"The Big Short" only tells part of the story

[tedquick]

“The Big Short” was an excellent movie but very disappointing in that it left out the real reason for the housing bubble and its eventual and inevitable crash. The movie’s position was that it was pure industry greed that created the bubble and subsequent implosion. While the bankers were indeed complicit it was government’s intervention and manipulation into the lending world that was the real culprit.

In 1996 HUD required Fannie Mae and Freddie Mac to increase the percentage of mortgage loans held in their portfolios to be made to lower-income households. In other words, the government dictated that higher-risk loans be made, so the sub-prime mortgage was created. Those sub-prime products were then used for those borrowers who had insufficient incomes and inadequate credit scores to qualify under the decades-long conservative and formerly-used business model.

Since no business person would intentionally make bad loans knowing that they would eventually have to absorb the certain losses, they developed and sold highly profitable mortgage-backed securities (among other instruments). The bankers, through this new mechanism were able to layoff the inherent risk from the poor-quality loans. They simply packaged those higher-risk loans with the AAA and AA loans and sold them to unsuspecting investors.

Irrational exuberance soon replaced common sense and the use of this newly-found cash cow erupted into an inexorable march towards disaster. The mammoth unsustainable bubble grew ever larger. Eventually the inescapable happened: the bubble burst!

Of course greed was in play. In fact, millions and billions of dollars were made by a few players in the field. The heads of Fannie and Freddie themselves made millions in bonuses for having had such “great success” in purchasing what turned out to be disastrous loans made to the unqualified borrowers.

But the people in Washington, the ones responsible for the decrees that lead to the runaway lending should be in prison cells right next to Bernie Madoff. While Bernie lost billions, the Washington cartel cost the American people trillions and nearly destroyed America’s economy. And then those same criminally liable and audacious government players had the nerve to sue the very lenders who were merely following the cartel’s orders.

“The Big Short” was an excellent movie and while it did point out the greed evident in the banking world, it ignored the real culprits, those in Washington who I consider to be un-indicted criminals. They were not even mentioned in the film, let alone indicted, so the public may never know the whole truth about the real cause of the near-destruction of our economy.

So, where is the outrage and does anybody even care?

[Challenger]

“The Big Short” was an excellent movie but very disappointing in that it left out the real reason for the housing bubble and its eventual and inevitable crash. The movie’s position was that it was pure industry greed that created the bubble and subsequent implosion. While the bankers were indeed complicit it was government’s intervention and manipulation into the lending world that was the real culprit.

In 1996 HUD required Fannie Mae and Freddie Mac to increase the percentage of mortgage loans held in their portfolios to be made to lower-income households. In other words, the government dictated that higher-risk loans be made, so the sub-prime mortgage was created. Those sub-prime products were then used for those borrowers who had insufficient incomes and inadequate credit scores to qualify under the decades-long conservative and formerly-used business model.

Since no business person would intentionally make bad loans knowing that they would eventually have to absorb the certain losses, they developed and sold highly profitable mortgage-backed securities (among other instruments). The bankers, through this new mechanism were able to layoff the inherent risk from the poor-quality loans. They simply packaged those higher-risk loans with the AAA and AA loans and sold them to unsuspecting investors.

Irrational exuberance soon replaced common sense and the use of this newly-found cash cow erupted into an inexorable march towards disaster. The mammoth unsustainable bubble grew ever larger. Eventually the inescapable happened: the bubble burst!

Of course greed was in play. In fact, millions and billions of dollars were made by a few players in the field. The heads of Fannie and Freddie themselves made millions in bonuses for having had such “great success” in purchasing what turned out to be disastrous loans made to the unqualified borrowers.

But the people in Washington, the ones responsible for the decrees that lead to the runaway lending should be in prison cells right next to Bernie Madoff. While Bernie lost billions, the Washington cartel cost the American people trillions and nearly destroyed America’s economy. And then those same criminally liable and audacious government players had the nerve to sue the very lenders who were merely following the cartel’s orders.

“The Big Short” was an excellent movie and while it did point out the greed evident in the banking world, it ignored the real culprits, those in Washington who I consider to be un-indicted criminals. They were not even mentioned in the film, let alone indicted, so the public may never know the whole truth about the real cause of the near-destruction of our economy.

So, where is the outrage and does anybody even care?

I was a community banker for 41 years , beginning in 1959. After 30 years in the business , I could count on one hand the mortgages that we forclosed. We did not participate in the rush to create and sell junk loans to the Freddies.

The preponderance of these loans were made by the independent originators or subsidiaries of the Wall Street sleeze bags, not community bankers.

Tedquick is on the mark with these comments.

[chachacha]

this would be a good topic for the political forum. i agree with both posters.

[manaboutown]

Right on, Ted! The primary reason I go to so few movies anymore is because they push their coked up wacky agenda, distorting and misrepresenting so much. The party in charge in DC forced lenders to make these loans.

[rubicon]

Right on, Ted! The primary reason I go to so few movies anymore is because they push their coked up wacky agenda, distorting and misrepresenting so much. The party in charge in DC forced lenders to make these loans.

manaboutown: spot on. Look at how Hollywood and the liberal media pundits are treating Michael Bay's movie on Benghazi...they can't handle the truth

Dodd Frank had a leading hand in this also and then had the nerve to write Dodd Frank to prevent enhance too big to fail. Common sense would dictate that you cannot ignore prudent underwriting but that is actually what the federal government demanded and they still are doing the same now. Its sheer manifest incompetence

[rubicon]

this would be a good topic for the political forum. i agree with both posters.

chachacha: Not so ... unfortunately too many trolls on Political Talk who either can't civilly engage or get their adolescent kicks with mischief

[VILLAGERBB]

I care. This was a scam and somebody needs to be held accountable.

[tuccillo]

Yes, I agree, that was the missing part of the movie. The Law of Unintended Consequences was at work.


“The Big Short” was an excellent movie but very disappointing in that it left out the real reason for the housing bubble and its eventual and inevitable crash. The movie’s position was that it was pure industry greed that created the bubble and subsequent implosion. While the bankers were indeed complicit it was government’s intervention and manipulation into the lending world that was the real culprit.

In 1996 HUD required Fannie Mae and Freddie Mac to increase the percentage of mortgage loans held in their portfolios to be made to lower-income households. In other words, the government dictated that higher-risk loans be made, so the sub-prime mortgage was created. Those sub-prime products were then used for those borrowers who had insufficient incomes and inadequate credit scores to qualify under the decades-long conservative and formerly-used business model.

Since no business person would intentionally make bad loans knowing that they would eventually have to absorb the certain losses, they developed and sold highly profitable mortgage-backed securities (among other instruments). The bankers, through this new mechanism were able to layoff the inherent risk from the poor-quality loans. They simply packaged those higher-risk loans with the AAA and AA loans and sold them to unsuspecting investors.

Irrational exuberance soon replaced common sense and the use of this newly-found cash cow erupted into an inexorable march towards disaster. The mammoth unsustainable bubble grew ever larger. Eventually the inescapable happened: the bubble burst!

Of course greed was in play. In fact, millions and billions of dollars were made by a few players in the field. The heads of Fannie and Freddie themselves made millions in bonuses for having had such “great success” in purchasing what turned out to be disastrous loans made to the unqualified borrowers.

But the people in Washington, the ones responsible for the decrees that lead to the runaway lending should be in prison cells right next to Bernie Madoff. While Bernie lost billions, the Washington cartel cost the American people trillions and nearly destroyed America’s economy. And then those same criminally liable and audacious government players had the nerve to sue the very lenders who were merely following the cartel’s orders.

“The Big Short” was an excellent movie and while it did point out the greed evident in the banking world, it ignored the real culprits, those in Washington who I consider to be un-indicted criminals. They were not even mentioned in the film, let alone indicted, so the public may never know the whole truth about the real cause of the near-destruction of our economy.

So, where is the outrage and does anybody even care?

[chachacha]

chachacha: Not so ... unfortunately too many trolls on Political Talk who either can't civilly engage or get their adolescent kicks with mischief

i have to agree, Rubicon. i hardly look at that forum anymore because of the inane remarks, but i always look for your personal best regards :)