If You Were Me Now, What Would You Do?
A follow-up to this post by Englishman in NJ.
Some posters made some very good points and had some relevant and interesting questions for me. I was actually traveling on business, so I couldn’t reply. I’d like to thank Ben for giving me this opportunity to follow up.
Some were interested/questioning of my role in the ABS/MBS business I alluded to: Fair questions indeed (although DinOR, you make some pretty aggressive assumptions). I’ve been in this business since I came to live in the US in 1992. What I actually do is provide services to support the issuance of MBS/ABS paper. So, we make payments to DTC for investors (or not, as the case may be), send investors reports on the status of their investments, act as the “Trustee” on behalf of the investors to ensure the pool of loans maintains it’s ownership integrity for tax purposes (sometimes called REMICs). I didn’t get into this in my first post because it seems very arcane, but if people would like to know more about how these types of transaction works, including CDO’s, CDO’s Squared and CDO’s cubed (I’m not making this up) let me know.
Anyway, back to DinOR and other commenters about my motivation for posting including my salary. Maybe I shouldn’t have been so granular - I do regret that now, but if you don’t understand how modest $300K is in the financial services business in NYC then you probably shouldn’t feel the need to characterize my motivation to post. The idea that I’m “bragging” about my income is simply laughable. Don’t get me wrong, I’m not complaining about my compensation, far from it, just don’t imagine for one second that I’m impressed by it. By the way, it’s DEFINITELY not MD level, I’m just a Director, a very common corporate title indeed (I have been told it is the second most common corporate title in banking after Vice President)!. Someone asked if that included my bonus, and yes, it does.
I don’t want to get too defensive here simply because I don’t feel defensive anyway. However, let me give you my personal perspective on what I do and how I feel about it:
When I first got into this business it was a very reasonable and respectable business indeed. Some large investors, mainly pension funds and insurance companies, wanted to own real estate assets but didn’t want the hassle of actually owning the properties, so by certificating the ownership though MBS paper could diversify their holdings and not need to build a big infrastructure to support this diversification.
Well, that became completely bastardized over time, didn’t it? So, now we are where we are and how do I feel? To be brutally honest, I feel like I’ve pretty much wasted my career. I wish I could go back in time and do something useful, doctor, vet, some such. I’m not kidding. Many (but absolutely not all) of the investment bankers I work with are tools of the highest order. I knew many IB’ers at Bear and Lehman, and although I felt very sorry for some of the “normal” people working in those shops I certainly didn’t have any sympathy for those pigs. I had a meeting with Goldman, Sachs about re-remics recently and to hear them complaining about government interference in their business made me feel like taking a shower afterwards.
So, where to go from here? I agree, as it turns out I’ve been a part of the problem. But I can’t quit. I have a wife who stays at home with two babies who need medical coverage and someone with a decent income. If I’m laid off I know that it’s very unlikely I’ll ever make anywhere near the money I make here ever again. Yes, it’s taxpayer money. Yes, I’m very lucky how things played out over the past 12 months. Hopefully I’ll continue to be lucky. I take no pleasure in any of this.
What would I like to have seen happen in theory? Institutions that had a failed business model should have been allowed to fail. No taxpayer money should have been given to any company under any circumstances. Many senior officers acted criminally. The CDS debacle at AIG should have been allowed to unwind with complete counterparty default and let the chips fall where they may. Why should a nurse in Peoria give money to Lloyd Blankfein or Vikram Pandit? That is simply inexcusable.
As we know, that is not what happened - and it’s not going to happen. Now we drag this out for decades and my children will suffer enormously for my mistakes. I don’t know all the answers, but if anyone is interested in any stories from the “front lines” of this train wreck, I can contribute.
“rms”, $565K bought me 1,900 square feet. Ranch style built in 1958. About half an acre.
“CentralCoastDude”….. “Even for $300k, I would not live in Jersey.” Nice one, agree really.
Oh, and DinOR, et al, flame away, you can’t make me feel worse than I do. On the other hand, when I get home at night at least I see some kind of personal salvation.
Oh, and one other thing DinOR/DD and others, be constructive….if you were me now, seriously, what would you do?
‘The idea that I’m “bragging” about my income is simply laughable.’
DinOR never read N N Taleb’s ‘Fooled by Randomness,’ did you? (The relevance of my comment would be obvious to anyone who read the book…)
PB:
I did pick up on that. Taleb is brilliant and I’ve been influenced by his works that’s for sure.
Specifically, I was referring to Taleb’s discussion of people earning $100Ks on Wall Street but still feeling poor due to inevitable comparisons with people in the same circle who make far more money, coupled with a cost of living folks who live in Oregon cannot begin to contemplate.
>Taleb is brilliant and I’ve been influenced by his works that’s for sure
I read his book and even audited one of his course at my Master’s alma mater NYU Polytechnic Institute (yes, in Quantitative Finance). According to Janet Tavakoli, he is more lucky than anything else. I say she is probably right.
“According to Janet Tavakoli, he is more lucky than anything else.”
Isn’t that the whole point? I get bashed for mentioning Gladwell, but sometimes there’s mystery to the cosmos, and sometimes there’s not.
Either he’s a live or he’s dead or the cops got him…or they don’t.
– Mr. White
“…he is more lucky than anything else.”
What on God’s earth is that comment supposed to mean? Taleb strikes me as someone who creates his own luck, by positioning himself to capitalize on the inevitable market crashes which result when Megabank, Inc and a cooperative central banking cartel endlessly blow asset price bubbles.
“Taleb strikes me as someone who creates his own luck”
Yes, but Madoff did the same. Get it?
“Get it?”
No, I don’t get it. Bernie Madoff ran a Ponzi scheme that landed him in jail. Taleb writes interesting books and bets against Wall Street, both activities that were legal the last time I checked.
Taleb wins by doing things that are legal, while Madoff lost by perpetrating a historically significant and patently illegal financial scam.
What was the same about what they did?
“No, I don’t get it.”
Let’s make a deal, you read Gladwell’s Outliers (admittedly not great, but necessary for this conversation) and I’ll read a Taleb book (you suggest) and then we’ll continue this…
While writing the book, Gladwell noted that “the biggest misconception about success is that we do it solely on our smarts, ambition, hustle and hard work.”[3] In Outliers, he hopes to show that there are a lot more variables involved in an individual’s success than society cares to admit,[3] and he wants people to “move away from the notion that everything that happens to a person is up to that person”
BTW, PB, Taleb’s interests are similar to my late grandfather-in-law’s interests (How do we gather meaningful data on life, as it happens?). An illusion of understanding of current events
news.cornell.edu/stories/April08/Obit.Federer.html
Muggy,
Taleb totally concurs with the point about the role of luck in an individual’s success. See this:
The Roots of Unfairness: the Black Swan in Arts and Literature
I personally wrote an essay along similar lines when I was a senior in high school. As luck would have it, I lost the essay at some point along the way. But I remember some of the more talented and ambitious of my high school peers’ negative reactions to the suggestion that chance might have played a major role in their successes.
Cool, I will read that this afternoon. Thanks, PB.
My only point in comparing Madoff /Taleb is that maybe the only thing thing separates their jeenyus is how they applied it, and maybe that’s because Taleb stopped at Burger King on October 12, 1981 instead of Rite Aid.
you should consider another career path.
Perhaps go to law school or look to join a boutique finance
firm or work at a pension fund.
Hey Englishman in NJ,
Ignore the ones who accuse you of bragging. Sadly, it’s American nature to sneer at someone who mentions his income and it is significantly higher than the income of the one doing the sneering. Ayn Rand called it “drooling envy.” It is safe to say you earn $60,000, but any amount over $200k and some slob will try to shoot you down. Very sad.
I’m guessing this was an attempt at an apology for being one of the enablers of the bubble and subsequent debacle.
Oh for pete’s sake get over yourself.
I’d like to have some sympathy for a guy pulling down $300K/yr., but seeing as how my unemployment is directly related to the losses my former employer sustained due to MBSs and Credit Default Swaps, I’m having a tough time doing it. (A financial company that managed retirement funds, 401Ks, etc.)
At least I wasn’t alone (2-300 other people, including a VP or two).
Of course, you could say I was an “enabler” too, since I maintained the airplane that the “suits” flew around to make all these deals. I didn’t make anything remotely close to $300K, however.
Guess I can say “I didn’t run the trains to Auschwitz, but I did grease their wheels.”
Hey GS even a on a much smaller and personal level….I used to bank on the EXTRA money from DJing, older peoples parties year after year…..class reunions 50th birthdays disco nights. but man the money spigot just closed last year…..
I used to pay off my credit cards and fund my IRA with all the parties i did during the holidays but that’s pretty much gone too. or its at half the price i was charging 10 years ago.
Hey English were you the guy that threw his wife a surprise 25th anniversary party in the back yard, during the dot com craze???? on a Sunday afternoon after a weekend in a Hamptons spa you chartered a helicopter both ways?
Man that was the party over 200 guests..portable ac’s in the tent and a plane flew overhead with a banner celebrating your 25 year marriage????
I dunno I started at 4pm and just kept playing till like 3 in the morning, people just kept throwing money to play their song tipping me….then you gave me a $500 tip too boot…i made well over $2000 that night…
If that was you ….thank you sir. It was all wall street types…. rude, crude but with a wallet full of cash.
PS: i wont tell you about all the ML BS GS, booze cruises i did out of the north pier at Battery park city…
Owwwwch…
“Guess I can say “I didn’t run the trains to Auschwitz, but I did grease their wheels.””
+1
rms,
Considering the history of your recent zyklon-b comment, I think you are on a whole different page from X-GSfixr. That is the ugliest smiley I ever saw.
In response to our reactions to Englishman in NJ and his role in the financial crisis, X-GSfixr made a moral analogy putting himself way out on an edge - holding to task himself, his work life, and resulting enabling of rapacious businessmen, using the strongest possible metaphor.
He’s not the only one of us who earned a livelihood without moral ambiguity.
I have too much to lose, but when those who have lost everything exact their revenge I’m going to look the other way.
So now wall st is the death camps. Wow.
“To be brutally honest, I feel like I’ve pretty much wasted my career. I wish I could go back in time and do something useful, doctor, vet, some such. I’m not kidding.”
Welcome to the US financial services sector during the Greenspan era! (Been there, done that…)
I got laid off from the tax department of a multinational corporation in the aftermath of the 2001 recession. Aftermath because lay offs had been going on in the operating companies for a while, but they didn’t hit US headquarthers until 2003. I was out of work for a long time. Got the extra 13 weeks of unemployment. Tried working with a friend who was trying to start her own small law practice after she got laid off. Read that NY Times Magazine article about the high powered Wall Street types who were fighting over jobs folding sweaters at the Gap and got even more depressed.
When the job market started to improve just a little, the only people who were getting jobs were starting at hedge funds. I couldn’t go that route. I had the background, but I just couldn’t make myself do it. It seemed such a useless thing. The company wasn’t useless completely, though I wasted a lot of time on projects that were useless - especially the one that was wholly dependent on a powerful defense contractor coming in as a partner and wasting all their political capital on getting federal funding for a project that could never become self-sustaining. That one died. Lots of other projects originating in the M&A department were pretty useless too. But those guys needed some way to earn their bonuses, so we provided the support for acquisitions that inevitably hurt the company’s bottom line.
Well, I found my niche through some good fortune, a professor who was willing to vouch for me, the fact that I could move easily and the years of hard work that had put me in the position to take advantage of the good fortune and impress the professor with the contacts. Also, having a life style that let me take a huge salary decrease from the one I had had before was pretty useful.
I don’t know what to say about your situation. It sounds like the area you are in will have to continue for a long time while the loans that are already owned in that form continue until they unwind or fall apart. But there isn’t much new fodder at the bottom of the chain. People can play all sorts of games with the loans that are already around, but if the volume of new loans going forward is much much lower, eventually the work will disappear. Commercial lending is way down and the residential stuff is currently dominated by federal/federally insured loans and maybe a few banks left that don’t sell their loans. That lending will have to pick up eventually, but will it ever be turned into securities at anywhere near the leve we have seen recently? I don’t think so. The mathematical models have been proven false. The demand is for the triple-A stuff and no one can pretend that there isn’t any risk anymore.
You skills are tied to the shadow banking system. Do you see a new avenue for it? Not the securitizing life insurance thing from the NY Times - that is a tiny market and the insurance companies won’t let it last long (they will/have been changing their contracts to make sure it can’t happen). You have quite a conundrum.
Polly:
Great story. You bring up a very good point. The volume of deals is never going to recover, whatever else happens. We will still have work for a while as existing deals pay down, but replacement levels, at least in MBS, are practicially non-existent. My departments and others like mine throughout the industry will be downsizing big time over the next 2-5 years.
I might get away withy 2010 (everything crossed), but after that they will start cutting the higher salaried people from Director down very quickly. Well, if I was them I certainly would.
“The volume of deals is never going to recover, whatever else happens.”
Does the nation’s economic leadership understand this? All the visible evidence suggests the top brass at the Fed and Treasury are in complete denial. I get the feeling that nothing whatever has been learned from the bubble.
So far as I am aware, nobody at either the Fed or the Treasury has ever once publicly acknowledged the existence of a housing or credit bubble. What’s worse, all the policy initiatives seem to serve the purpose of an attempted reflation of the bubble. They seem to think that like all the king’s horses and all the king’s men, they can somehow put Humpty-Dumpty back together again.
Maybe the new book by Kenneth Rogoff and Carmen Reinhart about 800 years of financial folly should be required reading for anyone who assumes a top financial economic leadership position in the US government. It is on my Christmas wish list already. An excerpt follows:
“The final lesson is that financial liberalisation and financial crises go together like a horse and carriage. It is no surprise, therefore, that the last 30 years have seen waves of financial crises, of which the latest one is merely the biggest. The current crisis is the worst since the Great Depression. Yet, argue the authors, no one should have been surprised by this outcome. The US showed all the classic symptoms of a country heading for crisis: a huge current account deficit; soaring house prices; headlong credit growth; and, let us not forget, excessively complacent regulators.”
+1
excessively complacent regulators.
excessively
complacentcomplicit regulators.The government has certainly not learned their lesson. Look at what is happening to the FHA.
The problem with MBS is not the fact that they exist or even that CDO’s exit. The problem is that there was no bar at the front end of the process. The fact that anyone originating a loan nolonger assumed any long term risk combined with the fact that people were willing to buy these resulted is a total break down of risk evaluation in the process. The best tool for risk reduction is the size of the downpayment. Eliminate no money down purchases, or atleast make the hurdle for qualifying for such pretty high on the front end and then you can have a successful implementation of an MBS system. Without that almost any system will fail. THe FHA will be the next example as they continue with low money (that with incentives are basically no money down loans).
Your title is Executive Director, correct? That’s actually a nice title, just enough responsibility to be important with nice salary and perks, but not important enough to be blamed for something awful that may/will happen (MDs).
Polly –
Hats off to you for reinventing yourself in the aftermath of the early-2000s recession. Not easy to do, but well worth the effort!
Thanks, Bear. It doesn’t always feel as good as it is. For example, when you are assigned to actually read the America’s Healthy Future Act and report back on it. But most days aren’t like that.
I mean it about the hedge funds. For a while there, they were the only ones hiring at all. Maybe I kept away because I had actually had an interview at Long Term Capital Management once (didn’t get the job) and knew there was something fishy going on when everyone wanted to be like that? Maybe it was a suspicion that there just shouldn’t be that much wealth sloshing around? I’m still not sure. It just felt wrong. I needed some sort of about face. I got it.
“…read the America’s Healthy Future Act…”
Ugh…
I’m just glad _someone_ reads it—goodness knows our elected representatives don’t, and I wonder how well even the staff of most legistlators read most legislation.
Read health bill? Not as easy as you’d think
By Erica Werner
ASSOCIATED PRESS
2:00 a.m. October 10, 2009
WASHINGTON — Read the bill!
It was a rallying cry at angry health care town halls this summer and has evolved into something of a political movement. Many Americans are demanding that lawmakers actually read the comprehensive legislation they have written — or at least make it publicly available — before voting on it.
The push for transparency has become a running side debate in Congress, with lawmakers — often minority Republicans, but some Democrats as well — pressing leaders to post measures online for 72 hours before a vote.
“I don’t think the American people can be left in the dark,” House Minority Leader John Boehner, R-Ohio, said this week.
It might sound like a no-brainer. President Barack Obama has made transparency a watchword of his administration, and House Speaker Nancy Pelosi pledged upon taking office to “create the most open and honest government in history.”
The Internet makes it all possible. So, what’s the problem?
Well, have you ever tried reading a bill?
…
After the 2001 dot-com crash I went back to the previous job that I had so reveled in escaping. I also went back to my previous salary. Thankfully I had not cranked up my lifestyle in the meantime.
I have never worked in the financial services industry, but looking at my college friends and acquaintances, it’s remarkable how many of them do. “When Genius Failed” is one of my all-time favorite financial books.
I did read Baucus’s “chairman’s markup” or whatever they call it…not the same thing as an actual bill in legislative language of course.
I prefer the David Goldhill prescription (see Sept. issue of the Atlantic Monthly).
“I have a wife who stays at home with two babies who need medical coverage and someone with a decent income.”
Wife and two children on one income here too. Out of pocket dental and vision, and catastrophic medical with high copay; an incredible sacrifice today. We’re debt free except for a light weight mortgage, and it’s prepaid six months in advance right now. We’ll survive this mess.
I’m going to quibble: “I agree, as it turns out I’ve been a part of the problem. But I can’t quit. I have a wife who stays at home with two babies who need medical coverage and someone with a decent income. If I’m laid off I know that it’s very unlikely I’ll ever make anywhere near the money I make here ever again. Yes, it’s taxpayer money.”
Actually, you can quit, you just can’t quit the income. Lots of us get by on much less, and live on single incomes, and have kids, so your situation is certainly not special, and unlike BillinLA who can’t miss an opportunity to quote Ayn Rand, (such the independent thinker she changed her name from Alissa Rosenbaum), not all of us “little” people envy your income, we just question whether our taxes should fund an entitled Wall Street lifestyle.
+1. Great dissection, SaladSD.
“Everything has been figured out, except how to live.”
— Jean-Paul Sartre
I would do exactly what you are doing unless you feel the need to change careers in midstream, which doesn’t seem likely.
I enjoyed your piece btw and under normal banking circumstances I’d say good for you for making a very good living.
“and under normal banking circumstances”
Lol.
May the Best Bank Win TM
We should all be grateful that we have such inside perspective of what has occurred and someone that is so open with their personal affairs..It just add’s to the overall knowledge on the board…Thanks E in NJ…
Hear, hear, scdave.
Over the years, we’ve had the opportunity to include posters from inside the machine; however, so many of them have been chased off by posters who wanted to retaliate against the powers who made the crisis/bubble possible. It’s an understandable emotion, but it does not benefit us HBBers nearly as much as if we have them explaining to us what they do, how they do it, and why. Sometimes, I think it’s best to bite our tongues and listen to what they have to say. If they are here on the HBB, and if they are trying to explain things to us, they are not the “bad guys,” IMHO.
Thanks for your posts, Englishman. Your honesty is greatly appreciated.
I don’t know if you remember my comments ,but I would like to know when you guys realized the junk was toxic waste . I know that you might not be able to answer this question .
I assume you are saying you would be unemployed if the bail-outs didn’t take place ,and that is why you are lucky . Do you have a idea on average
what the % lost is in these CDO bundles or trenches ,or is it different for different trenches ? Also ,aren’t the investors going nuts ,and what about redemptions ? Might of asked to many questions .
HW:
I do remember your comments.
I think it dawned on people at different times what was happening, and some people never really got it until the end. You know the old saying about not understanding something if your job depends on not understanding it….
For me, I suppose around 2004/’05 time. We were just seeing vast pools of subprime loans coming through, I couldn’t understand how people in cities that I knew (I also lived on the West Coast for 7 years before coming to NY) could take out $500K+ mortgages on this scale.
I was also privvy to some amazing Rating Agencies actions and comments. Not to be very specific but the RA’s were hired and paid for by the IB’s, a bigger conflict of interest is harder to imagine.
As for losses in CDO’s it varies greatly depending on the collateral in the CDO itself. I’ve seen some crater and become literally worthless after legal fees. Others seem to hold up reasonably well. The amazing thing is they are still rated by the reference to the ratings of the securities contained therein and those ratings are still very very bogus in many cases. There is still an awful long way to go.
Thank you …..Are they keeping them at the same ratings so they don’t have to sell them as would be necessary for some Pension
Plans requirements …if you get what I mean ?
Anyway ,I could ask you a million questions …but other people might want to ask questions .
To be honest I’m not really sure. We do hear rumors that RA’s are being encouraged by the govt. to keep ratings up to prevent the kind of sales you mention, but I couldn’t say for sure.
One thing I do believe is that the RA’s are almost as bad as ever. I think you might be surprised how mediocre the staff are at Moody’s, S&P and Fitch -very average analysts. I think they are overwhelmed and still being bulied by the Investment Banks.
Govt. programs like TALF are also causing real problems in this area, after all, if you are a RA are you going to risk govt. wrath by increasing subordination on a TALF deal and hurting the economics for the government’s friends who are buying and being financed by the taxpayer to do so.
What a tangled web we weave…
“…RA’s are being encouraged by the govt. to keep ratings up…”
Certainly it would be illegal for the government to openly encourage the ratings agencies to commit outright fraud. Is there any chance the hand of justice will catch up with fraudsters? I want to see those committing financial crimes sentenced to prison time, whether they are in government or private sector. This is the only way moral hazard in the fraudential sector will be rooted out. Those who would deliberately defraud the American people should be very afraid.
I am wondering why the Treasury Department and the Federal Reserve Bank are so conspicuously silent on the subject of financial fraud. I guess we should take this as a sign that fraud was not a root cause of the financial crisis?
Bear,
My thinking is that the lid must be keep on the box, the slightest hint that there might
be financial fraud would open the flood gates
to prosecutions which would lead to the markets falling. As long as TPTB can keep
saying with a straight face that everything is
on the up and up, nothing will fall off the cliff.
“…the slightest hint that there might
be financial fraud would open the flood gates
to prosecutions which would lead to the markets falling.”
If the markets need to fall in order to root out fraud and corruption, so be it. I don’t want my children to have to relive the past thirty years of financial history in their lifetimes. I would rather see anyone who committed fraud serve prison time. Markets can recover from asset price crashes, so long as the fraud and corruption that caused the problems is rooted out of the system.
You and I are in total agreement. My thoughts
are that this will never happen since Wall st.
now owns the White house and congress.
But remember how all the RA’s said they were off the hook because they had disclaimers . The big debate went on that
it was up to the Account Managers to know what they were investing in . Remember the RA’s said in defense that they just accepted the risk models of the industry . I don’t know if these defenses have been tested in Court or not yet .
This is one of the problems with not purging and busting the corrupt systems immediately after discovery ,because it continues . Just like the loan -making that is going on . What ,its been 5 or more years since the beginning of the meltdown and the status -quo continues . The only reason they got Bernie Madlog is because he turned himself in .
The President yesterday in summary said that he was going
to work on regulatory laws that would be designed to protect the consumer in the financial industry .Don’t know if it’s lip service or not ,but Wall Street didn’t seem to happy about it and started complaining about his speech immediately ,claiming their classic “regulations hurt business
BS.”
“Wall st. now owns the White house and congress.”
If everyone assumes that something might happen to root out fraud and corruption in the financial sector and relentlessly seeks a suitable opportunity, then it will eventually happen.
If everyone assumes that nothing can or will ever be done, perhaps not.
Everything being on the up and up fell by the way side a few months ago (was it longer?) when the banks were given permisson to leave their assets at book value, not updating them to fair market value. While I understand why that was done at the moment of crisis (didn’t like it, but understood), now that there has been enough time for some information to filter through, and there has even been some recovery in values, I can’t see any justification for it based on the original reasons given. So, that leaves two possible reasons: government inertia (yeah, it happens) and knowledge that even at the current values, too many banks would be in violation of their capital requirements if it happened, or pension funds so underfunded that making up the difference would put the companies under, etc.
In any event, I expect that eveyone has managed to avoid any hint of encouraging fraud. It is much easier to encourage people to decide that a particular class of transactions doesn’t require a new rating than it is to actually encourage fraud in doing a new rating. The contracts probably provided that the original ratings were the ones that stayed with the bonds throughout their life anyway. Keeping that triple-A was very, very important.
Dumb question of the day:
Is financial fraud OK, provided the perpetrator is at a high enough level post in the financial system?
I feel some kind of curious compunctions about raising the fraud question. I grew up believing the USA was subject to a rule of law, and that anyone found guilty of breaking the law would be prosecuted and punished.
Now that it appears financial fraud has infected our system at the highest levels, my beliefs in our system are shaken. What happened to the checks and balances that our founding fathers built into their carefully-crafted Constitution?d
When will justice roll across the financial system and root out the corruption which has helped create and perpetuate the credit bubble?
But let justice roll on like rivers, and righteousness like a mighty stream.
Amos 5:24
“It is much easier to encourage people to decide that a particular class of transactions doesn’t require a new rating than it is to actually encourage fraud in doing a new rating.”
Your post suggests a deliberate effort to hide the objective condition of bank balance sheets; whether this is executed through rules or discretion seems immaterial.
I vaguely recall something similar was going on in the Japanese banking system during the 1990s. Financial authorities who are now revealed to live in glass houses should not have thrown so many stones back then.
‘…classic “regulations hurt business BS.”’
The new book by Rogoff and Reinhart on 800 years of financial folly nicely puts the lie to that myth. Even Adam Smith said a rule of law was necessary for capitalism to function property (I read this in an Alan Greenspan speech!).
With any luck, one of the benefits of “globalization” and the attendant degradation of US national sovereignty, will be that some of these sacks of chit will be dragged in from of a international criminal court.
One of their arguments has been that “If you come down too hard on us, we’ll pick up our toys and go play somewhere else….” I’d LMAO if the threat of extradition forced them to stay in the good old USA, where they will have to hope that bought politicians “stay bought”
I can’t see J6P protesting too much, if the World Court filed a few extradition requests for Angelo Mozilo, or the CEOs of all of the big Investment Banks.
Until I actually start seeing some of these guys in orange jumpsuits and handcuffs, heading out to Leavenworth or Marion, “Justice” is something that must happen in the afterlife, because I’m sure not seeing it here.
“If you come down too hard on us, we’ll pick up our toys and go play somewhere else….”
How would they do this if they were imprisoned?
I was referring to all the whining they’ve been doing, when the subject of tax increases on “the rich” comes up.
“now owns”… nope WS has owned the WH since 80. Just way more obvious to us now. Always check your rear view mirrors Rancher.
“Now that it appears financial fraud has infected our system at the highest levels, my beliefs in our system are shaken. What happened to the checks and balances that our founding fathers built into their carefully-crafted Constitution?”
Did you feel anything when the retired pilots got their retirement contracts adjusted downward following the 9/11 episode?
now owns the
WS owned them for the last 30 yrs. Since 80.
I should have used the word “obviously”.
“I couldn’t understand how people in cities that I knew… could take out $500K+ mortgages on this scale.”
As I’ve asked Mr. Bear many, many times: What could act as a “vector” to increase personal wealth $$$$$$$$$$$$ x100,000 / x200,000 / x300,000 + dollars/euro’s whatever…that can be directed and distributed to MILLIONS of people simultaneously across a wide swath of global geological area?
Was it all a “bad model” that failed?…or…was it a “bad model” that some knew would fail…at some point in time?
(Hwy now laying down, looking up at the passing clouds through wind tossed tree branches… quietly ponders the falling Autumn sycamore leafs and a sunlit revealed flying spider, …gravity & time, so subtle… it’s hard to imagine the “effects” they “produce”)
Was it all a “bad model” that failed?…or…was it a “bad model” that some knew would fail…at some point in time?
http://video.pbs.org/video/1290388692
According to Simon Johnson on Bill Moyers’ Journal, they knew there would be a high default rate on the mortgage loans that were being made. That was in their models. To me it sounds like the very definition of predatory lending. According also to Johnson where they miscalculated was the crash of the underlying asset prices. They didn’t expect those price declines.
I am guessing the gradual realization among industry professionals of the toxic asset problem closely resembled the plight of a frog in the pot of water who notices it is boiling after the point when its muscles are too fatigued to jump out?
+1 for the analogy.
PB, you should post this in tomorrow’s bits bucket because it really is worth discussion. It’s not just the bankers in this position. It’s everyone from J6P to the current winner of the Nobel Peace Prize.
I suspect the froggies who are most aware, and most fatigued, are TT Timmy and HeliBen.
I agree Ox . What really makes a success, and why do we strive to keep up with someone else.
“I am guessing the gradual realization among industry professionals of the toxic asset problem closely resembled the plight of a frog in the pot of water who notices it is boiling after the point when its muscles are too fatigued to jump out?”
+1 LMAO
Bill:
Not an apology at all. How could I have predicted any of this nearly 20 years ago. I stumbled into this business by luck, no one leaves school saying they want to go into the “Trustee” business.
Simply put, I ws attracted to the money, it was better by far than in any other job I could of gotten.
You want absudity? My wife was a kindergarten school teacher in the innner city in Paterson, NJ for 10 years. What she did in a day was more valuable than I did in a year, but of course I earned multiples of what she did.
That’s not my fault, it’s just a reflection on the priorities we seem to have developed as a society.
I know your post is directed to Bill in Carolina. I’ve read down to here and know the background of your high income. Still, I don’t blame you. If you got on your high horse and took the noble route, the next guy would instantly replace you and bring the $300,000 home to his wife.
I’ve been attacked for working in the defense industry, sometimes as a federal employee, but especially as a consultant earning three and sometimes four times what I earned in 1999 at age 40. If I did not take the job, some other high skilled engineer would. Phooey on envious people! I should rub it in and get a BMW M6!
I live in Jersey, too, out in Flemington. Its very nice out here; too bad the commute to the city is difficult although my immediate neighbor commutes via train that she gets in Whitehouse Sta. Just had the house appraised for a refinance, the third since coming here in 2000. Started out at almost $1700/month payments on a $240,000 loan and will now be under $1200/month on $219,000 loan. Anyway, the appraisal put the house at $607,000 and thats in line with the town reappraisal last year at $603,000 so it should be pretty sound. Its a 1965 modern on 2-1/2 acres with 3200 sq. ft. Taxes 12,500.
You make the point that people on this blog have pondered for years: How could they give out $500,000 mortgages to some of these borrowers? On your income, you’d find that a difficult nut to keep up with but some of these borrowers we read about are a couple where the wife has a “family daycare” in the home and the husband is a self-employed auto mechanic and they got into a $600,000 house in Colorado on that. And theres so much of it that it nearly crashed the world economy! People in Norway won’t get pensions they counted on because of American homebuyers in Nevada.
I’d like to see more criminal investigations because it ought to be a red flag that 3 states - California, Florida and Nevada - had so much of this bad mortgage debt.
People in Norway won’t get pensions they counted on because of American homebuyers in Nevada ??
Thats a little bit of a stretch isn’t it ??
People in Norway won’t get pensions they counted on because of American homebuyers in Nevada ??
Thats a little bit of a stretch isn’t it ??
Don’t you remember those articles about a year ago about the little towns in Norway who stupidly spent their bucks on American mortgage-backed cra*p/securities? Good ratings, and then it turns out it was utter c*rap after all; surprise, surprise…Lehman all over again, except they didn’t get a bailout; surprise, surprise…
Hey, I’d like to read more of that story, actually. What has happened in those towns since then, in real-time meat-people land?
And now that I think of it, where the fook is Iceland in the news lately?! I can’t believe I forgot all about Iceland!
Is everybody swaddled in seal-skins and bobbing up and down in a coracle whilst trying to catch fish?
2 things…1-Taxes 12,500. OM.
and 2- Really good mini documentary on the town and people in Norway on tv month or two ago. Yes, they have been hurt mightily. Closed schools, fire depts, pensions and so forth.
It really did stretch that far and probably further.
It really did stretch that far ??
Yes, but not just Nevada…
Yes, but not just Nevada…
Yep.
I thought it was Iceland that had the problem.
“2 things…1-Taxes 12,500. OM.”
+1 OMGawd! Fixed for ‘ya.
$12,500 is not bad for a good area in this state. Its the schools and people have woken up to that. Towns fight to make it hard on builders. The town just north of mine tied up a developer who wanted to put in 900 houses long enough that now, with the real estate boom over, the town might buy the land.
“Coracle” and “whilst” in one post?
Olympiagal, i love you!
*prueba *
“*prueba *” ???
Sounds sorta like the spring pink that will cost ‘ya 10 or 20 yrs.
NO not kidding:
http://www.aftenposten.no/english/business/article2111026.ece
“People in Norway won’t get pensions they counted on because of American homebuyers in Nevada.”
Um, yeah—I call BS on this too. People in Norway are only not getting pensions because their pension-fund managers are IDIOTS, and failed to diversify and hedge to guard against the risks.
Even if the AAA-rated toxic cr*p they bought had been less toxic, they still were taking on a massive amount of exchange-rate risk by having so much exposure to one class of dollar-denominated assets. After all, I’m doubtful that they pay their pensions in dollars rather than krone. If they hedged the exchange-rate risk appropriately, they’ve probably been making up a fair bit of their earlier losses over the last 6 months…
Well, Prime, it is true, at least in the towns that invested their monies from cities funds into these vehicles.
Yep, true.
It’s the “because of American homebuyers in Nevada” part of your comment that I dispute, not the “won’t get pensions” part.
If they don’t get their pension payments, it’s because their pension managers eff-ed up, plain and simple. They managed the pension resources badly. It’s not because of stupid people buying houses in Nevada that they cannot afford. They are responsible only for their own financial “lessons”.
it’s because their pension managers eff-ed up, plain and simple
Correct. They even said that in the documentary. And the mayor of one of the towns said so too. And, no one, not one of them including guys selling the ‘vehicle’ later admitted to knowing what they sold, sort of.
It really comes down to the ratings agencies, doesn’t it? In fact, the only real regulation necessary is a gov’t financed (aka non-profit) ratings agency,with as much teeth as the IRS. What a simple answer to investor protection. The fact that this has never been mentioned and also allowing the banks to book-to-fantasy tells me that the gov’t needs wall street and wall street knows it.
But how do you prevent fraud if the rating agency is looking at fake paper and doesn’t underwrite each loan and appraisals . They were pulling the trick of putting the good stuff with the bad also in those bundles .
You would have to have effective check and balance on the
front line of the sale of the property and the loan/appraisal to begin
with . They are talking about making a originator keep part of their loan originations to crack down on them not having skin in the game so to speak .It’s pretty absurd that the industry thought that 20% to 100% increases yearly in real estate values
were anything but fake and not sustainable .
I believe that many in the industry just thought maybe the values would just level off , rather than crash ,and everyone wanted to make hay during the upturn ,and they were counting on the
real estate always goes up myth . But to the degree that
people in the industry committed fraud and encouraged fraud and encouraged Borrowers to commit fraud for future
gain is alarming . “Why not let your house work for you”,”Get the lifestyle you deserve “, ” You can always refinance this
adjustable loan when your property goes up in value ,” ” You will be priced out forever if you don’t act now “, If your not leveraging your missing the boat”, “Real Estate always goes up and look at the tax savings and your just throwing away money on rent ,” ” I know a seller who will give you cash back if you buy his house ,” ” Your payment only starts out at 1 % ,see that’s affordable ,” “All you have to do is hold the property for 2 years and you get tax free gains ,how can you beat that ,” ” You need to make ________ to qualify for this loan ,how can we make this happen “, ‘You can get into this place for no money down ,you deserve it ,”and on and on .
The way the industry sold the public real estate ,while the interest rates were low and artificial because they were qualifying people on the teaser starter rates ,was appalling .
Normally a agent is suppose to pre-qualify a borrower and
take them only to houses they can afford ,but that went out the window once the industry knew they could get any loan through and any hit the mark appraisal they wanted .
I guess I’m saying that people in the Industry from top to bottom have proven that they have to be policed ,and borrowers are apparently capable of being sold a con job if they think they might have future gain by it ,so they have to be policed .
UK Man..
Let me be the first to say thank you. It’s not often we laymen losers get this kind of unique insight into the high dollar securities business, slime and all. I enjoyed reading about your account of how the bubble years impacted your family…… viewed through your own lens, your own vision irrespective of how clear or distorted your perception of it might be perceived by others.
Here is something you might have some knowledgeable input on……
Beginning about 6 weeks ago, I started getting hounded by investment firms hawking equity stakes in MBS’s, CMO’s/REMIC’s and the other assorted acronyms associated with shack paper. One of these firms is David Lerner. They offer various types of CMO’s (PO, IO, etc) and REIT’s. Traditionally D. Lerner has been a muni-bond house but all of a sudden it seems they and others are putting effort toward selling mortgage securities.
Any comment?
Thanks in advance.
Exeter:
I’m almost all in cash or near-cash myself. Just knowing what has still to unwind has me very worried for me and my family over the next 10 years. The investments being peddled here may turn out to do very well, but I would worry I’m catching a falling knife (as we HBB’ers like to say!).
Don’t know anything about David Lerner except I hate their radio commercials where they tout the fact that their initial consultation is free. Really. You were thinking of charging me for that?
I would stay well away, but my track record in investing leads me to believe I might be a good contrarian indicator.
“I’m almost all in cash or near-cash myself.”
Aren’t you whatsoever concerned about devaluation or inflation risk? I know we officially have a strong dollar policy, but so far actions by the Fed and Treasury have spoken much more softly than words. The Fed could potentially continue playing a fooling game with anyone who believes their rhetoric, while deliberately engineering a rerun of the Great Inflation of the 1970s, when high inflation was used to transfer wealth from households who were long dollars into the hands of real estate and commodities speculators. Anyone who was foolish enough or sufficiently unfortunate to have the majority of their wealth in dollars, Treasurys or fixed-income pensions at the beginning of the 1970s was thoroughly reamed by the end of the 1970s.
What is to prevent a repeat?
The Financial Times
US mantra of strong dollar loses its value
By Tom Braithwaite and Sarah O’Connor in Washington
Published: October 9 2009 19:22 | Last updated: October 9 2009 19:22
For 14 years US Treasury secretaries have taken up the mantra as though it were an essential part of the office. So, sure enough, Tim Geithner, like his recent predecessors, believes “in a strong dollar”.
But if one thing has been devalued over that time, it is not so much the currency itself but the impact of the phrase.
After a week that saw the dollar reach a 14-month low against a basket of currencies and a fervour of Republican fretting about the value of the currency, the accusation is doing the rounds that maybe Mr Geithner does not “believe” hard enough.
…
Anyone who was foolish enough or sufficiently unfortunate to have the majority of their wealth in dollars, Treasurys or fixed-income pensions at the beginning of the 1970s was thoroughly reamed by the end of the 1970s.
There are other kinds of “cash” besides “dollars”, you know.
Gold and FOREX?
Yep.
I am betting the Fed is going to keep interest rates rock bottom during the next two years of resets and maybe a few years after that. The politicos in power want to keep house prices from falling further (we know it is futile). The investment money looking to the best returns is betting on inflation ahead. Most of ones’ portfolio should be in US stocks, precious metals (bullion and ETFs), TIPS, and international stocks with an emphasis on commodities.
Emergency cash should be in at least nine months of t-bills. Anymore should be in an IPS mutual fund.
Start looking for work in San Francisco, a great city!! Even at $200k you will be fine there. And save what you can now for that rainy day.
Yeah, why live in New Jersey where CCD would never live just to be near extended family while raising twins? You could live in California!
Family is overrated, hire an illegal Nannie or 2 and enjoy life!!!!!!
Family is overrated ??
I must disagree but my situation may not be that common particularly today…We are pretty much old school…I 100% agree with your comment;
And enjoy Life…:)
What I mean is, sometimes we move closer to family for help only to find grandmas has decide to go back and teach,
Not all g-parents are up for the job and guilt ya so much it is hardly worth the effort. Not to mention the jewish princes in NJ would drive me nuts as would the chain smoking and wife beater shirts.
At least my family is overrated, meaning my brothers. The kids are a different story. Of course only the oldest lives nears us, next door in fact. And the son lives with us part time, meaning when he isn’t in college.
Are there financial sector job openings in San Fran? Last time I was up there (last month), I rode the BART from the Embarcadero to SFO, and got into a conversation with two gentlemen sitting withing close proximity, one of whom was an unemployed financial sector worker. Seems the guy had worked for Megabank, Inc and one of the GSEs, and was now down on his luck. He was doing something or the other for income, but he hated his job and was lamenting the lack of opportunity.
I know this is an isolated case, but my general impression is that the financial sector has swollen to roughly twice its sustainable share of the economy, and will have to shrink by 1/2 or so if the USA is ever to recover to its former prominence in the global economy. Read the handwriting on the wall, and take appropriate precautionary action.
Mr. English,
Your thoughts on this. My bank, Keybank, phoned
me last week and told me that if I wanted to extend
my home equity line of credit to $300,000 they would
do it at no charge.
We are in an all cash position, home and land
paid for, and owe nothing. We opened the LOC just
as an emergency fund if needed and have never used it. The payments would be interest only prime + 1%.
Why did the bank do this? I’m baffled!
It sounds like they are hoping you will open a line of credit so they can get you to pay some fees, or at least show some activity on their books that they can use to fool stupid stock market investors into buying their overvalued shares.
We already have the line at $150k with no fees,
and if we use it, the payments are interest only
at prime +1 so there is no valid reason for them
to double our potential draw.
My guess is they are responding to their critics claims that they are not making loans ,so they will make loans to people who don’t need it ,just so they can say they have been extending credit .
Everything is smoke and mirrors in that industry .
YUP and if I ask $hi$$bank for an extra thou or two I will be turned down….
——————————————
We already have the line at $150k with no fees,
They need exposure in your area to diversify their portfolio. Maybe your neighbors have been paying down their own LOC’s. It is all a numbers game. Don’t worry about it.
No idea - I assume that they assume you won’t use it, or very little of it, given your history.
“Why did the bank do this? I’m baffled!”
I heard a few similar stories over the past year. The only sense I could make of it is that having the LOC open with a limit of $X counts as “extending credit” even if you do not tap the line.
The banks want to be able to tell the government that they ARE extending credit—really, honest, for real—while at the same time they want to limit their risk in this deleveraging environment. You look like a good risk to them, since you don’t actually want the credit.
Our credit card (Citibank) increase our loan limits twice in the past six months or so.
I feel appreciative that you spent the time sharing so much of yourself too.
I thought a lot of you, Englishman, since your post. Although I was feeling snarky that day, what was eating me after is why is someone so successful and talented feeling he missed the boat? Shouldn’t someone in the top income brackets feel like they’ve grabbed the brass ring or feel proud of their accomplishments? I didn’t understand why and felt saddened that skipping the trophy home left you feeling you’d missed out.
The day you posted I’d spent the morning w/the wife of a man who runs a major financial institution in our country. They live in the same home, their first really after owning a condo, they had built 20 years ago when they were in their 20s. I think you can imagine as he moved up the ladder he could have moved up several times over. But they didn’t consider that necessary. She and I were talking about a discussion I had w/a broker who said most of her summer was spent taking calls from people in tears because they had believed the bank when they were told what they could afford. My friend quietly mentioned how she’d noticed the new norm was to buy the most you could possibly afford and leave nothing extra. She’s not a gossip but there was concern in her face I’ll never forget. I’d rather be in the position of her and her husband than the position of those she worried about.
I wish you luck in deciding where you’re going from here. Please remember how much more you bring to the table than so many out there in the same boat: Contacts, first hand knowledge, educational excellence and please accept my apologies for my remark about your wife not roughing it. I spent enough time in a competitive, high affluence environment to understand and have sympathy for the pressures.
Thanks for the feedback CarrieAnn.
What I meant to say in my first post was that I did feel like I was missing out at that time (2003-5).
Now of course, I know so much better. Finding Ben’s blog in 2005 was a huge help as well.
“rms”, $565K bought me 1,900 square feet. Ranch style built in 1958. About half an acre.
Crikey
$300/sq. Well at least those ca. 1950s ranchers are built solid, with good foundations. In our area they are at least. SO bought one in 1992 for $160k he could probably get $250k if he sold today. About 3/4 acre, half wooded. What really impressed me is that the basement is dry.
Wait til the floods and mud flows after the rain this fall and winter in CA. Almost impossible to get flood insurance in burn areas. Better call Obama, ugh,ugh,ugh. hahahahahaha.
Englishman, I much enjoyed your posts, and much appreciate you sharing your perspective from your unique vantage point.
There is one thing I would VERY much like to understand better, given your comment that your firm serves as trustee for some of the MBS/ABS securities.
Simply put: why are the trustees not suing to block mortgage modifications in order to protect security-holder interests? It would seem to me that they must in order to do their fiduciary duty.
The reason it looks like this to me is that the interests of the various tranche-holders are very frequently directly at odds. A modification that defers taking a loss is a benefit for the lower tranche-holders—but in a declining market, the longer you put off taking possession and liquidating the collateral, the greater the eventual total losses become. Therefore, any benefit to the lower tranches is coming directly at the expense of the higher tranches, which would have been made whole in a rapid liquidation, but no longer will be made whole under an extend-and-pretend modification.
The trustees should have a duty to sue to protect the tranche-holders that are taking unnecessary losses.
Are they not doing so because of direct government interference? Or are they just not seeing the direct conflict between the various tranches?
In terms of structure, is it typically a single trustee representing the interests of all tranches (even though to do so would be to be complicit in the obvious conflict of interest), or do the various tranches have different trustees?
Many thanks for any insight you can provide into these issues.
These are some excellent questions:
The trustee is the trustee for the entire transaction, including down to all the subordinate notes (sometimes called B-pieces).
The trustee will never sue on behalf of the bondholders, the bondholders themselves will have to do that. The level of fiduciary responsibility is limited here. Our role is to receive payments from the servicers and distribute accordingly to the noteholders as detailed in the governing documents of the deal.
Bondholders do try to involve the trustee more than required but we resist strongly for obvious reasons. Although our legal fees are covered by the waterfall of payments it would take many man hours of key personnel to be involved in litigation.
Thanks for the response…
“The trustee will never sue on behalf of the bondholders, the bondholders themselves will have to do that.”
I would guess that a judge would find that bondholders do not have standing to sue the servicers; they merely hold claims against the trust, and the trust actual owns all of the assets.
It would be like me trying to execute a shareholder suit again a company held by a mutual fund that I own; while it may appear that I have an interest in the company, the mutual fund’s trust owns the actual stock, and I would have no standing.
I would expect that it would have to be the trustee taking such action, or no one.
I’m interested in your questions Prime ,and I have another if it’s possible to answer . Did the loan bundles of CDO’s get any direct funding to make them whole from the Feds or Treasury or Tarp ……..or even AIG?
Not the CDO’s directly. They are simply bankruptcy-remote vehicles whose only assets are the paper they hold.
Now, to the extent the govt. backs that paper, then yes, they would receive govt. help.
Still, the dstress among the major CDO managers is huge, I don’t think they are getting bailed out significantly at this stage.
It’s useful to remember though thay everything is very opaque, it’s hard to figure out what is going on in many instances.
Somebody didn’t want to let go
http://tinyurl.com/y87oh8f
SanFranQL:
I saw that earlier, and it was heart-breaking. I am a guy, but don’t deny my emotions. Imagine how Dad felt. Sad.
The Olygal “Up where we Belong” Question of the Day…….
Is Olygal a “Puget Sound Deb”???
Signed,
Mayo-naise
She isn’t close enough to Puget Sound.
Since she gets along with seafood so well, a “Bering Sea/Dutch Harbor Deb”……
Signed,
Maverick and Goose
(I’m watching waay too much cable TV lately……..)
Uuhhhhhh… I’m pretty sure she is _right_ near the Puget Sound; she has mentioned digging geoducks near her house.
But the real problem is that “Puget Sound Deb’s” don’t exist, since the Navy’s OCS is not actually on Puget Sound. “Bremaloe’s” apparently do exist—but they are on the OTHER side of the sound, near Bremerton.
I wuz just joking
Color me dense tonight. I will blame the red wine, which is tasting quite nice.
Too bad you didn’t manage to roust her up tonight, cause I’m certain her response would have been far more entertaining.
I will blame the red wine, which is tasting quite nice.
Too bad you didn’t manage to roust her up tonight, cause I’m certain her response would have been far more entertaining.
I was too busy enjoying the robust oatmeal laundry-room brewed stout.
But red wine is nice, too. If I only had grapes handy. In Utarr there was a whole mile long fence planted in old grapes down the road from me. Boy, I enjoyed experimenting with those.
I’m thinking of starting a batch of cider this week from scavenged apples. But I dunno. I just barely recovered from the last batch I brewed and drank…last year.
Is Olygal a “Puget Sound Deb”???
Signed,
Mayo-naise
I’m not, but probably only because I don’t meet those hot-shots often in the course of my days.
Luckily for me, too, because I’m taking a breather from all that hormone-fueled nonsense that so bedevils me and makes me unproductive and giddy.
Yes, men are nothing but trouble, is what I’ve decided nowadays*.
*assumes virtuous and prim expression *
Wolfgirl, I live a 9 minute meander through the forest to the shores of the wonderful and glorious Puget Sound. How else could I go about stealing Santa Claus be-hatted oysters for sleepless-near-seattle? Kayak under the moonlight and lean out and try to kiss the moon on the water and almost fall in and drown? Dig up geoducks? Curse when a stupid clam can outdig me? That always makes me so mad…
Course, I arrive at a high bank and then have to clamber down, once I get there. On the one hand that’s good, because it’s fun to clamber and because when I get down there I am usually completely alone on miles and miles of beach, since it’s remote and since all my neighbors are too old for clambering.
On the other hand, clambering can leave you rather dented and scratched, and then you also have to clamber back UP, and unlike you, I don’t have paws.
It’s not that easy, in the dark. But it’s funner.
*And this time I mean it! Probably.
It’s not that easy, in the dark. But it’s funner.
Hahahahaah! That reminds me of a discussion with blu-print a half a year ago, when we were talking about books we liked. I told him how I’d just read ‘Duma Key’ by Stephen Kin, and then how I very unwisely decided to go out for a midnight paddle. So I’m halfway down the muddy bank and hanging onto a scratchy shrub and casting about with my hand for the next scratchy shrub, when my reptile brain whispers: ‘There’s something underneath you on the beach….’
That’s exactly when I learned that I can teleport myself a couple hundred feet when I really, really want to. Because I was back standing on my porch in 3 whole entire seconds.
Hey, life-skills, man.
…Now that I think of it, where HAS blu been? Blu! BLUUUUUUUUUU! Come forth!
You are definitely closer than I thought. My memory must be failing. It’s been decades since I was in that part of the country.
Too long, then.
Don’t you remember how nice rain feels?
hear them complaining about government interference in their business
This is the kind of arrogance that makes me want to take a and tiki torch and a pitchfork to Wall Street. Interference in their “business?” Their business consists of fraud, oligopoly, and bribes to member of Congress. Government shouldn’t just “interfere.” Government should just shut them down entirely, or let the chips fall where they may.
you haven’t heard anything yet. You would simply not believe how pathetic these people are, I assure you.
“you haven’t heard anything yet.”
You tease!
Now you simply MUST regale us with tales of IB slime and their twisted world-views. You simply must!
Sounds like such a great topic that we should save it for another post, though! Bring on your worst!
I can’t resist. i’ll e-mail Ben and see if he is OK with it.
You don’t have to tell us. I don’t want you to get into any trouble with your bosses.
OMG, I can’t wait…
Hush oxide, Englishman wants to get it all off his chest; it will be like therapy, only cheaper!
This part of the book is getting really good! Can’t wait English
you can use a different name
Where’s a hacker (to get into Goldman Sachs e-mail server) when you really need one………
I bet these pathetic pieces are scum are the same people who go all Galt and “hard work” when a poor person has to sign up for an “entitlement” program like food stamps. Or God forbid somebody gives a bed to the entitled homeless.
So true oxide . I think you all know that I have said many times that the
bails outs and other tricks were just Obstruction of Justice . When Hank Paulson was questioned on “moral hazard ” by Congress/Senate, he looked baffled like why would anyone consider that a issue .
People are hurting bad because of this scheme that nobody saw
coming with the faulty risk models of that Industry refusal to perform “quality control ” and prevent outright fraud .The scheme morphed into outright breach of duty and fraud on many levels . I find it a little hard to believe that just nobody had any idea that the train
that the financial industry put the World on wasn’t going off a cliff.
That industry lived off the prior long term reputation of that market ,in spite of the fact that the risk models changed and they really hadn’t been tested in the real world . I believe a lot of laws were broken that were still on the books ,in spite of de-regulations ,and the regulators and Government were off the charts asleep and some bribed .
It’s easy to become blind if your Masters with the money influence you ,should be the confession of many Politicians . The Politicians breached their duty to judge their Masters .
People are hurting bad because of this scheme
No, not because of this scheme. If people are hurting, it’s their own fault because they “didn’t work hard enough.”
(sorry, very hard not to be cynical these days)
It’s just as bad as if the Industry put a defective car on the
market that hadn’t been tested . I remember reading that the “Creators ” thought that the risk would be spread out by the trenches . But, I don’t know if they broke down the ratings by each trench within one bundle or not . Also is appears they didn’t design Plan B in case a meltdown occurred in terms of Conflict of Interest between trenches within the bundles . But ,for the longest time these Bundles of loans were performing because real estate kept going up and it would be rare to get a foreclosure in the bubble building period .
Englishman Et Al.
William K. Black has indicated many times publicly that a few key things need to happen in order to straighten up the financial sector. Among them are investigative accounting of the firms involved and prosecution of the officers at those organizations that committed crimes. This would involve putting the IB’s and any other suspected institution into receivership as in the days of the S&L scandal.
Not sure what I want to ask here, but maybe it’s why hasn’t the necessary forensic accounting been done by qualified regulators like Black resulting in prosecutions and exposure of the truth? Would there be any value to doing this?
A side question would be are the statute of limitations running out such that corporate officials who should be prosecuted will never be?
Englishman,
I think it took a great deal of courage and introspection to write what you did and share it with the blog. Many of us here tend to forget that our individual circumstances are relative, and that being judgmental automatically precludes us learning from others’ experiences; thus limiting our own.
As you say, your salvation is there when you come home to your family—you owe us nothing. Nothing at all.
Thanks for these posts.
Englishman,
Thank you for your story. My Sis and BIL live not far from you in the Boonton area. He has ridden the wave of another strange boom that is Pharma IPOs. As you say, it was never his intention. His party is pretty much over. There are a lot of us out there that put bread on the table facilitating hollow investments, not just in the banking center.
I’m a little late to this discussion, but rather than tell you what you should do, let me tell you what I have done.
My career of choice was public service in city planning/regional economics/transport. At some point I realized we had a bad government, and I too was wasting my career. So I took the knowledge I had and first ran a protest campaign for state legislature, then went to work writing reports for a real estate research company. The pay is not huge and I’m not changing the world, but I get to tell the truth, and its easy work for me.
Now my protest campaign was a hit to the family finances, as I was unemployed for nine months, but (unlike ENJ) mine as the smaller income, and we had saved and paid off our mortgage. Easier for me than you: I ran in part because if I couldn’t who could?
Meanwhile, my wife works for a quasi-public organization that pays more than most in government, because it has to compete for finance workers with the financial industry. And as the crisis unfolded, suddenly her perspectives on things got a lot more respect, and she got a bunch of promotions, and is now earning far more money than planned.
What she knows (because I have he data and tell her), however, is that in a broader sense she is now overpaid. And that means that level of pay is a windfall that is not to be counted on. The response is to live the way we planned to, and bank any extra money — we increased our charity, but only so much, because we wouldn’t want to have to cut organizations off later. She has started spending somewhat more money on clothes and convenience because those she work with spend more. I have not.
Bottom line, you need to arrange your lifestyle for the income you might end up with. Step one: pay off that mortgage as soon as possible. Step two: could you bike to the train or bus? One car is enough, even in Wayne. You’ll feel better due the exercise, believe me. And pay off that car and keep it going. If your wife is at home, she can cook from scratch. Our motto on chores is she does 40%, I do 40%, and 20% we just live without; she’s a Senior VP and scrubs our toilets, whereas a shocking share of people around us now have immigrants come in and clean. Insane.
What do you get for that? FREEDOM! I hit the road. She will too, if in the future she doesn’t like her job anymore. We have no gun to our head. And, although it is too much, we’ll be paying saved cash for college.
It looks like the English man was involved with the servicing the CDO’s as a Trustee ,or whatever they are called these days, rather than origination of the product ,or the sales end of the industry .To me it would be a nightmare having a job like that when the meltdown
started . In the Boom Market sales people on the lower levels got to wash their hands of the Sale.
Thanks for sharing your story, WT Econ.
Having a paid-for house, living not just within but well under ones’ means, main breadwinner knowing she could leave her job - freedom indeed!
And I like the chores motto.
Ditto.
I already suspected you were neat-o, WT, but now I’m sure of it.
At some point I realized we had a bad government, and I too was wasting my career. So I took the knowledge I had and first ran a protest campaign for state legislature.
I especially respect the fact that you ran a protest campaign, whether or not it worked. That’s super! What we can do, is all we can do, if that makes sense. Like you say: “I ran in part because if I couldn’t who could?”
Thanks for running. You’re across the country from me, but I don’t care; thanks.
I think cynicism is the refuge of idealists who would rather get bitter and lazy than keep trying.
So again, I respect your choices greatly and I’m glad they’ve worked out so well for you and yours.
I think cynicism is the refuge of idealists who would rather get bitter and lazy than keep trying.
Ah, I’m not sure I agree with that.
A healthy dose of cynicism is a measure of critical thinking; who here at the HBB is without cynicism? You wouldn’t be a regular poster here without a dollop.
You wouldn’t be a regular poster here without a dollop.
That sounds…cynical.
Hahahaah!
Englishman,
I also wanted to say that I regret the treatment you received at the hands of some here.
Working in MBS/ABS services does not strike me as particularly suggesting any culpability for the bubble forming; it’s not like you were personally responsible for the global credit/liquidity bubble or the lack of lending standards that ensued.
Personally, I’m glad you made a good living off the machinery, and that you were smart enough to connect the dots and avoid being an FB. I congratulate you for that.
Best of luck figuring out your plan for the future. My guess is that in spite of the current drop in volume, some form of securitization will continue to exist in the future, even if it remains all federally backed rather than private; I would be surprised if there were not still a need for trustee services.
test
I remember talking to some poor lady who just got the notice that
the Bank she worked for was belly-up and her stock options were worthless
now (I think she said the worth was 67k at one time ). She said in summary that the money was her retirement ,and she didn’t know what she was going to do . This is a person that was in a totally different division from the loan division who had her life affected by the acts of others .
Not all people who worked for a bank or loan outlet were involved with the
fraud or breach of job duties or foul play that was going on in the loan divisions .
It’s amazing to me that in the unregulated world of banking they would leverage as high as 40X’s ,and that is just nuts ,and I can’t imagine any justification for that stunt . I still think about the people in 1929 who had nothing to do with stocks at the time or any speculation who suffered because of the greed of some people . If you have any system that the acts of one can affect the life of many ,than it has to be regulated ,with strong rules of the game with penalty . Capitalism isn’t just giving someone a right to steal or get unfair advantage ,or create a ponzi-scheme .
Englishman,
Two points:
1 I hear you regarding $300K a year. $200K is barely middle class in that area. $300K is comfortable, but by no means high income. Anyone who says otherwise has never spent any time in NY or eats Raman 7 days a week.
2. While not exactly the same situation, I went through the .com era. I graduated from business school at the right time and was a paper millionaire several times over before I turned 26 thanks to the stock options they were handing out like candy.
I thought the world was mine and I would be retired and sipping pink fruity drinks on my own private island by the time I was 30. Every chance I had I would talk about how we were revolutionizing the world with out super duper fantastic application. I was not a tech guy and didn’t quite understand what the hell it was or how it worked. But I could sure give a nice demo of it and create amazing PP presentations for it. Not once did I bother with the pesky details that we never actually made a profit, nor was a profit anywhere on the horizon. But who needed profits when you were changing the world?
Lots of people lost a lot of money because of what I and thousands of others said and did during that time. I hyped garbage. And investors bought the stock of my and hundreds of other companies in part based on that hype. And they lost their shirts. But I don’t now and didn’t then feel guilty. People wanted in on the Wall St / .com casino. They put their money on red and the ball landed on black. Can’t blame the casino for the outcome. And you sure as hell can’t blame the Roulette dealer for throwing the ball down.
Also like you I started to see the writing on the wall most of my peers were convinced otherwise. Stock price dropped from $200 to $180. They were sure it couldn’t go any lower. To $150. Can’t possible go any lower. $100, no way lower. 90, 80, 70, 50. Same attitude all the way down to where the price settled around $5 and stayed between $5 and $15 until the company was bought by MegaSoftwareCompany a few years later.
I started selling early enough so that I actually had something to show for my options. Not quite enough to buy that island, but enough to visit often. I just played the game using the rules that were set up by someone else.
My general point is you have nothing to feel sorry for or ashamed of. You took advantage of what was in front of you. You didn’t make the rules, you played by them. And you did well for yourself. Nothing wrong with that. You didn’t force anyone to buy a house they couldn’t afford. You didn’t force anyone to re-fi every 2 years, spending the proceeds on new cars and trips to Fiji. Stop beating yourself up.
… and create amazing PP presentations for it.
There are no amazing PowerPoint presentations, there are only suckers who believe there are amazing PowerPoint presentations.
+a gazikityzillion cubed
Very true. I agree PP presentations are as usefull as tits on a bull. But when in Rome….
I don’t think it would be normal if the English man didn’t feel bad about what happened and he already has regrets that he didn’t get into something more meaningful to him in retrospect. The fact that the English man feels bad tells me that he is human and thats better than some of those pigs in the business .
“I hear you regarding $300K a year. $200K is barely middle class in that area. $300K is comfortable, but by no means high income. Anyone who says otherwise has never spent any time in NY or eats Raman 7 days a week.”
Lived here most of my life, and I have to disagee.
You can go broke living in the NY area the same way you would anywhere else.
Or you can live differently than you could anywhere else — one or no car, less square footage, less stuff, but more things to do, many of which are free or cost little.
Moreover, the house (price and utilities), the car (insurance) and taxes cost more here, but lots of other stuff costs the same or less, if you don’t shop high end or in the usual mall.
Hi all. I’m traveling today and rewarded myself tonight with this thread. Best I’ve read in a long time. Thanks, Englishman. I look forward to hearing tales from the office. Good night.
Be careful, Englishman. Many, many people read this blog; it isn’t really a secret club of r.e. cynics against the world anymore, and you’re probably pretty identifiable. I’d be very careful about anything that smacks of telling tales from the inside. The way things are now, people lose jobs over stupid things they do on their off hours and post about on Facebook. Just a thought. You’re obviously a big boy and a talented one at that, but I’m sure I wouldn’t like to see you lose your job over some tales of terror that you regale us with.
Although less fascinating, I could regale the readers with some tales of terror about finances/insurance in the medical world, but usually I don’t.
Best wishes on whatever you decide to do and thanks for the insights.
i have found myself in a similar situation (with the exception of making 300k/yr) in that i am a little stuck working at a place that pays the bills (very well), but i feel like i work for a bunch of thieves. i’m not walking away yet (for the same reasons as you), however, i am working on a “plan b” now, until such time i CAN retire (a couple of years). AND i’ll be taking a shower too! this is my advice to you: start working SERIOUSLY on “plan b” now, with an eye toward leaving eventually. you’ll live longer. good luck
Just offering a after thought to this thread . I don’t think guys like DinOr
should of been attacked for his hostility toward people that were involved in a corrupt system that should of been bankrupted. Thousands of people work for corrupt employers and make the choice of sticking it out because you have to pay the bills ,or
your stuck for a variety of reasons . I don’t think the English man committed fraud himself and was more-so involved with the servicing end of the business . That being said ,you still pay a price for being around creeps ,and sometimes the greedy creeps try to take you down with them ,even when you didn’t have anything to do with the actual crimes or had direct knowledge of the crimes .
If you can’t beat them, join them.
The reason values like integrity are so rare is because they require sacrifice. Real, genuine sacrifice.
That’s the difference between NJ English, and WT Econ. One of them took the path of least resistance, the other sacrificed income and time to do what he thought was right.
One of them is a man of character and the other is an opportunist.
And…I lived in NYC on far less than $300K for 15 years, it can be done.