{"id":3213,"date":"2008-06-05T13:57:46","date_gmt":"2008-06-05T20:57:46","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=3213"},"modified":"2008-06-05T14:40:07","modified_gmt":"2008-06-05T21:40:07","slug":"the-meltdown-culprits-are-finally-punished","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3213\/the-meltdown-culprits-are-finally-punished\/","title":{"rendered":"The Meltdown Culprits are Finally Punished"},"content":{"rendered":"

I just finished writing a comment regarding the mortgage meltdown which led to the credit crisis which has caused a real estate recession (don’t you just love our fondness for allegorical alliteration!)\u00a0 We were playing the blame game over on a post I wrote regarding The Gang of Three <\/a>and how Wachovia’s current misfortunes may signal the bottom.<\/p>\n

While many lenders and originators and agents and appraisers and so on can shoulder some of the blame, we should look to two primary sources for our stone throwing activities: the first is borrowers.\u00a0 Borrowers, however,\u00a0get a pass because it is politically, if not financially, incorrect to blame the customer.\u00a0\u00a0That leaves us with number two:\u00a0the rating agencies.\u00a0 Yes, the rating agencies: Moodys, Fitch and Standard & Poor’s.\u00a0 Have you heard much in the press or by the politicians with regard to\u00a0the rating agencies?\u00a0\u00a0\u00a0Neither have I, yet I argue that they are the proximate cause and primary culprit in this mess.\u00a0 Lenders make money by lending money.\u00a0 Investors make money by investing.\u00a0 Borrowers can borrow\u00a0because lenders can lend because investors will purchase\u00a0on the secondary market.\u00a0 The secondary market prices and purchases based on the rating given by the neutral, third party<\/em>\u00a0rating agency.<\/p>\n

But, it turns out that the rating agencies were being shopped and whoever gave the best rating got the job.\u00a0 So instead of giving investors accurate warnings, which in turn would have made the loans much more expensive, which in turn would have cut way down on the volume of high-risk loans –\u00a0we instead have rating agencies trying to make money.\u00a0 There’s that pesky “invisible hand” at work again.<\/p>\n

Thankfully we can all relax.\u00a0 As you can see by reading this article <\/a>in Business Weekly, New York Attorney General Andrew Cuomo has brought these criminals to justice and hit them with the severest of all punishments: he made them say “sorry.”\u00a0 They have also agreed to set up some new guidelines (may I suggest: “Keep your hand out of the cookie jar” be first and foremost?)\u00a0 Wow, nothing like a good strong talking to when you have caused or at least been heavily involved in Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

I just finished writing a comment regarding the mortgage meltdown which led to the credit crisis which has caused a real estate recession (don’t you just love our fondness for allegorical alliteration!)\u00a0 We were playing the blame game over on a post I wrote regarding The Gang of Three and how Wachovia’s current misfortunes may […]<\/p>\n","protected":false},"author":36,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[26],"tags":[164],"class_list":{"0":"post-3213","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-lending","7":"tag-credit-crisis","9":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":4789,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4789\/deregulation-is-the-new-regulation\/","url_meta":{"origin":3213,"position":0},"title":"Deregulation is the New Regulation","author":"Brian Brady","date":"October 2, 2008","format":false,"excerpt":"From the Wayback Vault in The New York Times Building: Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1667,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1667\/the-800-pound-gorilla-in-the-corner-the-meltdown-of-the-wall-street-mortgage-market\/","url_meta":{"origin":3213,"position":1},"title":"The 800 pound gorilla in the corner – the meltdown of the Wall Street mortgage market","author":"Morgan Brown","date":"July 16, 2007","format":false,"excerpt":"As we go about our daily lives in the mortgage and real estate world; dutifully performing our job functions and taking the high road of customer enlightenment via blogs such as Bloodhound; we are faced with a very large gorilla looming in the corner of our workplace. That gorilla is\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7402,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/7402\/if-i-never-make-a-single-payment-on-my-super-cheap-fha-loan-do-i-still-get-my-8000-tax-credit\/","url_meta":{"origin":3213,"position":2},"title":"“If I never make a single payment on my super-cheap FHA loan, do I still get my $8,000 tax credit?”","author":"Greg Swann","date":"March 8, 2009","format":false,"excerpt":"WAPO:The last time the housing market was this bad, Congress set up the Federal Housing Administration to insure Depression-era mortgages that lenders wouldn't otherwise make. This decade's housing boom rendered the agency irrelevant. Americans raced to aggressive lenders, seduced by easy credit and loans with no upfront costs. But the\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2229,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2229\/what-really-caused-the-lender-meltdown-and-other-important-stuff\/","url_meta":{"origin":3213,"position":3},"title":"What REALLY Caused the Lender Meltdown and Other Important Stuff","author":"Russell Shaw","date":"November 15, 2007","format":false,"excerpt":"The Wall Street high finance folks who contrived a system to endlessly send money to lenders and reward them for making fraudulent loans got what they rewarded. Here are a few Letters to the Editor from Businessweek: The Heat On Angelo Mozilo Maria Bartiromo's interview of Angelo Mozilo (\"The heat\u2026","rel":"","context":"In "Realty Reality"","block_context":{"text":"Realty Reality","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/realty-reality\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1784,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1784\/mortgage-meltdown-the-end-of-the-world-has-been-delayed-again\/","url_meta":{"origin":3213,"position":4},"title":"Mortgage meltdown? The end of the world has been delayed again","author":"Greg Swann","date":"August 10, 2007","format":false,"excerpt":"This is me from the Arizona Republic (permanent link): \u00a0Mortgage meltdown? The end of the world has been delayed again If you watch the TV news, you can't miss the video clips of financial pundits screeching about the imminent collapse of the mortgage industry. In fact, the world probably cannot\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2112,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2112\/hr-3915-is-dangerous-for-the-american-homeowner\/","url_meta":{"origin":3213,"position":5},"title":"HR 3915 Is Dangerous","author":"Brian Brady","date":"October 28, 2007","format":false,"excerpt":"HR 3915, The Mortgage Reform and Anti-Predatory Lending Act of 2007, was introduced by Barney Frank, (D-MA). Congressman Frank is also the Chairman of the House Committee on Financial Services. I outlined the key components of the bill with a link to the text here. The danger behind this bill\u2026","rel":"","context":"In "General"","block_context":{"text":"General","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/general\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/3213","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=3213"}],"version-history":[{"count":0,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/3213\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=3213"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=3213"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=3213"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}