What is this article about? Perhaps it should be obvious, but (other than a massive downturn of something) I have no clue as to who or what is portrayed here.
[blockquote]Mark Levin had a loooong diatribe about this tonight. He said because Democrats were involved, the media and congress gave it a pass.[/blockquote]
http://www.cnbc.com/id/26622615
Is a good summary of the reasons for the Lehman underlying issues. Lehman is apparently one of the banking houses that packaged the bundles of resold mortgages that caused this last real estate bubble. In good times, when they could actively resell the debt instruments, and pocket the fees, that was a way to make a “low risk” profit. Without a resale market, and with high single digits foreclosure rates in the underlying mortgages, Lehman ended up with a liquidity crisis, and now might not be able to pay its bills.
The worst of it is as the cited video indicates: nobody believes the numbers anymore coming from the firm. Apparently the financial architecture escaped from the ability of the auditors to correctly portray what is going on in the firm, at least in real time. I’m sure somebody sometime will figure it all out, but in the meantime, you get the top level chart, with sellers but no real buyers.
This simply is a good example of how an unregulated portion of the banking market collapses when the boom-bust cycle runs out. Many people thought we had regulated our banking system to prevent this type of dysfunction, and we obviously had not. The simple solution is to stop or at least drastically slow the mortgage originators’ ability to bundle and sell their new mortgages. But that would be a dramatic change from the roaring days of the last decade’s bubble. It certainly won’t be as easy to get a mortgage as it has been recently. Expect more money down, and more scrutiny of the ability to pay.
I’m still trying to figure out any link between Fannie and Freddie and Lehman’s demise. I suppose it is just another part of the liquidity collapse phenomena, with nothing directly related except for the circumstantial timing.
The connection is that Lehman has been buying Fannie and Freddie hand-over-fist for the last year, and the $2 Billion they spent doing it have evaporated down to perhaps $50 million.
At each and every step they thought they were being clever buy buying Fannie and Freddie at “bargain basement” prices, only to have it drop even more. Instead of cutting their losses they doubled down (again and again) on their losing bet.
#7 Checked that box, then.
That is another good example of how the 1930’s separation of banks from investment banking was a good idea. Lehman was endangering their position in the mortgage market as they overextended into equities, which happened to control 75% of that mortgage market…
What is this article about? Perhaps it should be obvious, but (other than a massive downturn of something) I have no clue as to who or what is portrayed here.
Mark Levin had a loooong diatribe about this tonight. He said because Democrats were involved, the media and congress gave it a pass.
If it were Republican dominated, like Haliburton or Enron there would have been calls for heads to roll.
[blockquote]Mark Levin had a loooong diatribe about this tonight. He said because Democrats were involved, the media and congress gave it a pass.[/blockquote]
Not unlike Freddie and Fannie, really.
The graphs mean nothing unless we’re told what they’re meant to convey. What does the downturn signify?
http://www.cnbc.com/id/26622615
Is a good summary of the reasons for the Lehman underlying issues. Lehman is apparently one of the banking houses that packaged the bundles of resold mortgages that caused this last real estate bubble. In good times, when they could actively resell the debt instruments, and pocket the fees, that was a way to make a “low risk” profit. Without a resale market, and with high single digits foreclosure rates in the underlying mortgages, Lehman ended up with a liquidity crisis, and now might not be able to pay its bills.
The worst of it is as the cited video indicates: nobody believes the numbers anymore coming from the firm. Apparently the financial architecture escaped from the ability of the auditors to correctly portray what is going on in the firm, at least in real time. I’m sure somebody sometime will figure it all out, but in the meantime, you get the top level chart, with sellers but no real buyers.
This simply is a good example of how an unregulated portion of the banking market collapses when the boom-bust cycle runs out. Many people thought we had regulated our banking system to prevent this type of dysfunction, and we obviously had not. The simple solution is to stop or at least drastically slow the mortgage originators’ ability to bundle and sell their new mortgages. But that would be a dramatic change from the roaring days of the last decade’s bubble. It certainly won’t be as easy to get a mortgage as it has been recently. Expect more money down, and more scrutiny of the ability to pay.
I’m still trying to figure out any link between Fannie and Freddie and Lehman’s demise. I suppose it is just another part of the liquidity collapse phenomena, with nothing directly related except for the circumstantial timing.
The connection is that Lehman has been buying Fannie and Freddie hand-over-fist for the last year, and the $2 Billion they spent doing it have evaporated down to perhaps $50 million.
At each and every step they thought they were being clever buy buying Fannie and Freddie at “bargain basement” prices, only to have it drop even more. Instead of cutting their losses they doubled down (again and again) on their losing bet.
#7 Checked that box, then.
That is another good example of how the 1930’s separation of banks from investment banking was a good idea. Lehman was endangering their position in the mortgage market as they overextended into equities, which happened to control 75% of that mortgage market…
“Liberal Media”… not when it comes to the market. Then, no questions get asked.