Questions for the Big Bankers

[groovedaddy]

Today, the Financial Crisis Inquiry Commission, which Congress established last year to investigate the causes of the financial crisis, is scheduled to question the heads of four big banks — Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JPMorgan Chase, John Mack of Morgan Stanley and Brian Moynihan of Bank of America. The Op-Ed editors asked eight financial experts to pose questions they would like to hear the bankers answer.

http://www.nytimes.com/2010/01/13/opinion/13intro.ready.html?th&emc=th

[napi21]

1. One of those questions was asked in slightly diff. wording.

The NYT opinion seems to be that extremely low ins. rates were the cause of the crisis, or at least one cause. The bankers would disagree. Each of them admitted that they viewed the world economy to be very liquid and although they did what they call crisis scenarios, noone ever asked the question "What IF the price of housing dropped?" They admit to being lax in reviewing most mtg. apps, and although none of them said they turned over the customer qualifications to the rating agencies, at least 2 of the 4 said they admit that they didnt do as much checking if the rating agecey reported a 3 star rating. That coupled with some less than honest mtg. brokers & RE agents were the biggest contributors to the total collapse of the housing ind. They also admitted that they were granting mtgs. with 20%, 10% & dsometimes NO equity at all, and they shouldn't have ever done that.

There weren't many questions about the Fed. involvement, other than the mention of how much money the banks got from them, but there IS another session scheduled for 1:45 EST I think. The Committee Chairman is meing pretty strict on this group. He gave then ONW 5 minute break in the morning and about 30 mins. for lunch. He also reminded everybody that he wanted to stay on track so be back here on time!