Thanks to a reader's comment who provided the link to the following post from another blog. What is most interesting in this blog is the link to the United States Senate PERMANENT SUBCOMMITTEE ON INVESTIGATIONS report WALL STREET AND THE FINANCIAL CRISIS.
Open and bookmark this report...click here
The post for the most part is very well written. As it says, the length and technical speak will be too much for most to absorb. They have as they put it, created the "Cliff Notes" version of this 650 page report. While I have not read the Subcommittee report yet, I know that most of what is told here is true.
While I do not like WAMU (now part of J.P. Morgan Chase who I like even less) I must say that their main mortgage program - the pay option arm - was not toxic. In fact they had been offering it for many years and was at one time the only program they had. World Savings (now part of Wachovia which is part of Wells Fargo who I like equally as little as J.P. Morgan) also had a program like theirs which they offerred very successfully for many, many years with little defaults. The problem with this program began when Wall Street created a market to securitize this program. As that happened other lenders/banks offered it. Competition and mostly - encouragement of the government - to ease credit and create more homeowners (this began during the Clinton Administration) caused this program to go toxic. The pay option arm mortgage was initially meant to be more of a financial planning tool. It offered a low interest pay rate and deferred the difference. By doing so, people of financial means simply "put their money to better use". The program was never meant for those who could not afford a mortgage at the then prevailing rate or for investors who could not afford the investment to begin with. It was this unintended use that created the toxicity. So what or shall I ask "who" caused this once good program to become toxic?
In addition, contrary to what the "Cliff Notes" say, most brokers did not commit outright fraud, forge documents or make phony loans. While there were some that did and "always had" - those "bad apples" exist even today - in most industries. Just look at the fraud being committed by the foreclosure mill lawyers AND the banks themselves. This should not be and should never have been a total indictment of the mortgage broker industry. LItterally hundreds of thousands of "good" honest people were the first victims of layoffs due to the closure of the hundreds of mortgage broker companies around the country. The real causes of the problem, the WAMU's, Wells Fargo's, Bank of America's of the country are profiting more then ever and go unpunished for the crimes their crimes affecting the entire world and specifically those of us here in the U.S. Treasonous to say the least...but they keep on stealing.
Anatomy of a Financial Collapse from AlterNet/by Les Leopold
How Wall Street Thieves, Led by Goldman Sachs, Took Down the Global Economy -- Their Outsized Influence Must be Stopped