumer bill, which would require the Treasury and the Commerce Department to impose retaliatory tariffs on nations that have overvalued currencies.  China. 

Supposing, Congress IS right and that if China stopped manipulating its currency which many an economist deem 15% to 38% undervalued, would a 38% increase of all prices of goods imported from China be good for American consumers?  Bond market take notice.  Rules for Radicals incite your largest creditor in fragile economic climate?  Smoot-Hawley knocked 15% of the value of U.S. imports almost immediately.  Canada partner/neighbor responded and quickly erected trade barriers of their own.  U.S. exports fell 50% in less than 3 years.   Weak economic tidings but importation of inflation?  http://online.barrons.com/article/SB500014240527487038870045766293102408...

Floyd Norris NYT timeliness.   Imports to most countries plunged when the credit crises began in 2008, and then recovered.  But in recent months, slowing economies have led to renewed declines in most countries in the Euro zone.  Appropriate time for retaliatory Schumer tariffs, no?  http://www.nytimes.com/2011/10/15/business/europes-consumers-are-pointin...

What will the consequence of the litany of above listed policies be on inflation?  Other than being scared to dickens by policies which DISCOURAGE confidence in housing formation, “Looking to Rent? Good luck.”  This NYT Real Estate Section title notes that times may be tough but rents in Manhattan are breaking records.  They now average $3,331 a month, and vacancy rates have fallen.  Rents make up more than 30% of owners equivalent rent (OER), the largest portion of the CPI.  Unintended consequences.  http://www.nytimes.com/2011/10/16/realestate/rents-in-manhattan-rebound-...

The above section feature is validated by the WSJ article articulating that many metropolitan markets have price/rent ratios in the single digits, suggesting bargains abound.   Take notice that this rent creep will be hitting the CPI.  This is ironic in the fact that more people are renting as home ownership housing stock has come down significantly by historical standards.  Buy high, sell low?  NOW Barney and Congress are promoting renting.  http://online.wsj.com/article/SB1000142405297020477460457662944331303573...

Popular delusions of mankind and the madness or crowds.  Ironies of laws of unintended consequences, policy prescriptions, community “organizations” or disorganizations, world of opposites, marriages and divorce of politicians and bankers, partisan parties, twists, collective wisdom discount mechanisms, rent or buy, buy or sell, 1% or 99%. 

Russ

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High Plains Drifter's picture

agreed. this fuck is making excuses. he doens't get it........

jeff montanye's picture

in answer to his question who is a banker?  for the purposes of this discussion, something on the order of the board of directors and the top fifty (by market value/compensation) each of: shareholders, bond holders and management of each too big to fail organization.  no, not the tellers, disingenuous one.

whstlblwr's picture

Everyone was there. SEIU, ACORN, Longshoremen and other organizers, faceless, unemployed, faceless employed, moms, dads, and lost souls. I felt like a lost soul during a slow motion walk near frozen in time."

Well his walk in New Hampshire would be different! Now the liberals complaining LOL!!

What I Learned At Occupy New Hampshire
by Dan Kervick 10/16/2011 - 12:23 am
Well, not much really.
There were about 350 people there. That was good.

But here's the bad news:

One of the apparent leaders and key organizers is a Ron Paul guy. He's a Republican state rep. He was there with his Ron Paul sign and a megaphone. He is also, I think, the moderator of the discussion forum on the Occupy New Hampshire web site.

This was something close to my worst nightmare. I have absolutely no interest in being part of a movement that is some sort of junior version of the Tea Party, and it depresses me that what I had hoped was the awakening of a progressive movement is so incoherent and unsure of itself as to include these radical right crackpots under their tent. If the Occupy movement is not able to develop even enough coherence to kick these guys to the curb, it's not something I'm going to be able to participate in. I've had enough of laissez faire - and at bottom, that's what these guys are all about.

Raging Debate's picture

Whstlblwr. I don't like the bi-polarity and framing left right issues these days so I must be brief. Outside of major war, I do believe the State of NH could win the DRIVE-THE_CAPITAL-OUT-OF-THE-STATE the fastest award. Although I dunno, Washington and Bankers shipping to China in terms of scale may just take the cake. Perhaps I should consider seperate awards...

I moved from NH because of it's indirect tax policies - AKA the police state. People outside of NH (although Texas had some similar issues) have no idea what it was like the last 15 years.

I stood up to the court system and I was totally criminalized, family broken apart because I dared even suggest better ways of doing things. What kind of Progressivism are you looking for? There is a fairly new program called Families First which  focuses on  assisting the shattered family culture of the State. Highly Progressive but right now, underfunded as the States financing has collapsed. So the other side of the coin is a much needed program to attract capital. Politics are a pendulum, NH will swing more to the right. It was so far left it defied the general cycle of Fascism first Communism second which is the inclination you may further desire but I sure as hell don't! Neither does anybody else with a penis in NH! In some US States, the opposite will be true, they will want and be better off going more socialist (a tad). 

I see Congressman Guinta's banner on the ZH site. I will give Guinta some big bonus points for knowing the State needs a two way web-based communication system as in yesterday. And I will be seeing him Friday so if you want to actually do a little research or add something for you and report it here (or I will report it first on my network Raging Debate.com and link it here) then call me at 603-953-3388. That is my cell phone and my name is Jason Rines.The scared little dweeb at Morgan Stanley complaining about anonymous media commentators can kiss my ass. Any I.T. or I.T. tech knows how terribly easy it is to find anyone on earth these days if a government has the mere inkling to.

 I am also attempting to lead by example and help my home State but putting a lot of righteous anger aside and now help rebalance because the leverage games are over. Organic growth will be very hard (less so for those us that kept its practice barely alive) and those with brights, integrity and balls step right up and lead. Otherwise, my ten year struggle was all for nothing...

phyuckyiu's picture

This guy speaks with more free association than someone high on LSD. Impossible to follow. Only thing he said worth noting is 'Quantum physics Heisenberg Uncertainly Principle, the act of measuring an outcome changes the outcome.' , and that ZIRP being forecast a few years out assures the conditions for ZIRP will continue to be met. Schrödinger's cat. Quantum Physics rules. Awesome book by Robert Anton Wilson too.

merizobeach's picture

I made a brief career in political activism in the States before I moved away.  Activist work in the States hammers home to one the significance of voter turn-out; for example, in '08, after 8 years of horrorshow, there was a 40-year best voter turn-out.  56.8%.  There was still a voter apathy of 43%, or 99 million eligible voters that still couldn't be persuaded to turn out.  http://www.infoplease.com/ipa/A0781453.html

 

Catalyzing the bloated masses into action requires persistent, active organization--meaning people functioning as organizers.  I'm very cynical of the authenticity of Occupy movement, as I am of most things, as many are as well.  There seem to be hints of real awareness and motive, but the American public has nearly zero training or experience in political protesting or activism.  I don't doubt that many people want reforms, but I also suspect that most have no idea what reforms they actually want, in clear legal terms.  In these early stages, this kind of grassroots movement is necessarily disjointed and ad hoc.  When it spreads like wildfire, I'm a bit taken aback.  The masses do not catalyze easily..

 

So then, it really is just a flash-fire of long-sewn seeds of discontent.. or, if Friar William of Ockham may forgive, is there something more complex and sinister?  Are the least obedient sheeple being herded for slaughter..?  Unified Quest 2011 has US military training for domestic unrest suppression; Alex Jones has long claimed the existence of 'FEMA prisons'; the world economic ponzi bubble is ready to pop; TPTB have a long practiced history of false-flag ops...  Is this Occupy movement actually the beginning of a much broader yet more subtle false-flag which results in massive loss of civil liberties and the onset of martial police statism?

glenlloyd's picture

the text is basically unreadable, and mostly incoherent.

Careless Whisper's picture

80% of the protesters have a simple message: 1.end the fed 2.end the banker bailouts 3.end the corporations' control of the government.

here is the wake-up call for politicians, fraud bankers, and corporate criminals -- 50 seconds in the day of occupywallstreet in nyc:

http://www.youtube.com/watch?v=lpyTXGb3k3A 


redpill's picture

Where are you getting the 80% figure?  I wish you were correct, but I'm seeing a lot more vague social angst (signs decrying human emotions like "greed" and  inspecific "unfairness") than the specific actions you suggest are the desired outcome.  

Careless Whisper's picture

The 80% figure is just my estimate based on numerous visits to Zuccotti Park, including this weekend. Being there is like the difference of watching a college basketball game at home and being there in person. The various signs aren't representative of the majority of protesters. During my visits, the biggest crowd responses came from "they got bailed out, we got sold out"; "no more bailouts"; "end the fed", etc. Most of the people I saw, and talked to, get it. There were people there with fringe causes, perhaps worthy, I don't know. The "tax the billionaires" in the crowd were sparse and considered a sideshow by most. Geraldo Rivera was there yesterday and he taped a show in the middle of the large crowd. He was there with numerous people including Russell Simmons. During the breaks in the filming the crowd chanted "fox lies" but was quite during the taping as Geraldo promised the crowd he would be fair. Events like these in Manhattan tend to be "high energy" and I recommend that you just go and see for yourself.

dimichzh's picture

First, I thought it was just me confused and tired as I read the article, exhausted at the end.

But, this is how this type of psychopaths suck your energy out of you.

Not only the banks suck money out off people, The bankers also write articles in the way that does this with your energy.

midtowng's picture

The asshole will remain arrogant right up to the point of being hung from a lamppost.

Panafrican Funktron Robot's picture

Not to mention, his entire post is a hot mess.  I'd normally be amazed that this person could hold down any kind of job apart from something relatively simple like unskilled labor, but then I remembered that he works on Wall Street.

macholatte's picture

Mr. Certo is clearly putting his own spin on the situation. The reality is that the government did in fact pass the Community Reinvestment Act (Clinton) that did make it mandatory that banks lend money to deadbeats. But the banks didn't really fight it because they knew the loans would be sold to Freddie & Fannie and they'd keep the lucrative servicing fees. He also neglected to mention the $300M spent by Citi to get the Glass-Steagle Act repealed (Clinton) which really opened the Pandora's Box. Yes, it's a very comfortable government-private sector partnership which the OWS folks are completely overlooking which is not surprising.

 

This life of ours, this is a wonderful life. If you can get through life like this and get away with it, hey that's great. But it's very predictable. There's so many ways you can screw it up.
Paul Castellano

 

flattrader's picture

I call bullshit on your CRA claim that it was mandatotry to loan to deadbeats.  (and The CRA has been around since 1977.  Almost every administration made some changes to it since inception.)

Relation to 2008 financial crisis See also: Subprime mortgage crisis and Global financial crisis of 2008–2009

Some economists, politicians and other commentators[105][106] have charged that the CRA contributed in part to the 2008 financial crisis by encouraging banks to make unsafe loans. However, every empirical study that has looked at CRA loans has concluded that they were safer than subprime mortgages that were purely profit driven, and CRA loans accounted for a tiny fraction of total subprime mortgages. [107]Michael Simkovic, "Competition and Crisis in Mortgage Securitization"

Do some homework instead of listening to morons on CNBNC, CNN and FOX.

Most of the shit loans were made by mortgage companies an then sliced, diced and repackaged and securitized by "bankers".

macholatte's picture

You need to do some research of your own, like actually reading what it was I said.

Did I claim the CRA was responsible for the 2008 financial crisis? NO. My post was a comment pertaining to the spin that Certo published. About the only thing you did get right was that the CRA was a Jimmy Carter invention (1977) but the changes made by Clinton (1995) have been considered by many as being extreme. That debate continues. Nevertheless, it was Certo who brought it up. The next time you start pulling shit out of your ass throw it at the mirror.

ATM's picture

Yes they were made by bankers who then off loaded them to Fannie and Freddie, at the request of Andrew Cuomo, who promised to buy $2 trillion "affordable" mortgages. The government intentiaonally reduced the risks to their banker buddies of making these loans because they buddies knew that the govt would buy them, stamp them with a AAA rating and sell them to grandma who wanted that juicy 7% yield.

Of course you can try to argue that the government didn't want to extend "home ownership" to the poor and especially minority citizens who didn't and don't qualify for mortgages. In fact that rules that were in place basically forced banks to make these loans or face ramifications to their businesses.

And why wouldn't they loan to deadbeats when they would profit nicely and take no risk? The government made the rules so that it could or actually would happen. It's like the banks today buying treasuries to turn around and sell back to the Fed at a profit 2 weeks later.

Why would banks buy treasuries at their most expensive prices in history? Because they are guaranteed to make money! Same with making liar loans!

Ident 7777 economy's picture

 

 

YOU FAIL flattrader, per wiki:

The Community Reinvestment Act (CRA, Pub. L. No. 95-128, title VIII of the Housing and Community Development Act of 1977, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods

Stares straight ahead's picture

Excuses, maybe... even probably.

But I think he does a pretty good job of identifying some of the problems that really need fixing.

A lot of what he says could be boiled down to the "End the Fed" mantra. Maybe if the article started that way and he didn't identify himself as a banker,  the comments would be different from the peanut gallery.

Instead, lets reflexively start a class war and pay a bunch of losers to poop out in the open in downtown NYC.  That'll teach 'em!

Richard Chesler's picture

It takes an asshole  to know one.

 

slackrabbit's picture

i'll bring the rope and beer, you bring the bbq

Mohan's picture

WIth such incoherent rambling and smugness, I wonder how he could get to top 1%. It almost proves the point many are making, the Wall Street speculators get rich not because they are bright, but because of the fact that the Federal Reserve is there to backstop their losses.

eureka's picture

They're all like that - they're spawned by the matrix called an "Ivy League University".

Ever read or heard Jim O'Neill's rampling? They go like "I ate my sandwich and observed a streetband play Abba songs,,, I was heartened by the fact that luxury goods sell exceedingly well....I'm just back from BAden-Baden and I can tell you the rich are in great shape.... what's everybody moaning about...?" etc etc etc

Jim On'eill of course lives in the fantasy that he is extremely tall, dark and handsome and actually is a paralel incarnation of CLive Owen - i.e. a throughly sexy and irresistable and cunning against all odds triumphant hero, who boldly disregards the whining of the disenfranchised working poor and or unemployed masses....

Ever heard of "decoupling", jobless recovery and supplyside economics...? How about a homeless and foodless recovery...? According to the banksters and financial MSM "news"-propaganda machinery, these are all viable scenarios for continued ANGLO-DOMINATION of the world...

Yes indeed - the USUKs (Us+UK/my term) really do suck, in every sense of the word and the concept - and they will continue to du so until we smack them hard on their heads. For now, my hammer is the word - but if that doesn't work, eventually, I will pull out my physical hammers and hack their heads to pieces. Just so they know: guys, I'm onto you, monitor me all you want with your police state apparatus - I fear you not - not only that, if and when the hour of your oppression amounts to push the people to physical revolution - you will go down - and my hand will be among the masses.

weinerdog43's picture

No.  Guillotine is more appropriate.

eureka's picture

Yes, exactly - typical upper middle class barage of pseudo-moral questions designed to confuse and "spread" responsibility across the pyramid - in denial of the fact that the chief responsibility is with the top, not the bottom, because the top has the priviledges of information, capital and access to institutional power.

If "liar loans" had not been issued there would have been no GDP growth and thus no fake revenue stream to pretend to be able to pay for US EMPIRE - and here lies the rub:

US EMPIRE is the motivation and originating force of any and all US credit bubbles; you see, when a nation ceases to make things (US manufacturing = ca. 10% of GDP) - it must mecessarily extract wealth from other nations - and it does so by fiat bubbles and military empire. US is a mafia-military-fiat ponzi scam - and all the little bankers and borrowers are nothing but pawns in the game of empire, which is exclusively a game of the elite - and they - are surely to blame, for they know wgat they do - and it ain't serving god, but mammon, their pathetic "power" of talismanic projection and manipulation - a substitute god, for those poor souls who do not know the real God - the reak Prince of Peace, who's chief principle is "love thy neighbour as thy self"

The elite's material knowledge - may be the source of their spiritual arrogance (i.e. "I the elite banker am god") - but, this does not exempt them from spiritual and political accountability. The Hnal Paulsens and Roy Blankfein and Jamie Dimons of the world, will be held accountable spiritually and should be held accountable legally, politically and morally by "we the people and its institutions".

Do notlet banker babble about horizontal & equally shared responsibility confuse the matter at hand. Credit bubbles are blown by and for the elite to sustain its chief apparatus of self-glorification and amassment of all assets: EMPIRE.

The bankster elite, despite its own assertions, does not serve God, but Satan - and if you are not religious or spiritual you can just perceive those terms as metaphors and  translate them into secular psychological terms: - i.e. they serve theor own megalomaniac egos, like in:  "I need to make a million today to make it worth getting out of bed" - which is to say a "domination" complex" - and " who can I fuck over today, let's see, maybe some stupid German bankers will buy some of my derivatives" -that is to say a "fascist-sociopath complex" - i.e. contempt for one's fellow man based on the subconscious conclusion that the neighbour is "stupid" for trusting "me", the hollow, lying, cheating, con-artist, scumbag-banker.

Nevertheless, for all their self-righteous materialism, satanism, arrogance, and spiritual deceipt of self and other, do not feel sorry for the elite banksters - they must be held accountable, the must be punished and they must repent - for without this natural process of true personal and systemic renewal (to use a secular term) - there will be no new future, but only more empire, darkness, exploitation and sustained evil.

If you want a renaissance - for the US, and the world - call your congressman, your senator, state and local reps and impress on them that you expect them to act to bring justice to world of banking - to get your vote, if they hope stay in politics. If enough people do this and speak out publicly like this, perhaps some justice can be attained - and if not we only sit back and watch and thus become small enablers of evil.

Support OCCUPY WALL STREET and all other US cities and banksterdoms - boycott all big banks and all corrupt big corporations - be proactive and co-responsible - so you can tell your kids one day, that you were part of making thier futre a little better - and not just an observer concerned only with your own pocket - but at least equally with the concept of community - freedom, brotherhood & equallity - that is the creed of a sustainable republic, an enlightened person and citizenry - the anti-thesis of empire.

Cognitive Dissonance's picture

Unless we are willing to let it all go we are trapped by what we keep. This is what feeds the Ponzi. There is no fine tuning the Ponzi folks. There is only destroying the Ponzi or not destroying it. As long as we suckle at its teat we are all just slaves delivered to the dock.

oldman's picture

Thanks, Cog

Letting go is in the streets---no tomorrow---only today

This is the election that we always longed for by going to the polls

No more hopium---this is the real election day                om

tarsubil's picture

So a house of cards still stands based on whether you believe in it or not? Nah, it'll collapse sooner or later. Whether you fight it or not won't matter to this house of cards that is built so far up and so big. Whether you fight it or not will impact you, however. People need to think about how they are going to survive, not how they are going to fight. But I guess some people are already there. One wing of the house of cards fell on top of them and they never thought about how they would survive such a thing. You really shouldn't follow those people.

oldman's picture

tarsubil,

Survival is an instinct---most of us will survive          om

Mad Cow's picture

Survival is an instinct

Kinda like the Dodo bird?

How about we use our God-given brain?

malikai's picture

Well put. I made a similar sort of statement to my "circle" on FB earlier today only to have people completely ignore the reality that is if we actually want real change, we'll need to prepare for and accept an outcome in the US similar to that of Argentina in 2001. This was met with completely ignorant returns as the very protesters, some of whom were arrested in Chicago over the weekend are still thinking they can change things "peacefully".

I guess they'll either figure it out or they wont. Anyway, someone please wake me when the cops start shooting or they start using pitchforks, tar and feathers, or guillotines.

cjc1023's picture

Anyone else catch this?

http://www.bloomberg.com/video/77805822/

Soc gen Asian equity strategist asked bout volcker rule which somehow leads to a hissy fit bout zh and the should-be-regulated, irresponsible disseminator of info that is the blogosphere

Oh and he's 'absolutely certain' the 4th was the bottom. And you should invest in Macau because his 8 year old son said boom on a bus there.

You're welcome.

TheLooza's picture

as someone who has spent almost as much time in macau as state-side this last year, I can honestly say they have a very energetic and willing hooker-corp over there.  inspiring stuff.

check out the circuit at the old lisboa.  quite a spectacle.

 

phyuckyiu's picture

It appears Tyler has posted his rebuttal to this video :)

slackrabbit's picture

yea 4 mins in

this guy is such a pantty wetter mummy's boy.

 

monoloco's picture

We should just rely on the banks and hedge funds for information on banks and hedge funds because they're regulated, unlike these annonymous bloggers who could be anyone. Yeah right, what a tool. 

merizobeach's picture

Thanks for this.  He really does go off on a paranoid rant!  An old-fashioned anti-free-speecher.

boiltherich's picture

My my, I think we (OWS and ZH'ers) have struck a sensitive nerve.  I really had no idea that anyone at the "top" was actually reading what you and I say.  I am cheered and have new hope that they are expressing anger and fear over the growing awareness of their criminality and evil. 

merizobeach's picture

This SocGen shill with a struck nerve has not read the ZH disclaimers or manifesto.  If he has, then he is deliberately spinning a web of propaganda and misinformation.

o2sd's picture

That is one very useful idiot.

spanish inquisition's picture

I will translate for everyone - "NOT ME!"

GeneMarchbanks's picture

'Change comes from power and power comes from organization.'

Please adopt the above before dispensing.

Manipulism's picture

Whats the point of this endless enumeration???

Ricky Bobby's picture

He is with the bankers or the rest of us. Save me the pensive bull shit, the ruminations to ease his conscience. Hard to let go of the privileges,  fuck he would have to sell his house in the Hamptons.

Manipulism's picture

And this is allowed on ZH?

Unbelievable!

Sophist Economicus's picture

I agree!   Let's ban all debate and counter-opinions.    Anybody not of 'our' worldview should be censored!