Full story here. Set your faces to “stun”…
“…Potential losses in housing values from 2008 foreclosures in all 50 states — if values decline to 2000 levels– were less than one-third of the $350 billion provided to banks and insurance companies to cope with losses in mortgage-backed securities, Lucy and Herlitz estimated.
“Damage to the balance sheets of large banks and AIG occurred not mainly from losses on foreclosed residential mortgages, but because of borrowing short-range to buy long-range derivatives and from selling credit default swaps insuring derivatives backed by mortgage payments,” Lucy and Herlitz said.
“These financial manipulations had high-speed forward gears, but when the housing bubble burst, the banks and AIG discovered they had neglected to create a reverse gear with which they could separate foreclosed properties from some forms of mortgage-backed securities.”
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Well here’s a nice dose of truth. Honestly, Tony Soprano couldn’t have dreamed up a racket like this. The spotlights are on the crooks. Are they going to admit it and walk away or stuff their pockets faster?