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Thread: Next Bubble to Pop ... 'Subprime' Student Loans ?

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    Default Next Bubble to Pop ... 'Subprime' Student Loans ?

    from


    (snip)"What’s the next industry to bubble up…pop…and collapse?

    “Student loans,” said our new friend, Barry Dyke.

    From the far north…well, from New Hampshire…Barry has been following the money. And he sees a lot of it going to the education.

    Why?

    “It worked just like subprime,” he explained.

    The feds bankrolled it. Guaranteed it. Regulated it. And conveniently didn’t notice as it got to monstrous proportions… And then, when it blows up…they’ll be there again, pointing fingers and promising to “regulate” more heavily.

    “When you pay for something, you get more of it,” says presidential candidate Ron Paul.

    The feds paid for one heckuva a lot of education…subsidizing students and colleges…with trillions of dollars. They pay for GIs to go to school. They give grants to the schools themselves. And they hand out hundreds of billions in loans, at low teaser rates (just like subprime!) to students…often to students who are unqualified and unlikely to get much out of it.

    Here’s the Washington Post story:

    As the nation amasses more than $1 trillion in student loans, education experts say a vexing new problem has emerged: A growing number of young people have a mountain of debt but no degree to show for it.

    Nearly 30 percent of college students who took out loans dropped out of school, up from fewer than a quarter of students a decade ago, according to a recent analysis of government data by think tank Education Sector. College dropouts are also among the most likely to default on their loans, falling behind at a rate four times that of graduates.

    “They have the economic burden of the debt but they do not get the benefit of higher income and higher levels of employment that one gets with a college degree,” said Jack Remondi, chief operating officer at Sallie Mae, the nation’s largest private student lender. “Access and success are not linking up.”

    The plight of “non-completers” has grown in magnitude as student debt tops $1 trillion, according to the Consumer Financial Protection Bureau. In addition, the sputtering economy has forced a growing number of students to make difficult choices between the benefits of a degree and the burden of paying for it. More students are balancing their studies with full- or part-time jobs or signing up for a reduced course load to save money, increasing the likelihood that they will not graduate.



    Colleague, Justice Litle is on the case too:

    We have all heard it said: “You can’t put a price on a good education.” But this is silly – of course you can.

    It was the thoughtless peddling of such a mantra that allowed institutions of higher learning to raise prices with impunity… year after year, at a faster rate than inflation, as costs spiraled out of control… with government-sponsored loan programs fueling the whole thing.

    Sound familiar?

    Echoing subprime, the college bubble even has its own version of the “principal-agent problem,” in which the financial interests of the college (which profits from the loan money) have no alignment with the students (who voluntarily drown themselves in debt).

    Soon these (literally) poor, debt-burdened waiters and waitresses of the future may realize they were snookered, and wake up angry… not unlike the legions of starry-eyed home buyers who, caught up in the rush of the American dream, chained themselves to a grossly inflated asset at a price impossible to pay.



    Geez. It looks like college students have been the chumps in this story…flimflammed by the feds and the universities.

    But, remember, we are grateful to the patsies. They’re the ones who keep the whole scammy economy going.

    Imagine what would happen if young people decided to learn something instead of going to college? They could get a job learning from a plumber or a machinist…or apprenticing to a furniture maker…or just sitting in the library with a big stack of books and a notepad. No tuition payments…no beer parties…no orientation programs (No means no!)…no graduation programs (You can make a change!)…no research labs…no football stadiums…

    …imagine if a group of them got together, hired a teacher…and learned the classics…or theoretical physics…or quantum mechanics…or linguistics…the old fashioned way? Let’s see, pay the teacher $80,000…split it among 10 students… Good teacher/student ratio…much better than sitting in a lecture hall with 150 other students. And $8,000 each.

    A lot better than the $40,000 we spent to send our five children to college. Yes…we spent about $40,000 for each of them, per year. You can do the math. It adds up to $800,000. And we’ve got one more to go!

    That’s why we’re still writing these Daily Reckonings…we can’t afford to stop.

    And it’s kinda fun, frankly…as long as you don’t take it seriously.

    But let’s not talk about us. Let’s talk about them. Those poor young people…leaving school with $25,000 in debt (approximate average)…and a punky job market.

    If they got a degree in math or science, they can probably get a job. But what if they got a degree in the social sciences? Or the arts? Or no degree at all? How many baristas can Starbucks hire?

    What can they do?

    Go to work for the government! Or at least go to work in ZombieTown [ the author's recurring acronym for Washington, DC - sic ]. You don’t need to know anything to work for the feds. No kidding."(snip)

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    We got a housing bubble because our government decided that too few people owned homes. They poured money into subsidized and sub-prime mortgages which sent housing prices way up and many borrowers went bust.

    For similar reasons we have a bubble in student loans. Students ( and often their parents ) are paying more and more for something of declining quality. For too many Americans, a college degree merely denotes membership in the educated caste and helps to meet spouses of similar status. Since 1961 the amount of time students spend reading, writing and studying has DECLINED from an average of 24 hours per week to 15; from slightly more than 3 hours a day to barely 2 hours. For many employers, a college degree signifies only the ability to follow instructions and the college degree has replaced the aptitude test. Aptitude tests are disfavored because of the disparate results displayed by this group or that.

    Over the last 30 years, tuition and fees have increased 440 %. Student debt has risen and tuition has climbed. The number of people with college degrees is equalled by the number of people with student debt. 29% of borrowers never graduate and most colleges in the U.S. have graduation rates of LESS than 50%. That's right. Less than half of the students who enroll eventually graduate. The average graduate from NYU has $100,000 in student debt. Many are paying more than 25% of their income to repay their loans. Many have said that they would gladly "give back" the "education" they are paying for 10 and even 20 years after graduation. That response is highest among majors in "religious studies" ; "women's studies" ; "urban studies" and "cultural studies". I can't imagine why .

    Fortunately, some people are starting to look at WHAT many colleges and universities are spending this money on. In 2009 the base salary of UC Berkeley's Vice Chancellor For Equity and Inclusion was $194,000. Starting assistant professors get about a fourth of that. At U.C. Berkeley, administrators outnumber faculty.

    U.C. San Diego eliminated it's master's programs in electrical and computer engineering. It also cut classes in foreign languages but added a diversity requirement for graduation designed to cultivate a "student's understanding of her or his identity". So now rather than study something likely to make them employable , students can study .... themselves ? This is the same school that lost its top 3 cancer researchers to Rice ( they were willing to move from San Diego to HOUSTON ? ) but found the money to create a Vice Chancellor for Equity, Diversity and Inclusion. UC Davis has a Diversity Trainers Institute, an Administrator of Diversity Education, a Cross Cultural Center, a LGBT Resource Center, a Sexual Harassment Education Program, a Diversity Program Coordinator, an Early Resolution Discrimination Coordinator plus an entire Department devoted to Diversity and Social Justice. This type of redundant sinecure creation is duplicated throughout California's University and Cal-State systems. Assuring that at the very least graduates have been properly trained in how to be complainers and "victims". This kind of crap has naturally reached its zenith in California but is present to varying degrees in each and every public university system throughout this country. Taxpayers are being taxed more and students are borrowing more to pay for this nonsense. I am NOT commenting on the crap that goes on at PRIVATE universities which in some cases is worse.

    Has anyone besides me noted how much money is devoted to promotion of political agendas while money devoted to actual academics is shrinking ? While the overall cost of course keeps going up.
    Last edited by Eric Stoner; 06-13-2012 at 08:18 AM.

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    Quote Originally Posted by Eric Stoner View Post
    We got a housing bubble because our government decided that too few people owned homes. They poured money into subsidized and sub-prime mortgages which sent housing prices way up and many borrowers went bust.
    The government wanting to and putting many people in homes is not what caused the bust, the program was completely sustainable for many years. What created the bust was deregulation, a deliberate and negligent lack of oversight and nefarious financial firms and individuals who were able to manipulate the system and take $Billions out while leaving others holding the bag.

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    Quote Originally Posted by jimboe7373 View Post
    The government wanting to and putting many people in homes is not what caused the bust, the program was completely sustainable for many years. What created the bust was deregulation, a deliberate and negligent lack of oversight and nefarious financial firms and individuals who were able to manipulate the system and take $Billions out while leaving others holding the bag.
    As usual, partly true but deliberately ignoring the ultimate source of the mischief : The Money ! Where did it come from ? The Fed. Who subsidized and/or guaranteed mortgage loans that otherwise would NEVER have been written otherwise ? Fannie and Freddie. Who changed the regs that MANDATED more loans to more minorities regardless of ability to repay ? HUD. Who threatened criminal prosecutions to enforce those regs ? Then A.G. Janet Reno. Who blocked any attempt to rein in reckless mortgage lending ? Maxine Waters and Barney Fwank.

    You are correct that there was plenty of private sector greed and exploitation. But their taking advantage of a crazy situation did NOT occur in a vacuum. The root causes of the housing bubble begin with GOVERNMENT and government policy. That private entities took advantage of same ought not to be surprising to anyone.

    Likewise, colleges and universities have no incentive ( none, zero, nada ) to control costs. If they did, they would cut administrators and eliminate entire departments. As I explained, not only do students get soaked to pay for a lot of academically useless nonsense but taxpayers in many states have to foot the bill as well.

    I haven't even touched all the abuses in the "For Profit" college area.

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    Quote Originally Posted by Eric Stoner View Post
    As usual, partly true but deliberately ignoring the ultimate source of the mischief : The Money ! Where did it come from ? The Fed. Who subsidized and/or guaranteed mortgage loans that otherwise would NEVER have been written otherwise ?
    Not even close. Here is the timeline that clearly shows where the "mischief" and a lot of the money came from. Massive amounts of private money came in and regulations and safe-guards were thrown aside. Fannie Mae has been in existence from the 30's and has been for the most part successful and sustainable for almost it's whole existence. In addition, a large part part of the reason for the collapse was the price-gouging and collusion from the fuel and healthcare industries. For decades the household pie was divided up with reasonable and sustainable expenses. After 2,000 with less restriction on big business, healthcare and fuel prices soared to unheard of levels and took up unsustainable amounts of many homeowners budgets. People who could have easily paid the mortgage with gas at $1.50 and health insurance for the family at $600 per month, ran out of money with gas at $3.50 and the health insurance at $1,800. When they didn't have the money, one of the first things not to get paid was the mortgage.

    2000: Credit Suisse develops the first mortgage-backed CDO[20]
    Lehman Brothers convicted of 'aiding and abetting' the fraud of bankrupt subprime lender Famco, pays a tiny fine

    2003-2007: U.S. subprime mortgages increased 292%, from $332 billion to $1.3 trillion, due primarily to the private sector entering the mortgage bond market, once an almost exclusive domain of government sponsored enterprises like Freddie Mac.[90][91]

    2004-2007: Many financial institutions issued large amounts of debt and invested in mortgage-backed securities (MBS), believing that house prices would continue to rise and that households would keep up on mortgage payments

    Following example of Countrywide Financial, the largest U.S. mortgage lender, many lenders adopt automated loan approvals that critics argued were not subjected to appropriate review and documentation according to good mortgage underwriting standards.[95] In 2007, 40% of all subprime loans resulted from automated underwriting.[96][97]Mortgage fraud by borrowers increases.[98]

    2004: October: SEC effectively suspends net capital rule for five firms—Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns and Morgan Stanley. Freed from government imposed limits on the debt they can assume, they levered up 20, 30 and even 40 to 1, buying massive amounts of mortgage-backed securities and other risky investments.[99]

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    All true but incomplete. Actually, according to Charlie Gasparino, CDO's were invented by a bunch of geeks at J.P. Morgan Chase on a weekend retreat. In 1993 !

    You dodge the question of whether many of these sub-prime ; no doc ; no money down etc. loans would have been written if they were NOT guaranteeed by Fannie or Freddie ? Why did Fannie and Freddie approve so many of these loans ? If those GSE's were doing so well and lending so responsibly then how and why did they get taken over by the Federal government ? And why are we still paying to bail them out ?

    In any event we are re-hashing that which has been posted many, many times before. There is plenty of blame to go around and BOTH government and the private sector are responsible.

    As has been posted, too many people operated on the assumption that real estate prices would keep going up and that there would always be someone on whom the risk of default could be fobbed off. Add in the LTCM bailout of 1998 and you get the additional assumption that the Fed would step in and bail out anyone who got into trouble.

    You are right about the criminal negligence of the SEC. Cox was in way over his head and didn't have a clue. Neither did Barney Fwank, Maxine Waters, Pelosi or Dodd.
    The failure to properly regulate actually goes back to the CLINTON Administration when Rubin, Summers and Geithner together with Greenspan put the kibosh on such things as regulating derivatives and credit default swaps. Plus they pushed for repeal of Glass-Steagall. We can add in Sarbanes-Oxley if you want. That mandated "mark to market " when the markets were dropping like rocks and put more blood in the water for the short sellers.

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    Quote Originally Posted by Eric Stoner View Post
    You are right about the criminal negligence of the SEC. Cox was in way over his head and didn't have a clue. Neither did Barney Fwank, Maxine Waters, Pelosi or Dodd.
    The failure to properly regulate actually goes back to the CLINTON Administration when Rubin, Summers and Geithner together with Greenspan put the kibosh on such things as regulating derivatives and credit default swaps. Plus they pushed for repeal of Glass-Steagall. We can add in Sarbanes-Oxley if you want. That mandated "mark to market " when the markets were dropping like rocks and put more blood in the water for the short sellers.
    None of that was what caused the demise and subsequent crash. Those were caused by systematic efforts by the Bush Administration to deregulate and keep current enforcement from correct oversight. While he was mouthing words "We need to fix Fannie Mae", his administration was removing safeguards, allowing $Billions of highly levereged private dollars to come in without oversight and punishing anyone who sought to blow the whistle- just ask Elliot Spitzer who was in Washington to deliver a scathing report and name names in the whole fiasco when his "scandal" erupted. The changes made during the Clinton presidency where problematic after his term largely because of the increases in regulation and oversight during the Bush administration- coupled with the fact that other household expenses went to unsustainable levels. All the robo-approvals and the such played a huge part. I had friends that were in the mortgage business at the time and after Bush came in they basically said it was wide open and all the rules and regulations could be fully ignored.

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    Horseshit ! I happen to know EXACTLY how Elliot got into trouble and it was 100% his own arrogant fault. Forgetting the provisions of The Patriot Act where money transfers of as little of $4000 must be reported, Elliot paid for his trysts by WIRE TRANSFER ! Not cash. I also know more than one Wall Street poobah who got Elliot to back off his extortion attempts by showing him a full PI's report on his activities. How I know ? A friend of mine did the legwork and wrote the report.And yeah, there were a few pictures. Elliot was seriously compromised LONG before he was ever named as "Client Number 9 ". Before he ran for Governor. While he was still N.Y.'s A.G.
    The FBI was investigating money laundering and the whole Emperor's Club thing fell into their lap. Spitzer's name was on numerous wire transfers.

    What caused the crash were too many people unable to pay their loans back and nobody able to step up and buy their houses which caused real estate values to fall.

    It was Pagan and other Bush Administration officials who did try to warn what was happening. Barney Fwank and Maxine Waters especially weren't having any of it AFTER the Dems took over Congress in 2006. Remember ? Barney took over the committee responsible in the House and Dodd took over in the Senate. Name one thing either did to try and correct the situation. Let's look at the "Friends of Angelo" and add up all the Big Dem names. What about all of Obama's campaign contribs from Goldman Sucks ?
    Did Cox do anything of value while at the SEC ? No. He was in totally over his head and remained clueless AFTER the crisis hit.

    This thread is supposed to be about the "bubble" in student loans. Not a rehash of the history of the Financial Crisis and subsequent Great Recession. If you insist on posting your own history of one or both , with your own facts, please start your own thread so dedicated.
    Last edited by Eric Stoner; 06-14-2012 at 11:07 AM.

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    Quote Originally Posted by Eric Stoner View Post
    This thread is supposed to be about the "bubble" in student loans. Not a rehash of the history of the Financial Crisis and subsequent Great Recession. If you insist on posting your own history of one or both , with your own facts, please start your own thread so dedicated.
    Dude, YOU are the one who brought up the Financial Crisis- this was the fist sentence of the 2nd post in the thread:
    Quote Originally Posted by Eric Stoner View Post
    We got a housing bubble because our government decided that too few people owned homes. They poured money into subsidized and sub-prime mortgages which sent housing prices way up and many borrowers went bust."
    It was Pagan and other Bush Administration officials who did try to warn what was happening. Barney Fwank and Maxine Waters especially weren't having any of it AFTER the Dems took over Congress in 2006. Remember ? Barney took over the committee responsible in the House and Dodd took over in the Senate. Name one thing either did to try and correct the situation.
    Bush was offering tepid warnings as a cover while his administration was doing everything they could to bypass the regulations and safeguards that were intended to keep from happening what happened. There is tons of evidence of them actually obstructing attempts by lots of people to publicize and even stop what was obviously going to be a very large train wreck.


    Horseshit ! I happen to know EXACTLY how Elliot got into trouble and it was 100% his own arrogant fault. Forgetting the provisions of The Patriot Act where money transfers of as little of $4000 must be reported, Elliot paid for his trysts by WIRE TRANSFER ! Not cash. I also know more than one Wall Street poobah who got Elliot to back off his extortion attempts by showing him a full PI's report on his activities. How I know ? A friend of mine did the legwork and wrote the report.And yeah, there were a few pictures. Elliot was seriously compromised LONG before he was ever named as "Client Number 9 ". Before he ran for Governor. While he was still N.Y.'s A.G.
    The FBI was investigating money laundering and the whole Emperor's Club thing fell into their lap. Spitzer's name was on numerous wire transfers.
    My God, are you really that naive? Exactly what laws did Spitzer violate?, the Mann Act?...are you serious???. This was an obvious hatchet job.

    Spitzer writes this article and is about to start investigations:
    http://www.washingtonpost.com/wp-dyn...021302783.html and 10 days later this scandal erupts out of nowhere? Tens of thousands of politicians frequent escorts, hookers and much worse- why Spitzer? and why right then?

    Here is what I consider to be a very accurate accounting of the situation:

    "Since the Bush regime came to power, a new species of loan became the norm, the 'sub-prime' mortgage and it's variants including loans with teeny 'introductory' interest rates. From out of nowhere, a company called 'Countrywide' became America's top mortgage lender, accounting for one in five home loans, a large chuck of these 'sub-prime's."

    "Steering," sub-prime loans with usurious kickers, fake inducements to over-borrow, called 'fraudulent conveyance' or 'predatory lending' under US law, were almost completely forbidden in the olden days (Clinton Administration and earlier) by federal regulators and state laws as nothing more than fancy loan-sharking."

    "But when the Bush regime took over, Countrywide and its banking brethren were told to party hardy "it was OK now to steer'm, fake'm, charge'm and take'm."

    "BUT THERE WAS THIS ANNOYING PARTY-POOPER.

    The Attorney General of New York, Eliot Spitzer, who sued these guys to a fare-thee-well. Or tried to.

    Instead of regulating the banks that had run amok, Bush's regulators went on the warpath against Spitzer and states attempting to stop predatory practices. Making an unprecedented use of the legal power of 'federal pre-emption', Bush-bots ordered the states to NOT enforce their consumer protection laws."

    "Indeed, the feds actually filed a lawsuit to block Spitzer's investigation of ugly racial mortgage steering. Bush's banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws.

    Spitzer not only took on Countrywide, he took on their predatory enablers in the investment banking community. Behind Countrywide was the Mother Shark, its funder and now owner, Bank of America. Others joined the sharkfest: Goldman Sachs, Merrill Lynch and Citigroup's Citibank made mortgage usury their major profit centers. They did this through a bit of financial legerdemain called 'securitization.'"

    Bush, said Spitzer right in the headline: 'was the 'Predator Lenders' Partner in Crime.' The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet.

    Spitzer wrote: When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favorably."

    But now, the Administration can rest assured that this love story - of Bush and his bankers - will not be told by history at all ''now that the Sheriff of Wall Street has fallen on his own gun.''

    "Not all crimes lead to federal bust or even public exposure. It's up to something called 'prosecutorial discretion.'

    Funny thing, this "discretion." For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.

    Naming and shaming and ruining Spitzer - rarely done in these cases - was made at the 'discretion' of Bush's Justice Department."

    http://www.rense.com/general81/spit2.htm
    Last edited by jimboe7373; 06-14-2012 at 03:35 PM.

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    The housing bubble was a direct result of the Federal Reserve trying to reflate after the Nasdaq bubble burst..... Sure many pols liked the idea of more Americans owning homes..... And it certainly helped their reelection chances.... when big donors from finance and real estate, donated and told them how to vote...... The wealth gap was growing...... many Americans felt richer with the inflated equity captured in their home value..... This was a deliberate policy by the Fed..... They just let it run waaaaaay too long.
    The country has been looted.

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    Quote Originally Posted by mikef View Post
    The housing bubble was a direct result of the Federal Reserve trying to reflate after the Nasdaq bubble burst..... Sure many pols liked the idea of more Americans owning homes..... And it certainly helped their reelection chances.... when big donors from finance and real estate, donated and told them how to vote...... The wealth gap was growing...... many Americans felt richer with the inflated equity captured in their home value..... This was a deliberate policy by the Fed..... They just let it run waaaaaay too long.
    If that was the only factor, why was there recently a $25 Billion settlement agreed to by the nations largest banks for various forms of massive mortgage fraud?
    http://www.huffingtonpost.com/2012/0...n_1265292.html

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    ^^^ because A. it was less expensive and less risky than the potential legal bills resulting from an attempt to 'prove their innocence' in court versus settling, and probably more importantly B. because they would have lost additional billions in un-foreclosable property depreciation if un-evictable 'deadbeat' homeowners were allowed another 2-3 years of 'free rent' living in their defaulted mortgaged homes while a court battle dragged on and on. Oops I almost forgot C. avoiding probable nightly 'crucifixion' on mainstream media news for the 2-3 years the court battles would have dragged on. If you were a New Yorker, you'd understand that one of the main functions of the NY state AG is to 'extort' money from Manhattan investment banks. Threatened prosecutions, followed by quick settlements involving 'no strings attached' fine payments to the state of New York, have been standard fare for decades. And while the $25 billion was shockingly large, in the grand scheme of things it was cost-effective for the investment banks to pay it ! After all, if the truth were known the fine money might have come from TARP i.e. US Taxpayers.

    Trying to steer back on topic, in the case of student loans there is no way that the lender can 'repossess' a college degree. There is also no way ( under current law at least ) that a 'deadbeat' college graduate can go bankrupt on his student loan obligations the way a 'deadbeat' homeowner can. So the whole line of discussion above is arguably inapplicable.
    Last edited by Melonie; 06-15-2012 at 02:34 PM.

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    Quote Originally Posted by Melonie View Post
    ^^^ because A. it was less expensive and less risky than the potential legal bills resulting from an attempt to 'prove their innocence' in court versus settling, and probably more importantly B. because they would have lost additional billions in un-foreclosable property depreciation if un-evictable 'deadbeat' homeowners were allowed another 2-3 years of 'free rent' living in their defaulted mortgaged homes while a court battle dragged on and on. Oops I almost forgot C. avoiding probable nightly 'crucifixion' on mainstream media news for the 2-3 years the court battles would have dragged on. If you were a New Yorker, you'd understand that one of the main functions of the NY state AG is to 'extort' money from Manhattan investment banks. Threatened prosecutions, followed by quick settlements involving 'no strings attached' fine payments to the state of New York, have been standard fare for decades. And while the $25 billion was shockingly large, in the grand scheme of things it was cost-effective for the investment banks to pay it ! After all, if the truth were known the fine money might have come from TARP i.e. US Taxpayers.
    That's so far off the mark it's almost a waste of time to comment. I won't even bother to post any links as a quick search will list dozens of sources listing proof of the massive levels of fraud involved. Last post for me on this one as well.

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    Yea.... Paying the fine works out fine.

    A. Commit crime
    B. Collect pay and bonus.
    C. Pay fine.

    Go to step A...... This has been going on for decades..... The same groups have figured this out.
    The country has been looted.

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    Quote Originally Posted by jimboe7373 View Post
    Dude, YOU are the one who brought up the Financial Crisis- this was the fist sentence of the 2nd post in the thread:


    Bush was offering tepid warnings as a cover while his administration was doing everything they could to bypass the regulations and safeguards that were intended to keep from happening what happened. There is tons of evidence of them actually obstructing attempts by lots of people to publicize and even stop what was obviously going to be a very large train wreck.


    My God, are you really that naive? Exactly what laws did Spitzer violate?, the Mann Act?...are you serious???. This was an obvious hatchet job.

    Spitzer writes this article and is about to start investigations:
    http://www.washingtonpost.com/wp-dyn...021302783.html and 10 days later this scandal erupts out of nowhere? Tens of thousands of politicians frequent escorts, hookers and much worse- why Spitzer? and why right then?

    Here is what I consider to be a very accurate accounting of the situation:

    "Since the Bush regime came to power, a new species of loan became the norm, the 'sub-prime' mortgage and it's variants including loans with teeny 'introductory' interest rates. From out of nowhere, a company called 'Countrywide' became America's top mortgage lender, accounting for one in five home loans, a large chuck of these 'sub-prime's."

    "Steering," sub-prime loans with usurious kickers, fake inducements to over-borrow, called 'fraudulent conveyance' or 'predatory lending' under US law, were almost completely forbidden in the olden days (Clinton Administration and earlier) by federal regulators and state laws as nothing more than fancy loan-sharking."

    "But when the Bush regime took over, Countrywide and its banking brethren were told to party hardy "it was OK now to steer'm, fake'm, charge'm and take'm."

    "BUT THERE WAS THIS ANNOYING PARTY-POOPER.

    The Attorney General of New York, Eliot Spitzer, who sued these guys to a fare-thee-well. Or tried to.

    Instead of regulating the banks that had run amok, Bush's regulators went on the warpath against Spitzer and states attempting to stop predatory practices. Making an unprecedented use of the legal power of 'federal pre-emption', Bush-bots ordered the states to NOT enforce their consumer protection laws."

    "Indeed, the feds actually filed a lawsuit to block Spitzer's investigation of ugly racial mortgage steering. Bush's banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws.

    Spitzer not only took on Countrywide, he took on their predatory enablers in the investment banking community. Behind Countrywide was the Mother Shark, its funder and now owner, Bank of America. Others joined the sharkfest: Goldman Sachs, Merrill Lynch and Citigroup's Citibank made mortgage usury their major profit centers. They did this through a bit of financial legerdemain called 'securitization.'"

    Bush, said Spitzer right in the headline: 'was the 'Predator Lenders' Partner in Crime.' The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet.

    Spitzer wrote: When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favorably."

    But now, the Administration can rest assured that this love story - of Bush and his bankers - will not be told by history at all ''now that the Sheriff of Wall Street has fallen on his own gun.''

    "Not all crimes lead to federal bust or even public exposure. It's up to something called 'prosecutorial discretion.'

    Funny thing, this "discretion." For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.

    Naming and shaming and ruining Spitzer - rarely done in these cases - was made at the 'discretion' of Bush's Justice Department."

    http://www.rense.com/general81/spit2.htm
    And umbrella usage causes it to rain.

    This is like Dan Rather's recent attempted rewrite of history where he tried to claim that the documents he tried to use about Bush's National Guard service were in fact genuine. Spitzer has a lot of friends in the media who have struggled to help him rehabilitate his image and give him jobs. Too bad he can't get them ratings in return.

    There is no doubt that Spitzer did some good work in policing Wall Street. There is also little doubt that he did a LOT of overreaching. Remember the Dick Grasso case ?
    If , IF Spitzer had somehow been framed or set up , if he'd been enticed or entrapped in some way, I'd agree with you. Nothing of the sort occurred. I explained to you how an FBI money laundering investigation caused the Emperor's Club to fall into their lap. Spitzer's name came up over and over again because the arrogant dummy used wire transfers instead of cash. Whose fault was that other than his ? One of the state troopers who accompanied him on some of his trips was a notorious blabbermouth. For every legit case Spitzer brought against some wrongdoer there was a time when his intended target told him to go fuck himself. At least one of whom had a LOT more dirt on Spitzer than the A.G. had on him. Half of it was his sexual peccadillos. The other half were all Spitzer's illegal campaign contributions and other financial irregularities. THAT was the REAL illegality involving Spitzer although technically he DID violate the Mann Act by transporting Ashley across state lines for "immoral purposes".

    If Spitzer was such a hero , if his hands were relatively clean then why didn't he gut it out and fight it out a la Slick Willy ? Do you seriously think he resigned because he got caught using a few prostitutes ? If his work was so important then why didn't Andrew Cuomo follow up when he was A.G. ? And then when Andy became Gov. ? Maybe, do you think it could it have been that Andrew was smart enough to realize that Wall St. was the engine driving N.Y.C. which in turn was driving the rest of the state ? That it wasn't just the "Golden Goose" but the ONLY goose laying any eggs at the time ?

    Yes, the Bush Administration invoked Federal pre-emption to short circuit SOME state investigations and prosecutions. I'm not aware of Holder and Obama reversing the policy. Are you ?

    It is right and proper to blame Bush for helping to create the mess with his "ownership society" program that artificially inflated the rate of home ownership. The Dems in Congress happily went along. Name one prominent Dem who sounded the alarm. How soon we forget how supportive Barney Fwank was of Fannie and Freddie before they got into trouble ; as they were getting into deeper trouble and shortly before both effectively collapsed. What about Maxine Waters singing the praises of Franklin Raines et. al. for coming up with "no money down" mortgages ? What about her husband who was in this mess up to his neck ? or Dodd and his sweetheart mortgage ? I'm still scratching my head as to why he wasn't indicted ? How about Pelosi and all the other insider traders in Congress who were short selling like crazy before and during Lehman's collapse. Why isn't Corzine sitting in a jail cell ? If he didn't know what was happening to custie money, why not ?

    I could go on and on but it suffices to say that NOBODY is blameless and NOBODY was any kind of hero. Least of all Spitzer !

    Don't take my word for it. READ Gasparino's last two books and Matt Taibi's "GRIFTOPIA". They both document the mess and its root causes much better than you or I.

    I analogized the current student loan mess to the housing mess. Both resulted, IN PART , from well intentioned but misguided GOVERNMENT policy. The housing mess resulted , IN PART, from government injecting itself into the mortgage business based on its desire to see more people own houses. Which in turn artificially inflated housing prices which helped feed the monster. The student loan mess results, IN PART, from government guaranteed student loans pushing up the costs of college. Time was, colleges controlled costs and had to compete for students who could afford to pay tuition. Why do you think so many Northern students went to college down South in the 1920's and 1930's ? The G. I. Bill worked and like most government programs eventually morphed into student loans for everybody with predictable results.

    When you subsidize debt, you will get more of it. When you create expectations in defiance of natural markets you will get distortions and bubbles.
    Last edited by Eric Stoner; 06-18-2012 at 11:55 AM.

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    Default Re: Next Bubble to Pop ... 'Subprime' Student Loans ?

    Quote Originally Posted by mikef View Post
    Yea.... Paying the fine works out fine.

    A. Commit crime
    B. Collect pay and bonus.
    C. Pay fine.

    Go to step A...... This has been going on for decades..... The same groups have figured this out.
    Sadly, there is plenty of truth to this. At the top of the list is that Dem piggy bank , Goldman Sucks !

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