Subprime (Editorial) Real Estate: Why greed stories are for everyone

Reading Time: 2 minutes

For us, it’s a rollercoaster. For them, just a revolving door

Sometimes there are very, very good pieces in the New York Times. Usually, they don’t get nearly enough attention. One of the reasons is that the deliciousness of what is being reported is kept from the large audience who might act on the information because it has been packaged instead for the wrong crowd.

Writing about what’s wrong with Wall Street in an investor-oriented Times column called Dealbook is like writing about new developments in deadly weaponry for a publication aimed at maximum security prisoners: it just gives them new ideas.

Such it is with an article about subprime mortgages, bonds, and those who invest in them. The Times has a great little updater on this, about a character named Greg Lippmann who is straight out of Oliver Stone’s Wall Street.

Some Wall Street investors made money as the mortgage market boomed; others profited when it fell apart.

Having reaped big gains during both of those turns, Greg Lippmann, a former star trader at Deutsche Bank, is now catching the next upswing: buying the same securities built from mortgages that he bet against before the financial crisis erupted.

Mr. Lippmann is joined by other big-money investors — mutual funds like Fidelity as well as hedge funds — in riding a wave of interest in the same complex loan pools that nearly washed away the financial system….

Ahem! But instead of this being read by those independents trying to decide what they think of Occupy Wall Street, or by teetering homeowners who are thinking of voting for Mitt Romney because he promises lower prices at the tank, it will be read primarily by the same amoral miscreants gaming the system—like the guy in the article.

The underlying point of the piece is this: There’s no stopping these SOBs. They can ruin people’s lives, and ruin the country….and they just keep on merrily chugging.

As if to underline the point about the moral depravity and utter blindness to the misery caused by this kind of speculation, how does this man spend his free time? Not passing out blankets to the poor, presumably. No, passing judgment on which high-priced Manhattan sushi restaurants are up to his exacting standards. That about says it all:

Let ‘em eat sushi. But why let ‘em destroy our lives with impunity?

GRAPHIC: http://www.csmonitor.com/var/ezflow_site/storage/images/media/images/2010/0416/0416-goldman-sachs/7744338-1-eng-US/0416-Goldman-Sachs_full_600.jpg

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11 responses to “Subprime (Editorial) Real Estate: Why greed stories are for everyone”

  1. Joe Emenaker says:

    Go read “The Big Short”. Lippmann wasn’t the guy who gave loans to people who shouldn’t have gotten them. Lippmann didn’t tell the borrowers that the could afford them. Lippmann didn’t tell the U.S. to bail out AIG. He didn’t coerce Moody’s and S&P into rating junky mortgage-backed securities as AAA. What he *did* do was bet heavily that the whole system was going to implode, while *cautioning* people that it was all going to implode. It’s a little like buying fire-insurance on a tinderbox of a saloon, while telling the proprietor and the fire-marshal that the place is a fire trap. What he did was stick it to AIG for being idiots. AIG should have died a natural death for their idiocy, but they got bailed out (again, not Lippmann’s doing). And, by the way, he’s one of the people calling for reductions in the principals of troubled mortgages.

    Make sure you’re hating on the wrong people. Start with the idiots at the bond-rating agencies like Moody’s and S&P, and probably include AIG, too.

  2. Bugboy says:

    This is what happens when you tell a bunch of under-achievers they really ARE fabulous, then give them MBA’s.  Way to go!

  3. SED says:

    Who made these SOB’s rich, our money did.  So why can’t our money and choices bankrupt them?  Am I being too optimistic?  i.e. Georgia-Pacific is owned by the Koch Bros.  I don’t buy any of their products, I have taken all my money out of mutuals, put some of it into a credit union instead of corporate banks.  If the 99% made intentional choices through research of who owns what, etc., we can make changes.  And I disagree that our petititions don’t make  a difference. and it is better than doing nothing except complain.  More grassroots movements are springing up and we, as a country, are improving.  The media reports the negative but there is more positive we don’t hear about.  Odemagazine.com is just one example of this.  We have been complacent, now through the knowledge and transparency of the internet, are beicoming more  aware and giving that knowledge to our friends and family. More focus on solutions and improvements!!!

  4. CQ says:

      I have to admit I was clueless about the danger of these investment vehicles when a dozen years ago I wrote articles about the top MBS analysts on the Street.

    Russ, I wish your take on this article and its main character would reach the masses.

    Below is an especially good comment I found under the NYT article; the commenter’s website looks excellent.  

    “Sunny 20
    Denver, CO

    Ah,
    at last the circle comes around. I have written for years that there
    was no political will to prosecute the institutions which perpetrated
    the crime of the millenium, mortgage fraud. See, http://www.wallstreetmortgagefraud.com.
    I’ve always understood the money and the power behind the fact that no
    major institution or individual has been indicted, that statutes of
    limitation have expired, and that there has been, and will be, no
    accountability. I have literally preached that Without Deterrence There
    Is Only Incentive. This article bears out my greatest fears: That the
    ones who did it will be back and will profit again from their crimes,
    all at the expense of the nation’s taxpayers and workers. This is
    deliberate, calculated behavior by this Administration, and a total
    abrogation, not only of the rule of law, but the rules of decency.”

  5. margsview says:

    No, but the pain felt by most globally is about them paying the theft and economic treachery of banks and corporations.  After all the media are owned by corporations not the other way around and follow the dictates of what is wanted by vulture capitalism.  Time is running out we can’t wait for the press turn around.  We need effective action through the only means destroying people—–money—–therefore we need a grassroots tax movement on a country to country basis.

  6. Spearman says:

    As I understand it this crew’s admiration for Ayn Rand’s Objectivism  motivates their behavior.  I ask not having read her drivel.  Can someone sum it up for me beyond just the notion of greed.

  7. margsview says:

    Nicely put but why limit your comments to stating the obvious.  We are long over due to hear how taxpayers can turn the tables.  Protesting and petitions no longer have permanent effect, we need a tax movement that deals with the main concern—-money.  If these SOBs can use money to destroy those that pay for the system then money must be the instrument to regain our lives and country.

    • Russ Baker says:

       I don’t think it’s stating the obvious. This is not just about bankers’ behavior–it is about HOW news organizations position a story is as important as WHETHER they cover it. By isolating this information, they almost guarantee no corrective action.

  8. jimmmmmy says:

    when  mao took over china he killed 10 million or so banksters and  land lords . a very harsh solution to rampant corruption. if the 100 or so banksters mentioned in mr. lewis’s great book were arrested given show-trials and jailed for life [ after having their assets seized],and preferrably jailed in a for profit prison run by jan brewer and joe arpaio, the financial system would miraculously sort itself out in short order. wthout eric holders help.

    • Russ Baker says:

       It certainly is true that there is so much incentive to do the wrong thing in so many situations, and so few disincentives, that even people who might otherwise respond to moral cues barely realize  that their behavior IS wrong.

  9. Hbgrant says:

    for anyone who thinks we need LESS regulation – please read “The Big Short” by Michael Lewis. Greg Lippmann is one of the central characters in this sordid tale of insanity operating in the derivatives market.