The coming US dollar crisis Message Board

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Strategies & Market Trends : The coming US dollar crisis

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To: robert b furman who wrote (36765)	4/3/2011 10:56:04 PM
From: Larry S.	3 Recommendations Read Replies (2) of 71479

Robert, You hit a rare nerve when I realized that you were talking about the latest Credit crisis. David Faber of CNBC had a very informative show on it a year or more ago (I think the video it still available). He pointed out that it was Wall Street money that was used to grant mortgages of 110% of appraised value so that they could get paper to be used in CDOs. They then paid the rating agencies to give them AAA ratings. Fannie and Freddie may have shown the way but they were minor players. Faber's findings were consistent with a conversation I had in 06 with the head of the Mortgage dept. of a major Frisco bank. She was sitting across the dinner table from me and I asked her about a story I read on the plane that day. It described how mortgages were being granted based on next years projected values. She politely told me that I was too old to understand but, if the mortgagee couldn't pay, the bank would take it over and couldn't lose. But since homes would go up in value, the owners would benefit even if they had to sell. What she didn't say was that her bonus depended upon her arranging a large number of mortgages. Larry

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