Other People's Houses: How Decades of Bailouts, Captive Regulators, and Toxic Bankers Made Home Mortgages a Thrilling Business
Jennifer S. Taub
Format: PDF / Kindle (mobi) / ePub
In the wake of the financial meltdown in 2008, many claimed that it had been inevitable, that no one saw it coming, and that subprime borrowers were to blame. This accessible, thoroughly researched book is Jennifer Taub's response to such unfounded claims. Drawing on wide-ranging experience as a corporate lawyer, investment firm counsel, and scholar of business law and financial market regulation, Taub chronicles how government officials helped bankers inflate the toxic-mortgage-backed housing bubble, then after the bubble burst ignored the plight of millions of homeowners suddenly facing foreclosure.
Focusing new light on the similarities between the savings and loan debacle of the 1980s and the financial crisis in 2008, Taub reveals that in both cases the same reckless banks, operating under different names, received government bailouts, while the same lax regulators overlooked fraud and abuse. Furthermore, in 2013 the situation is essentially unchanged. The author asserts that the 2008 crisis was not just similar to the S&L scandal, it was a severe relapse of the same underlying disease. And despite modest regulatory reforms, the disease remains uncured: top banks remain too big to manage, too big to regulate, and too big to fail.
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gesture had: “At first I thought, what’s the use? But the way the community is acting, I’m not going to give up now. I’m going to try.” The pastor at Katherine’s memorial service asked: “Is she not a plea for economic justice in the marketplace?” Some measure of fairness did arrive when Congress amended the Bankruptcy Code to help farmers save their homes. Millions of Americans today also await legal changes to help them reduce principal, save their homes, and gain a fresh start. And they, along
However, anticipating that the asset sales would be insufficient, the Federal Savings and Loan Insurance Corporation (FSLIC) agreed to guarantee the note. This note from New West was treated as an $8 billion asset on American Savings Bank’s books. If and when the bad assets were sold and failed to generate $8 billion, the FSLIC would make up the difference. As part of the deal, the FSLIC was given warrants entitling it to purchase up to 30 percent of the stock in Keystone, Inc., one of the parent
piled up was treated as income for the bank. But things were changing. These loans were increasingly offered to borrowers who could never afford the recast rate. They could only pay if they could refinance the loan. Suddenly, these Option ARMs were like the old bullet loans that commercial banks offered before the Great Depression. It was a Ponzi scheme; the loans only worked for borrowers and lenders if prices kept rising. Otherwise, they would default. Selling these mortgages after they were