# \#OccupyWallStreet **URL:** \ **Category:** The BBQ Pit\ **Created:** [September 19, 2011, 6:27pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851 "2011-09-19T18:27:54Z")\ **Posts on this page:** 20\ **Page:** 114
**Author:** ![FE3O4ENAIL](https://avatars.discourse-cdn.com/v4/letter/f/ba9def/32.png) [@FE3O4ENAIL](https://boards.straightdope.com/u/FE3O4ENAIL)\ **Post date:** [December 8, 2011, 1:07am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2261 "2011-12-08T01:07:03Z")
I read today that the reason we have not seen more charges brought against bankers is the government lawyers think they cannot prevail against the defense the bankers can bring, due to their deep pockets. Total BS or not? ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [December 8, 2011, 3:54am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2262 "2011-12-08T03:54:21Z")
> [@Trom](#): > > Ok… I don’t. I think the benefit regulated commodity exchanges provide to society at large is a pretty neat thing. Not to say it’s not, but I think there are things that can be improved. > [@](#): > > Are you arguing that speculators serve no economic function? I am saying I don’t approve of gambling where the gambling affects the outcome of something unrelated to the gambling. The economic function of it is of precious little concern to me at this moment. Speculation on deliverable commodities, that I have no particular objection to (aside from extreme trading on the margin, which as I’ve already said, I think actual producers/consumers ought be able to get around–one ought to be able to use one’s own expected future production to trade on the margin, and someone buying the commodity for actual use is going to have a plan to pay for it.) The act of having a contract that requires you to actually deliver or take delivery of the item means that you need to have a plan to be involved if the market goes a very strange direction and you can’t unload. That will naturally serve to make speculation a little more risky. I have a moral objection to financial futures for roughly the same reason I object to a certain class of CDS instruments: I disapprove of gambling with someone else’s money (margin/leverage) and I disapprove even more of being able to place bets on something you’re externally affecting the outcome of. > [@](#): > > Doesn’t happen. Obviously. I just want it to. > [@](#): > > Why do you assume speculators are always long? Right now speculators are heavily net short natural gas and wheat. Shouldn’t that make them the good guys in this situation? I don’t, in fact, think they’re always long–that was just for illustration (a short-seller driving the price down and then getting penalized for not being able to deliver would be equally amusing to me). Speculating using contract instruments that don’t require physical delivery strikes me as, I dunno, as if the guys at the sports bookie actually affected the playing field they were betting on. > [@Scylla](#): > > Im going to stop right here. Your objections seem to center around either not understanding the context of my remark, or, taking specific issue with a conceptual example, or, assuming that all CDSs are on mortgage backed securities (or that that’s all I’m talking about.) It’s funny, because that sounds pretty much like what you did (poorly) every time you flailed at engaging me. ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [December 8, 2011, 5:14am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2263 "2011-12-08T05:14:41Z")
> [@Scylla](#): > > Dont bother citing or responding. I’ve had enough. I’m outta here > [@Scylla](#): > > So this was just the usual lying bullshit that I’ve come to expect from my favorite, trolling drama queen. > > Is anything you say ever true? > > Do you ever actually do what you say? The funny thing is, this was just a small part of the hissy fit he threw when, after saying I was done _debating_ him, I noted in passing that he was citing a bad source. 🙂 ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [December 8, 2011, 5:24am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2264 "2011-12-08T05:24:13Z")
> [@Damuri\_Ajashi](#): > > Well if Scylla really believes that then he doesn’t know what he is talking about. [Let me refer you](http://boards.straightdope.com/sdmb/showthread.php?t=624833&highlight=barney&page=6) to posts 256, 262, 264, 266, 267… ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [December 8, 2011, 6:29am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2265 "2011-12-08T06:29:06Z")
> [@RTFirefly](#): > > [Let me refer you](http://boards.straightdope.com/sdmb/showthread.php?t=624833&highlight=barney&page=6) to posts 256, 262, 264, 266, 267… Really, that was the part where it became clear that Scylla had absolutely no idea what he was talking about. I’m interpreting “Another 15 years or so in various related roles, the specifics of which I can’t disclose.” as “I totally did fifteen tours in the sandbox, and I had to literally register my hands as deadly weapons, but I can’t tell you my MOS.” ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [December 8, 2011, 7:03pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2266 "2011-12-08T19:03:12Z")
> [@Zeriel](#): > > There’s a distinction to be drawn between banks who are payees into a federal program that insures against catastrophic losses of specific types of accounts, and everyone else. You make that distinction yourself later in the same post. What sort of leverage do you thinmk I as an individual investor can get on buying treasuries? > [@](#): > > There’s that \*evil \*greed showing up again. I can understand actions with a remote catastrophic risk if that risk attaches to the action-taker–greed isn’t BAD, per se, except when it motivates the greedy person to cheat. I can understand them if not taking the action has severe consequences–desperate times call for desperate measures. > > What I cannot understand is how anyone with any moral fiber in their being can make the decision “There’s a chance this will screw up the entire economy, I’m not likely to personally suffer from that chance except for having slightly fewer fuckloads of money, and the only consequence of not taking this action is that I have slightly less more-money-than-I-can-spend. Yeah, let’s do it, I might get even richer!” I know a lot of people on wall street and almost every last one of them are very smart, very hard working and very driven by money. You simply don’t survive if you don’t have those three characteristics. Amoral (not immoral) greed will be ever present on walls treet and you have to regulate it or they will go down whichever road will increase the size of their next paycheck because noone on wall street is sure that they will have a job next year. > [@](#): > > I wouldn’t disagree with anything in this paragraph, especially because you point out the salient difference in the bolded bit. It’s like Scylla pretending there’s no difference between a financial futures contract and currency to try to accuse me of wanting to go to the barter system. So then you would agree that most of your complaints cold be addressed with sufficient regulation and oversight (including perhaps an insurance fund). > [@](#): > > As an aside, it amuses the hell out of me to see someone shooting down the High Financier. I don’t know if he doesn’t know what he is talking about or if he has just gotten lazy and imprecise because he thought he was dealing with a less sophisticated audience than he is used to. > [@Scylla](#): > > A couple of years as a bond trader, trading CMOS,Corporates, and Munis with a wirehouse. Another 15 years or so in various related roles, the specifics of which I can’t disclose. And you? Tax lawyer. > [@](#): > > That’s not true municipal bond insurance is considered insurance. I have no idea what you mean by classically. In your example everything that applies to life insurance also applies to, say, municipal bond insurance. You have a cite or something to suggest that anybody else thinks as you do? I agree that in today’s market people consider municipal bond insurance to be insurance but it is the exception not the rule. Classically speaking, investment risk (including default risk) were not considered insurance risk. There is a line of cases starting with Helvering v. Legierse that addresses insurance, I think most tax lawyers you speak to would agree with me. I don’t think the law of alrge numbers applies very well to insurance risk, there is the flood plain aspect to it and you might be confusing risk distribution with risk diversification. > [@](#): > > You are simply saying what I just said in another way. When I said that they didn’t consider credit risk was actually market risk that is like saying they didn’t know that all those homes were on the same flood plain. They knew, its just that they misjudged the likellihood of the event. > [@](#): > > I wasn’t talking about a pool, a structured investment or a CDO. I was referring to a single CDS on a specific issue, in the abstract, to illustrate how they were backed… or not. Ah, you are talking about corporate bonds. I was focused on REMIC CDSs for some reason. > [@](#): > > It’s an illustrative example. You’re being a picayune prig, don’t you think? I’m trying to explain a larger concept, and a digression on how stripping and selling the coupon is going to require additional collateral or else result in a margin violation was a bit of a digression that wasn’t super germaine to the point at hand. Well it seems to me that if you are going to appeal to authority on your own expertise (and on occassion act as your own cite based on your expertise), it might be worth pointing out these sort of errors. Everybody makes mistakes but you seemed to be presenting this scenario as a base case upon which you could attach a series of bells and whistles. And yeah, maybe I’m a bit of a picayune prig. > [@](#): > > Ok. How would you explain it so that a hostile laymen could understand it? I’m genuinely interested. If you are trying to explain why the gross notional amount of outstanding CDS is not a particularly good indicator of the net amount of risk being taken then I think that is self evident but that at least the ones used for hedging don’t really present two separate risks but I don’t think there is a lot of hedging of CDSs with other CDSs except to the extent you hedge industry benchmark CDSs against single issues or seomthign like taht and even that isn’t anywhere near what you would call common. > [@](#): > > Why does it have to be mortgages? We could be discussing a CDS on a simple treasury, or a corporate bond. You seem to think that everything that I am saying about CDS is strictly withing the context of a CDS on a CDO. This is not the case. Sorry, I don’t know why I got so fixated on mortgage securities. > [@](#): > > Im going to stop right here. Your objections seem to center around either not understanding the context of my remark, or, taking specific issue with a conceptual example, or, assuming that all CDSs are on mortgage backed securities (or that that’s all I’m talking about.) > > Is that fair? Yeah that’s fair, I got fixated on mortgage securities at some point and you had moved on to CDSs on corporate bonds. Although I will note that noone strips corporate bonds these days (and frankly there has never really been a strong market for stripped corporate bonds). > [@RTFirefly](#): > > [Let me refer you](http://boards.straightdope.com/sdmb/showthread.php?t=624833&highlight=barney&page=6) to posts 256, 262, 264, 266, 267… > [@Zeriel](#): > > Really, that was the part where it became clear that Scylla had absolutely no idea what he was talking about. > > I’m interpreting “Another 15 years or so in various related roles, the specifics of which I can’t disclose.” as “I totally did fifteen tours in the sandbox, and I had to literally register my hands as deadly weapons, but I can’t tell you my MOS.” I’ve detailed this before but Fannie Freddie adn CRA role in this crisis was not causative. Fannie has been around since the great depression and freddie has been around since the 1970’s CRA has beena round since the 1970s. People blame the CRA for forcing banks to make subprime mortgages but this is utter bullshit. Most of the subprime mortgages before the crisis were originated by lenders who were not subject to CRA. The definition of what qualified for CRA was expanded and banks really didn’t have any problems meeting their CRA requirements. The role taht the CRA did play is that before the CRA there was no good data on how subprime mortgages behaved. Then after CRA we had a good idea of how 20% down payment mortgages to people with jobs but bad credit behaved over a 30 year period. Bankers had models that they were comfortable expressed the behaviour of subprime mortgages they realized that you could make a significantly larger spread (more than enough to justify the additional risk) on these mortgages and so they started to actively pursue these borrowers. Then the housing market heated up and the demand for these securities went through the roof and they applied that model to subprime mortgages with zero down and no income verification. Wall street pushed this activity because they were making huge profits and people were getting very large bonuses. Folks who blame Fannie and Freddie for this crisis are blaming the Ocean for a tidal wave caused by an earthquake. Fannie and Freddie didn’t lead this charge, outfits like countrywide and Ameriquest did. Wall street started selling private label securities and Fannie and Freddie started chasing market share because people’s bonuses depended on it and that got them into trouble. They were part of the market that melted down and may have magnified its effect but they were not a precipitating factor. On the flip side, if you look at what happened with Ginnie mae, as the private market started absorbing mortgage demand, Ginnie Mae’s market share shriveled to almost nothing because they were focused on serving a policy goal of making mortgages available (a goal that was being more than adequately served by the market at the time) rather than a profit goal, noone’s bonus depended on how much business they did. Now they account for more than a third of the market. We are never going to be able to fully privatize fannie and freddie. We could swear on a stack of bibles that we would never again bail them out again and people will still act as if we will and that will ultimately force us to do so. The only answer is to either get rid of them entirely or absorb them into Ginnie Mae. As Zeriel points out people were greedy but that’s just human nature, even moreso among the self selected group that chooses to dedicate their life to finance. You have to regulate them because they will not regulate themselves. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [December 8, 2011, 7:58pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2267 "2011-12-08T19:58:30Z")
> [@Damuri\_Ajashi](#): > > …People blame the CRA for forcing banks to make subprime mortgages but this is utter bullshit…Wall street pushed this activity because they were making huge profits and people were getting very large bonuses… No, no, no! Its all because the liberals forced the banks to make those mortgages to help the poor people! What could the banksters do, they had no real power, no representation in the Halls of Congress, no way to redress their grievances! Sure, they took the money, but it was cold comfort for surrendering their deeply held principles! Whatsamatta you? ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [December 8, 2011, 9:04pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2268 "2011-12-08T21:04:23Z")
> [@Damuri\_Ajashi](#): > > What sort of leverage do you thinmk I as an individual investor can get on buying treasuries? I know I have been offered 3-1 from my financial advisor’s brokerage (25% margin) for government securities. Cursory google research suggests that some brokerages will allow an individual account to go as high as 19-1 (5%) on medium-term treasuries and 9-1 (10%) on long-term. > [@](#): > > I know a lot of people on wall street and almost every last one of them are very smart, very hard working and very driven by money. You simply don’t survive if you don’t have those three characteristics. Amoral (not immoral) greed will be ever present on walls treet and you have to regulate it or they will go down whichever road will increase the size of their next paycheck because noone on wall street is sure that they will have a job next year. I think you and I would disagree with where the line is between “amoral” and “immoral”. > [@](#): > > So then you would agree that most of your complaints cold be addressed with sufficient regulation and oversight (including perhaps an insurance fund). Certainly, if such regulation/oversight ruled out of existence the riskiest (and generally thus the most short-term profitable) gambling behaviors that appear to be prevalent these days. > [@](#): > > I don’t know if he doesn’t know what he is talking about or if he has just gotten lazy and imprecise because he thought he was dealing with a less sophisticated audience than he is used to. I think he expected we would collectively take his claims of expertise at face value in the face of evidence to the contrary (like his beliefs about the CRA and Fannie Mae). ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [December 8, 2011, 11:13pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2269 "2011-12-08T23:13:24Z")
> [@elucidator](#): > > No, no, no! Its all because the liberals forced the banks to make those mortgages to help the poor people! What could the banksters do, they had no real power, no representation in the Halls of Congress, no way to redress their grievances! Sure, they took the money, but it was cold comfort for surrendering their deeply held principles! > > Whatsamatta you? Well, there was a time when the CRA was necessary to prevent racism and racial disparity in lending. By the time it was no longer necessary to prevent the racism, the banks had figured out that it was also pretty profitable. > [@Zeriel](#): > > I know I have been offered 3-1 from my financial advisor’s brokerage (25% margin) for government securities. Cursory google research suggests that some brokerages will allow an individual account to go as high as 19-1 (5%) on medium-term treasuries and 9-1 (10%) on long-term. Thats pretty high leverge don’t you think? (I think I can get 30:1 leverage on short term). > [@](#): > > I think you and I would disagree with where the line is between “amoral” and “immoral”. Perhaps. I think that we might also disagree about the extent to which almost anyone presented with the incentives and disincentives they are presented with would act in pretty much the same way without proper regulation and oversight. I also think its very easy to be chaste when noone will have sex with you (I don’t mean you specifically but if you haven’t been faced withy the prospect of a million dollar bonus for churning lots of mortgages or getting shitcanned for not doing so, its hard to know if the nagging doubt that you may be contributing to some potential global economic meltdown would be enough to make you choose to get shitcanned). > [@](#): > > Certainly, if such regulation/oversight ruled out of existence the riskiest (and generally thus the most short-term profitable) gambling behaviors that appear to be prevalent these days. With proper regualtion adn oversight I don’t see why we would have to get rid of anything. > [@](#): > > I think he expected we would collectively take his claims of expertise at face value in the face of evidence to the contrary (like his beliefs about the CRA and Fannie Mae). I think his positions on the CRA and Fannie Mae/Freddie Mac are informed more by his ideology than his expertise. He is clearly financially literate. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [December 8, 2011, 11:45pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2270 "2011-12-08T23:45:15Z")
Damuri Ajashi: I would prefer if you did not take the word of Captain Ignorance and the troll twins as to what my arguments are. I’ve written extensively about my views and provided cites where appropriate. When I get the chance, I will go back through the thread, and repost them. The gist of which is that there are many causes of the crash of 2008. Part of it was simple greed, part of it was corruption or failure of regulators to enforce laws already on the books, part of it was simply a classic bubble. In short, I don’t disagree with any of the causes you’ve suggested. Where we do seem to differ is that I place significant blame on the government, HUD, and Barney Frank. The HUD mandates are what created the market for subprime mortgages in the first place and incented the originators to cut corners in underwriting to bring them to the table. It is true that there was a backing off of the mandates prior to 2008 but by that time the market had already hit escape velocity for these instruments, as institutions learned, or thought they learned how to guarantee these mortgages through securitization without Fannie and Freddie. There were plenty of warning signals that this was beginning to occur, as early as '02. Action at that point would have likely forestalled or completely bypassed the later meltdown, but was blocked largely by Franks and the Democrats. On the other side of the coin, if we had had courage from the Bush administration, perhaps a Paulson could have come out as early as April of '08, with something like Tarp, but only much smaller. A smaller dose of medicine at the right time would have been more effective than the larger dose too late. * * * Anyway those are my feelings on the matter and the sum of my posts in this thread reflect that. My main objective in pointing out the culpability of Frank, the Dems, regulation, et al is not to suggest that a huge amount of blame does not exist for the Financial community which collectively ran through just about every red light there was. Rather, it was to dispute the rather stupid and simplistic argument that the whole thing is the fault of corporate greed/financiers. More later when I have time. Ps. I said I was leaving when it was just Z and me going back and forth which was getting old. New poster brings new life. ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [December 9, 2011, 1:06am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2271 "2011-12-09T01:06:32Z")
> [@Damuri\_Ajashi](#): > > Thats pretty high leverge don’t you think? (I think I can get 30:1 leverage on short term). Absolutely it is, and I think it’s just as bad as the big institutions doing it. You won’t catch me doing that kind of shit. > [@](#): > > Perhaps. I think that we might also disagree about the extent to which almost anyone presented with the incentives and disincentives they are presented with would act in pretty much the same way without proper regulation and oversight. > > I also think its very easy to be chaste when noone will have sex with you (I don’t mean you specifically but if you haven’t been faced withy the prospect of a million dollar bonus for churning lots of mortgages or getting shitcanned for not doing so, its hard to know if the nagging doubt that you may be contributing to some potential global economic meltdown would be enough to make you choose to get shitcanned). Meh. I’ve been shitcanned for not doing something unethical before, and I stood by my principles (and not incidentally got said employer nailed for software piracy violations, after I left and the next guy started passing around the cracked software). That’s the basic definition of ethical behavior. And hell, even if I were to grant you that regarding the risky financial stuff that brought down the economy in the first place, that doesn’t explain away the CLEARLY unethical and in many cases illegal methods some of those institutions are using to foreclose on people–falsified records and signatures, etc., not to mention the fraud and outright lying on the part of mortgage officers country-wide (of COURSE you can afford/flip that house for a profit, here I’ll just fudge your annual income on the application). How much ethical leeway do we have to give before we can just admit there are a lot of people in finance whose greed makes them actively evil? > [@](#): > > With proper regualtion adn oversight I don’t see why we would have to get rid of anything. IMHO, if it allows 30-1 leverage when gambling on securities, it’s not “proper” regulation in the first place. > [@](#): > > I think his positions on the CRA and Fannie Mae/Freddie Mac are informed more by his ideology than his expertise. He is clearly financially literate. If his ideology blinds him to the extent that he’s putting as much blame on those entities as he is, there’s no particular reason to believe anything else he’s saying absent a cite. ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [December 9, 2011, 2:12am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2272 "2011-12-09T02:12:43Z")
> [@Scylla](#): > > Damuri Ajashi: > > I would prefer if you did not take the word of Captain Ignorance and the troll twins as to what my arguments are. Who’s asking him to? I referred him to the horse’s mouth: > [@RTFirefly](#): > > [Let me refer you](http://boards.straightdope.com/sdmb/showthread.php?t=624833&highlight=barney&page=6) to posts 256, 262, 264, 266, 267… > [@Scylla](#): > > Ps. I said I was leaving when it was just Z and me going back and forth which was getting old. Awww, you must’ve broken down and read a post of mine. How sweet. I knew you still cared. 🙂 > [@](#): > > New poster brings new life. Yep, there’s always a new poster who, at least for a little while, isn’t fed up with you and your bullshit, so you can kiss off the _old_ new posters. Eventually, of course, **Damuri Ajashi** will get tired of your silly games, and your attitude towards him then will be the same as your attitude towards **Zeriel** now. (I’ve seen this movie a few times.) The only question is, will fresh meat come along once again before **DA** and you have reached a state of complete mutual loathing? Not a very interesting question, but such is life. 🙂 ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [December 9, 2011, 2:59am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2273 "2011-12-09T02:59:49Z")
Damuri Ajashi: > [@](#): > > I agree that in today’s market people consider municipal bond insurance to be insurance but it is the exception not the rule. Classically speaking, investment risk (including default risk) were not considered insurance risk. There is a line of cases starting with Helvering v. Legierse that addresses insurance, I think most tax lawyers you speak to would agree with me. I don’t think the law of alrge numbers applies very well to insurance risk, there is the flood plain aspect to it and you might be confusing risk distribution with risk diversification. Again, I’m not sure what you mean by “classically speaking.” All the criteria for insurance seem to be fulfilled not just muni type bond issue insurance, but a CDS, and even tradittional market risk type insurance such as what you get with a variable annuity with a floor benefit, or living benefit. > [@](#): > > They knew, its just that they misjudged the likellihood of the event. I’ve argued that they didn’t. I certainly didn’t think what happened was possible. I don’t really see either of us providing cites to support our assertions here. > [@](#): > > Well it seems to me that if you are going to appeal to authority on your own expertise (and on occassion act as your own cite based on your expertise), it might be worth pointing out these sort of errors. Everybody makes mistakes but you seemed to be presenting this scenario as a base case upon which you could attach a series of bells and whistles. And yeah, maybe I’m a bit of a picayune prig. It’s not so much an error as an ommission. Perhaps I was faulty in ommiting it (but since it wasn’t germaine I don’t think so.) Anyway, as long as we are increasing the accuracy of an example, what you say is fair. > [@](#): > > If you are trying to explain why the gross notional amount of outstanding CDS is not a particularly good indicator of the net amount of risk being taken then I think that is self evident but that at least the ones used for hedging don’t really present two separate risks but I don’t think there is a lot of hedging of CDSs with other CDSs except to the extent you hedge industry benchmark CDSs against single issues or seomthign like taht and even that isn’t anywhere near what you would call common No what I was trying to explain was how, conceptually, somebody could hold the other end of a CDS. So, I kind of started going down the chain showing how you can use leverage and stripping to change the character of a security. If he had more questions or seemed sincerely interested I would have launched into the process for pooling investments and then breaking up the characteristics of the pool and selling them off seperately, creating a CDO, structured investment, or what have you… but I thought what I said sort of explained the gist of it. Again, it’s a difficult thing to explain to a layman, particularly a hostile one who was already formed an opinion without understanding. > [@](#): > > Sorry, I don’t know why I got so fixated on mortgage securities. No biggee. I may pass on mining this thread for my earlier post and just let what I wrote last post stand unless you have an issue. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [December 9, 2011, 3:01am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2274 "2011-12-09T03:01:42Z")
> [@Zeriel](#): > > If his ideology blinds him to the extent that he’s putting as much blame on those entities as he is, there’s no particular reason to believe anything else he’s saying absent a cite. I think it is fair to say you are not particularly receptive to cites that contradict you. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [December 9, 2011, 4:49am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2275 "2011-12-09T04:49:35Z")
**Arty** , who says you are Captain Ignorance? Honestly, you can be _such_ a little bitch, sometimes! ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [December 9, 2011, 4:52am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2276 "2011-12-09T04:52:13Z")
> [@Scylla](#): > > I think it is fair to say you are not particularly receptive to cites that contradict you. I have subjected this post to rigourous forensic analysis, it registered .19 millihicks, which is to say, entirely devoid of irony. ---
**Author:** ![Zeriel](https://avatars.discourse-cdn.com/v4/letter/z/58956e/32.png) [@Zeriel](https://boards.straightdope.com/u/Zeriel)\ **Post date:** [December 9, 2011, 5:43am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2277 "2011-12-09T05:43:34Z")
> [@Scylla](#): > > I think it is fair to say you are not particularly receptive to cites that contradict you. I think it’s fair to say you’re not receptive to cites that contradict your claimed expertise or prior political leanings, so at best we’re even. Much of the time, I was openly mocking you, remember. ---
**Author:** ![Shayna](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/shayna/32/17976_2.png) [@Shayna](https://boards.straightdope.com/u/Shayna)\ **Post date:** [December 9, 2011, 7:44am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2278 "2011-12-09T07:44:24Z")
> [@Scylla](#): > > I think it exists because there are some really stupid and ignorant people (which is always a deadly combination,) spouting simplistic answers to complex questions. Wrong, fuckhead. It exists because some really smart people figured out what you shitstains have been doing to this country by stealing our wealth from us with your market manipulation, gamesmanship and amoral (and in some cases flat out illegal) behavior and are finally calling your shit on it. Get used to a severely greater level of scrutiny from now on. We’re on to you. > [@Damuri\_Ajashi](#): > > People blame the CRA for forcing banks to make subprime mortgages but this is utter bullshit. Most of the subprime mortgages before the crisis were originated by lenders who were not subject to CRA. The definition of what qualified for CRA was expanded and banks really didn’t have any problems meeting their CRA requirements. The role taht the CRA did play is that before the CRA there was no good data on how subprime mortgages behaved. Then after CRA we had a good idea of how 20% down payment mortgages to people with jobs but bad credit behaved over a 30 year period. Bankers had models that they were comfortable expressed the behaviour of subprime mortgages they realized that you could make a significantly larger spread (more than enough to justify the additional risk) on these mortgages and so they started to actively pursue these borrowers. Then the housing market heated up and the demand for these securities went through the roof and they applied that model to subprime mortgages with zero down and no income verification. Wall street pushed this activity because they were making huge profits and people were getting very large bonuses. Let’s not forget that the disingenuous morons who keep trying to pawn this off on the CRA are just flat wrong that it was subprime mortgages that even caused this crash in the first place. To wit: [The Absurd Zombie Lie About the Economy Right-Wingers Desperately Cling To – And Why It’s Totally Wrong](http://www.alternet.org/teaparty/153217/The_Absurd_Zombie_Lie_About_the_Economy_Right-Wingers_Desperately_Cling_To_--_And_Why_It%27s_Totally_Wrong/?page=entire) The entire subprime mortgage market was worth only $1.4 trillion in the fall of 2007, and that includes loans that were up-to-date. As former Goldman Sachs trader Nomi Prins noted in her book, _It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street_, the federal government could have bought up every single residential mortgage in the country – good, bad and in between – and it would have cost a trillion less than the bailouts. Short of that, notes Prins, if the crisis were really about people buying McMansions that they couldn’t afford, “we could have solved it much more cheaply in a couple of days in late 2008, by simply providing borrowers with additional capital to reduce their loan principals. It would have cost about 3 percent of what the entire bailout wound up costing, with comparatively similar risk.” **What brought down the global economy was as much as $140 trillion worth of financial gimmickery built on top of the mortgage industry. It was the alphabet soup of the credit meltdown – the CDOs, default swaps and other derivitaves that made less than a trillion dollars of foreclosed loans into an economic weapon of mass destruction that would cost the American economy alone $14 trillion in lost wealth.** Great article — you should take a few minutes and read the whole thing, I think you’d like it. ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [December 9, 2011, 11:04am UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2279 "2011-12-09T11:04:13Z")
> [@elucidator](#): > > **Arty** , who says you are Captain Ignorance? Honestly, you can be _such_ a little bitch, sometimes! Nah, I thought you and I were the troll twins. 😃 ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [December 9, 2011, 2:32pm UTC](https://boards.straightdope.com/t/occupywallstreet/596851/2280 "2011-12-09T14:32:37Z")
Shayna: That is a surprisingly informative article despite itself. If we take away all the spin and bullshit you have a story that is pretty similar to what I have been saying. It seems to be in the interest of the article to deemphasize the effect that CRA and HUD made on the market, but if you go back and read those parts again about how CRA was only a suggestion without penalties, it’s pretty hollow. The inability to merge or engage in new business and the lack of access to lower rates is, in effect, a mandate. So, I don’t think that part is very true. As for the banks learning how to securitize and guarantee pools of loans on their own, I already talked about that, didn’t I? So, that doesn’t disagree factually with anything I e said. Earlier I posted some statistics as to what the CRA mandates were and what part of the market they were. Perhaps my troll/stalker/secretary can make himself useful and find it. Anyway shayna, what we have is the left arguing that it is all big business’ fault and the right arguing that it is all governments’ fault. Both views are simplistic. [Previous page](https://boards.straightdope.com/t/occupywallstreet/596851.md?page=113) [Next page](https://boards.straightdope.com/t/occupywallstreet/596851.md?page=115)