Taibbi: Wall Street Investigation-"Mother Of All Nightmares For Banks-- Getcha Popcorn Ready!"

[kpete]

POSTED: May 18, 11:16 AM ET | By by Matt Taibbi
A New Wall Street Investigation: Is the Hammer Finally Coming Down?
Eric Schneiderman speaks to supporters on election night at the Sheraton New York November 2, 2010 in New York City.
Michael Nagle/Getty Images
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Got a chance to meet Josh Rosner (co-author, with Times reporter Gretchen Morgenson, of the new book Reckless Endangerment) last night during an appearance on Eliot Spitzer’s In the Arena. We were brought in to talk about the new investigation of the banks that apparently is being launched by New York State Attorney General Eric Schneiderman, which looks like it might be the first for-real attempt at a prosecution of the systemic corruption that led to the financial crisis.

Schneiderman’s probe, news of which came out yesterday in this piece by Morgenson, reportedly targets the banks’ mortgage securitization process during the bubble years. Morgenson reported that Schneiderman is focused on at least three companies: Morgan Stanley, Bank of America, and old friend Goldman, Sachs.

This investigation has the potential to be a Mother of All Nightmares situation for the banks for a couple of reasons. For one thing, the decision to go after the securitization process is a total prosecutorial bullseye. This is the ugly heart of the wide-scale fraud scheme of the bubble era. Again, the business model during this time was a giant bait-and-switch scam. Sleazy lenders like Countrywide and New Century first created huge masses of bad loans, committing every conceivable kind of fraud to get people into loans (from doctoring income statements with white-out to phonying FICO scores to engineering fake appraisals). They then moved the bad loans quickly to the big banks, which pooled them and chopped them up (this is the “securitization” process), sprinkled hocus-pocus math on them, and them sold them to suckers around the world as AAA-rated securities.

...................



Everything I’ve heard so far indicates that Schneiderman’s investigation is not a publicity stunt and is an in-earnest attempt to get to the bottom of things. Which is cool. As Terrell Owens would say, Getcha Popcorn Ready!

MORE:
http://www.rollingstone.com/politics/blogs/taibblog/a-new-wall-street-investigation-is-the-hammer-finally-coming-down-20110518

[TBA]

1. Let's hope Schneiderman stays away from hookers (nt)

[femrap]

4. It's now referred to as

'The Wandering Wee Wee Syndrome.' (TwwwS)

If you didn't have TwwwS, there would be no 'hookers,' as you call them.

[TBA]

6. Point Taken (nt)

[Beavker]

16. True

He needs to be a Congressman for that kind of impropriety.

[paparush]

22. And balconies, small planes, and stays off the ski slopes.

[Cassandra]

2. I voted for Schneiderman.

As per Spitzer's example, he'd better be clean as a whistle.

[LiberalAndProud]

3. Damn my pessimism. Damn it.

All I can think is that there will be political fallout at the hands of big money. I hope for justice, but money is power and those are some powerful institutions right there.

[femrap]

5. Yeah, but look where

the head of the IMF is....Rikers, baby, Rikers.

But they still don't make him wear orange and he has a whole wing of the prison to himself. I want the dude in orange.

[Auntie Bush]

29. I hope Scheiderman finds Bernie lots of room mates. Fill the place to capacity.

[bluesmail]

7. Interesting CNN Video, too. Thanks kpete eom

[Bluzmann57]

8. Hate to be cynical

But it seems that we've heard stuff like this before and nothing has happened. I hope I'm wrong.

[Wednesdays]

9. K&R

:kick:

[gratuitous]

10. Oh, the New York AG's office

I was about to be astounded that there might be a federal investigation.

[BridgeTheGap]

42. New York law doesn't require proof of intent to defraud as federal law does. This opens

the door a little wider for the NY AG. I hope he sticks with it.

[Hotler]

11. k&r n/t

[StarburstClock]

12. Sad thing is those 3 "too big to fail" criminal banks are propped up

and will be regardless of their crimes. It's part of being a criminal country that creates torture camps, creates wars for profit and creates non-stop propaganda.

[DirkGently]

13. If disguising risk & intentionally subverting their own underwriting wasn't fraud, what is?

[Hubert Flottz]

14. Fitzmas in July?

K&R

[Mnemosyne]

34. I'm still waiting for the last one, HF. I may have missed it.

:hi::evilgrin:

We do need one badly though.

[Hubert Flottz]

40. I'm afraid that most politicians in DC are under the banksters spell.

:hi:

[Mnemosyne]

48. Tis true, so true. 98% is my guess.

:hi:

[GiveMeFreedom]

15. Well?

Gawd, I hope they get this done before the Rapture on May 21st. I fucking hate Bank of America. These fuckers probably think ol' Hey Suez will suck them up into the light and leave all us folks who committed "Moral Hazard" behind to pay off their crimes. Mother fuckers!!

[rhett o rick]

24. Re. May 21st. I requested an extension. Havent heard back tho. nm

[ProfessorGAC]

43. Extension Granted

See how easy that was?
GAC

[rhett o rick]

49. Oh! I was expecting something more dramatic. Oh well. nm

[Hestia]

28. I ain't paying squat if we are blessed enough for them to leave - reset to Zero

and we have a whole new game. NSA - gone! Wall Street - gone! Along with a lot of other institutions standing in our way. Since the Church of Christ and Assemblies of God have been actively recruiting in the military for the last decade, it may not cost us whole lot to bring the remaining troops home.

It'll be our game if the 21st comes true - and I do hope it does for them, quitting their jobs and taking to the road. Bless them and I hope it all goes well. Something tells me though, they'll get a huge talking to, and then they'll come back and be reborn as our children and grandchildren. We can teach them well and have true hope for the future.

A gal can pray can't she - lol!

[freshwest]

31. A global year of jubilee?

[Mnemosyne]

35. In a humane world it could happen! Good thought, freshwest. n/t

[Prana69]

36. WRT "The Rapture"... I say

..take the f*ckers and leave us behind to do it right. I truly hope they do get sucked up to whatever fantasy-land they think they are going. Let the real people rule the real world for a change. (And THAT is change I can believe in)

P69

[hifiguy]

17. If Schneiderman has the intestinal fortitude

to follow wherever it leads, this could get interesting. That he is focusing on the "securitization process" a/k/a wrapping dogshit in Harry Winston boxes and selling it as AAA-rated diamonds, could cause some very loose bowels on Wall Street soon. That's where the real fraud was.

:popcorn:

[dotymed]

45. Even if Wasserman wants to follow the leads,

I suspect that massive shredding parties are underway or have been completed. Also, I think that he will run into MANY official roadblocks on his path to the truth.

Money talks....Bullshit walks...I just hope the truth is not lost...

[olegramps]

18. My question is why isn't this administration leading the investigation?

Is there some technical reason the feds don't have some authority to investigate?

[lark]

21. I think you know the reason

They are big supporters, and in some cases part of the people that did this - Bernake, Summers and Geithner. Wall St. was Obama's biggest supporter during the campaign. It's the only group he's really been loyal to, the rest of us just get kicks in the rear.

[rhett o rick]

25. Was that rhetorical? nm

[Name removed]

26. Deleted message

Message removed by moderator. Click here to review the message board rules.

[fascisthunter]

19. with Todays Corporate Sellouts, Activist Judges

I have no confidence that these criminals get anything but a slap on the wrist to save face in public. This country is now a fascist puppetocracy...

[Dj13Francis]

20. I really really really wanna believe it

but sadly, I think, no. I think while they might find a fall guy or a few fall guys, the real players, the ones really responsible will absolutely not be held accountable for their crimes.

[Plucketeer]

23. IF ..... we got down to the REAL ROOT

of the problem, there'd be a FLOOD of open seats in the House and Senate! :grr:

[ErikJ]

27. Moody's

Dont forget Moody's. They took bribes to give them AAA rating.

[midnight]

30. I hope Schneiderman stays out of the sandbox so as to prevent any sand

from being thrown into his eyes, but if he does wonder into the sandbox, please wear safety glasses...

[OnyxCollie]

32. "This investigation has the 'potential' to be a Mother of All Nightmares..."

Can you say... Fitzmas?

[MrMickeysMom]

33. I must ask...

[Tripod]

37. k&r. n/t

[chervilant]

38. Durn!

I hope that every sleazy lender formerly affiliated with Countrywide -- including Mozilla-- feels the full brunt of this investigation!

I resigned from Countrywide after my manager grew increasingly hostile because I would NOT market subprime loans. In fact, I actively encouraged clients to avoid them at all costs--and lost a number of loans because some borrowers were eager to believe that they too could purchase a $550,000 home on a $45,000 annual income.

On the other hand, I DID help my manager book almost a million in commissions when I was his 'assistant,' and I realize now that some of those loans were subprimes. The greedy bat rasturd delayed my promotion to loan officer in order to insure his own personal gain. Then, he gave me a book on successful salesmanship as my 'bonus,' in lieu of the modest percentage of his income that was the industry standard.

Countrywide was chockablock full of bat rasturds, all richly deserving of a nice orange jumpsuit and a pair of cheap flipflops...

[Enthusiast]

39. I hope the hammer is finally coming down.

I would like my faith in justice restored. I will believe it when I see it.

[radhika]

41. Away from the safety and protection..

of Eric Holder's DoJ. Of course, the Congressional members they own might still be able to wrangle them some extra immunity, for a fee of course.

[dotymed]

44. It is (of course) the right thing to do.

I hope that it does not become a "whitewash."

These people(?) should have been prosecuted long ago. With our corporate-owned government (mainly banksters) it will be very hard to accomplish this.

It, IMO, is the most important investigation and hopefully, prosecution, that has been undertaken since Watergate.

If you have not seen the Jack Abramoff movie, I suggest that you do. It confirms many things. The main question it poses is "what are we going to do about the purchase of "our" leaders?"

[FrankinMO]

46. That would be awesome...

That's a lot of powerful money to be messing with. I would be wearing my flak jacket 24/7.

I bet the shredders at those places are getting a workout right now.

[mcollier]

47. SOMETHING'S MISSING HERE!!!!

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