ROFL! Buffett Calls Banks “Victims” of Evicted Homeowners
Now this is one of those moments….
“Large numbers of people who have ‘lost’ their house through foreclosure have actually realized a profit because they carried out refinancings earlier that gave them cash in excess of their cost,” Buffett, chairman and chief executive officer of Berkshire Hathaway Inc. (BRK/A), said Feb. 25 in his annual letter.“In these cases, the evicted homeowner was the winner, and the victim was the lender.”
So let me see if I get this right. The bank, which is always in possession of superior information (they have not only your entire credit history but also the performance of millions of other people’s loans, plus the benefit of dozens if not hundreds of analysts and other resources you could never dream of obtaining yourself) was forced to give you a bad loan that you then spent?
Utter and complete crap. The truth is here:
Charles Ortel, managing director of Newport Value Partners, said lenders failed to do sufficient underwriting because they counted on selling the mortgages to investors.
“So nobody had any skin in the game, except we the taxpayers, as it turned out,” Ortel said. “Banks didn’t do the required credit work.”
Ok, I take it back — that’s half the truth. I’ll go further — banks intentionally packaged up and sold crap they knew was garbage to investors.
It was not an accident, and it wasn’t that the banks didn’t do the required credit work — they most certainly did do it, knew what the answers were and intentionally hid them from buyers.
How do we know this?
Because at least one of them — Citi’s former chief risk officer — testified under oath before the FCIC to exactly that, producing written documentation showing that he alerted the firm’s board to the facts as well!
There’s no “speculation” as to what happened in this regard — we know exactly what happened and how. We can debate the “why” but that appears rather obvious too — more than 20 years of evidence suggests that the banks were quite smug in the knowledge that they would not be prosecuted even if their intentional hiding of this information from investors was to later be discovered.
Thus far that has proved to be an entirely-accurate expectation.
Yet still, to this very day, we have not seen the mainstream media call “bullcrap!” on the repeated assertions that the banks were either “sloppy” or “duped” by homeowners.
That assertion is utter and complete crap and we will never have an honest financial system until this practice stops. There can be no honesty in finance nor any hope of a recovery in the general economic case until and unless we start with the truth about what happened and how it occurred. We are, at this point, simply making efforts to continue the scam.