Monday, March 5, 2012

Mortgage Backed Securities and Banking Fraud: Taibbi Explains in Plain English

The simplest metaphorical explanation of what happened in the housing and mortgage crisis and how corporations traded dangerously risky "mortgage backed securities" that were bundled up and sold as "Triple A" rated financial instruments, even though they contained loans by people who had no jobs and no remote prospect of maintaining their mortgage payments. These eventually became toxic assets that banks held--and eventually got bailed out for--under TARP.

About Taibbi. Matt Taibbi is a pretty sharp guy. He writes for Rolling Stone and is known for coining the now-famous and oft-quoted phrase "vampire squid" to describe how Goldmann Sachs employees were  central figures in the metldown:
The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman Sachs graduates.
(Read more:
Inside the Meltdown. For more on the origins of the financial crisis in easily understood terms, watch "Inside the Meltdown" on PBS, online.

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