Root cause of current global financial crisis

Our friends at BBC News explain what caused the global financial crisis, mortgage crisis, and lending crisis in a great and simple way: US mortgage-backed securities were the investment products that sparked the global financial crisis in 2008. In essence, each security or bond was linked to pools of US mortgage loans, many of which …

Moodys Investors Service employee testifies about fraud

Here’s the written testimony of Eric Kolchinsky before the Senate Permanent Subcommittee on Investigations last week who, during the majority of 2007, was the Managing Director in charge of the business line which rated sub-prime backed CDOs at Moody’s Investors Service. He was suspended by Moody’s after warning the compliance group regarding what he believed …

Credit-ratings agencies became financial whores

Confirming what most analysts knew, both before and after 2007, a Senate panel investigating the causes of the nation’s financial crisis on Thursday unveiled evidence that credit-ratings agencies knowingly gave inflated ratings to complex deals backed by shaky U.S. mortgages in exchange for lucrative fees. The Senate Permanent Subcommittee on Investigations will hold a detailed …

State AG’s watch as option ARM’s start to implode by late 2009

The federal government and states are girding themselves for the next foreclosure crisis in the country’s housing downturn: payment option adjustable rate mortgages that are beginning to reset. “Payment option ARMs are about to explode,” Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama’s administration to discuss ways …

Welfare payments and unemployment as valid income

In an article titled “They Gave Your Mortgage To A Less-Qualified Minority” we see the effect of Clinton-era changes. Did these changes set the stage for the subprime crisis? You be the judge, but the system was abused, and went well beyond minorities. “Under Clinton, the entire federal government put massive pressure on banks to …