![]() Since 1980 the economy has also continued to grow handsomely, but only 1% at the top have benefited. NO Attempt made to recoup the millions $$$ made by these CEO's who defrauded the financial system - nor No attempt to indict them!.Men who destroyed their companies got to keep there money (in the Millions $$$) and didn't go to jail.Foreclosures jumped to Six Million by 2010 and are expected to grow to Nine Million.CDO's (collateral debt obligations) - imagine the owner of your meat department betting against the bad meat he sells - knowing it is bad - in the same way these investment banks bet against the bad mortgage securities - betting that they would fail - and then profiting from the high interest they made!.Goldman Sachs sold 3.1 Billion dollars of bad loans & worthless securities.This is what happened to investors who purchased these subprime loan packages that were rated Triple A by the Credit Rating Agencies. When you return home, however, and unwrap the package of beef, to your horror you discover the meat is rotting - You've not only been lied to - you are also out considerable amount of money - and, imagine there is Nothing you can do, now - No one you can turn to. You trust your meat market to carry nothing but the best because the proprietor has a Triple A rating. This is how Goldman Sachs defrauded investors.Įxample: these unsuspecting investors from all over the world bought these bad bundled loans (subprime) - here's a small scale scenario, Visualize yourself going into a meat market to purchase a quantity of what you anticipate to be prime quality beef because you are hosting a large party. Then, make $1 Billion in profit - while the global investors lose over $1 Billion. Next, secretly bet against it - knowing that it will fail. Next, sell slices of the bundle to many global investors. CDO's (Collateral debt obligations) - Pay an investment banking firm $15 Million to put together a CDO full of bad mortgage- related assets that were believed to likely lose value.subprime loans most profitable-predatory lending-these buyers were charged higher interests rates > their loans bundled and sold to unsuspecting investors as Triple-A rattings.investment banks paid rating agencies to distort the truth on the safety ratings of these loans (ie.borrowers without adequate credit or down-payment were not only allowed - but encouraged to take large loans to purchase inflated-priced homes. ![]() the safety laws for financial institutions that had been put in place were stripped away (deregulation).investment banks went public-no longer using their own money - allowing for risky investments & higher rates of pay-back,.So, naturally, conducting business in a traditional financial manner, and putting up their own money, the bankers of forty to sixty years ago care about the loans they are making and to whom. Local banks and investment banks formed small, private partnerships putting up their own capital. Furthermore, bankers/traders earned salaries in line with other professionals tightly regulated financial sector. Following the Great Depression, between 1933-35, motivated by financial abuses that contributed to the Great Depression, new laws such as the Glass-Steagall Actand the Securities and Exchange Act placed limits on financial risk-taking and required extensive disclosure of financial information. I’ll also post the conferennce schedule with the video links below, in the hopes that you will also be able to get to the videos directly from here, but if the links below don’t work you can get the videos from the Stigler page by following he link above.A bit about history. ![]() ![]() Sorry for yet another follow-up post on last month’s Populist Plutocrats conference, but I wanted to let interested readers know that, in addition to the unedited recording of the full conference, the good people at the University of Chicago’s Stigler Center have made available edited videos of each of the conference, which you can access from the conference webpage.
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