HERE'S Your Predatory Lending
This is brilliant, in that it pieces together how the financial crisis came to be. It gets a tad political at about 7:50, but the analysis is dead on, it calls the spades spades. (Note: use the pause button liberally help follow along.) (Also, betcha Google takes this down after awhile...they'll say it doesn't comply with some 'standard', and we all know what standard that is.)
But he left out one other tidbit...follow along. What is the next bank to go down in flames? It's Wachovia. What was the the disaster deal that baked Wachovia's cruel fate in the cake? Golden West. Who were they? They were the kingpins of "affordable mortgages" in California, the biggest issuer of ARMs:
"Of the $11.6 billion of loans originated in 2005 by Golden West, 99 percent were adjustable rate mortgages. Billions of these loans were Option ARMs. An Option ARM gives the borrower the option to pay a minimum payment (the loan balance increases), just principal, or principal and interest. Over 70 percent of their borrowers chose the minimum payment option. This reckless choice will only work if housing prices go up 10 percent per year. When prices drop 20 to 30 percent over the next two years, it results in Armageddon for the borrower and lender."
Who built this house of cards and was lucky enough to find dumb-ass Wachovia to foist it on? Herb and Marion Sandler. Lefties. Real big lefties. They had the whole world fooled. They were "pioneers" in mortgage lending, breaking from the conventional practice, turning industry thinking on its head. Yeah, building a house of cards is more like it. They walked away with billions and within a year what they built and passed off on Wachovia was worthless. Zero. Zilch. Oh but the Sandler's billions will eventually go to a bevy of utopian, Sorosesque foundations. There's your predatory lending folks. There's your greed.
UPDATE: Finito.
But he left out one other tidbit...follow along. What is the next bank to go down in flames? It's Wachovia. What was the the disaster deal that baked Wachovia's cruel fate in the cake? Golden West. Who were they? They were the kingpins of "affordable mortgages" in California, the biggest issuer of ARMs:
"Of the $11.6 billion of loans originated in 2005 by Golden West, 99 percent were adjustable rate mortgages. Billions of these loans were Option ARMs. An Option ARM gives the borrower the option to pay a minimum payment (the loan balance increases), just principal, or principal and interest. Over 70 percent of their borrowers chose the minimum payment option. This reckless choice will only work if housing prices go up 10 percent per year. When prices drop 20 to 30 percent over the next two years, it results in Armageddon for the borrower and lender."
Who built this house of cards and was lucky enough to find dumb-ass Wachovia to foist it on? Herb and Marion Sandler. Lefties. Real big lefties. They had the whole world fooled. They were "pioneers" in mortgage lending, breaking from the conventional practice, turning industry thinking on its head. Yeah, building a house of cards is more like it. They walked away with billions and within a year what they built and passed off on Wachovia was worthless. Zero. Zilch. Oh but the Sandler's billions will eventually go to a bevy of utopian, Sorosesque foundations. There's your predatory lending folks. There's your greed.
UPDATE: Finito.
posted by Donny Baseball at 6:46 PM
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