Sunday, January 10, 2010

Bigger Than Enron...

Incredibly, the Pinto paragraph above takes things one step further. It's bad enough that Fan and Fred lowered the loan approval thresholds. Pinto's point is that for 15 years, they doubled down by "routinely" misclassifying approved loans, effectively telling the capital markets and the public that these loans weren't as risky as they really were. Because of this, securities backed by these mortgages carried lower interest rates than they would have if the risks had been properly disclosed. Some of the offerings should probably never have been issued or should have been given junk bond pricing. Further, misrepresented loans Fan and Fred kept on their books enabled the two entities to continually make false claims of financial health.


In the real world--i.e., the world not run by Barack Obama, Harry Reid and Nancy Pelosi--this is known as "fraud."

And Mickey Kaus picks up on a key date in Wallison's WSJ piece:


"[A]s early as 1993." Hmm.

...which was also a Jack-ss Ponzi BTW.
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