Posts Tagged ‘subprime mortgages’
Tags: banks, corporations, fiscal cliff, healthcare, housing, profits, subprime mortgages, United States, Wall Street
Tags: art, banks, cards, Countrywide, crisis, games, SEC, subprime mortgages, Wall Street
The series continues with the Nine of Hearts: Angelo Mozilo.
Angelo R. Mozilo was chairman of the board and C.E.O of CountryWide Finance until July 2008. Countrywide was not so interested in sub-prime loans in the beginning when the sub-prime loan industry took off. Mozilo described the people involved with those loans at the time as “crooks”. But facing significant loss of business, Country Wide moved quickly into the sub prime business.
Mozilo used his fiscal power to give favorable mortgage financing to key political figures and power brokers. This included loans to Senate Banking Chairman Christopher Dodd, Senate Budget Committee Chairman Kent Conrad and former Fannie Mae CEO Jim Johnson. Other people received favorable mortgages to buy political favors. This included Nancy Pelosi’s son, Paul, Barbara Boxer, Richard Holbrooke, Donna Shalala and others wielding influence and power.
Mozilo sold hundreds of millions of dollars worth of mortgages over the years personally. The SEC charged him in 2009 with insider trading and securities fraud. He reached a settlement with SEC in 2010. He paid $67.5 million of a fortune estimated as over $600 million.
Tags: banks, ethnicity, finance, history, money, Niall Ferguson, race, redlining, subprime mortgages, United States
[the Birwood Wall in Detroit]
Beware of “The Ascent of Money,” produced by PBS and narrated by Niall Ferguson.
The program is very useful, starting with money as debt (and not as, as neoclassical economists often teach it, as the medium to overcome the limitations of barter) and passing through the various bubbles and busts of a monetary, financial economy.
But, in the section on the subprime mortgage crisis, Ferguson draws a straight line from federal redlining in the 1930s through the Detroit riots of 1967 and George W. Bush’s call for expanded homeownership to the crisis of 2007-08. He therefore leaves viewers with the impression that the housing crisis was a result of (a) federal policy (and not private mortgage lenders) and (b) too many mortgages to racial and ethnic minorities.
Don’t get me wrong: I’m glad the ignominious history of redlining is raised (a reminder of which is the Birwood Wall in Detroit). But what happened in the run-up to the subprime mortgage crisis was a combination of reverse redlining, as private mortgage lenders descended on minority neighborhoods to extract higher interest rates, and a plundering of working-class people, regardless of race or ethnicity, by private banks.
The result is both that racial and ethnic minorities have suffered from much higher subprime rates (and, then, foreclosure rates) than whites and that the majority of subprime mortages (and, later, foreclosures) were imposed on white homeowners.
Data from the Center for Responsible Lending make this clear.
So, my advice: go ahead and use Ferguson’s program to teach the commodification of money—but use it as an opening to a discussion of the a history of the role of money and finance in the United States and around the world that is much more complicated than Ferguson leads one to believe.
Tags: banks, capitalism, crisis, foreclosures, subprime mortgages
The current foreclosure mess has nothing to do with deadbeat borrowers. It’s all about the banks trying to clean up the mess they themselves made as quickly and cheaply as possible. And damn the consequences for homeowners and the rest of society.
Andrew Leonard challenges the hollow, self-serving pontifications of conservative politicians, Wall Street Journal pundits, and bank executives concerning the current mortgage morass. While many (perhaps even most) of the current foreclosures may not be in error, that doesn’t absolve the banks from pursuing their own profit-making agendas—in initially extending the loans, in getting the U.S. government to bail them out when the loans went south, and now in quickly foreclosing on those mortgages to improve their balance sheets.
The only puzzle that remains is why the Obama administration hasn’t capitalized on the mess created by the banks, to make the case for a different economic agenda.
The widespread use of robo-signers, the epidemic of lost paperwork, the proliferation of lawsuits, the potential invalidation of mortgage-backed securities — everything points to a systemic problem. The only real question is how big the mess will get. The White House should be far more out in front. Right before an election, the administration couldn’t have asked for a development that better illustrates the necessity for tight government supervision of the financial sector and industrial-strength consumer protection.But maybe Obama’s just afraid of being called “anti-business” again.
Or Obama and his economic advisers have, once again, made the choice about which side they’re on.