The Big Short

[travelover]

Could be, but I know for certain of two separate people who knew exactly what they were doing. Their plan was to just live in a $1M house, stiff the bankers and run when things got hot.

Remind me again of the difference between anecdotes and data.

Like HFWR said, the bankers were supposed to be the adults in the room. They were in the best position to know what they were doing was illegal and ultimately benefited the most from the deception. This is not to say that there was not fraud on the part of the loan applicants, but society holds different members of society to different standards.

 

[marko]

Remind me again of the difference between anecdotes and data.

The 'data' in my example were people we knew who moved into our neighborhood and told us outright what they had in mind. They thought the whole thing hysterical.

If you want names, dates and their new addresses let me know and I'll see what I can do.

 

[travelover]

The 'data' in my example were people we knew who moved into our neighborhood and told us outright what they had in mind. They thought the whole thing hysterical.

If you want names, dates and their new addresses let me know and I'll see what I can do.

I believe that you knew the two people you referenced. I just don't think the next big crash will be avoided by trying to convert all the people like your acquaintances. The point of leverage is with the loan officers, the mortgage bundlers and the rating agencies. They know the laws and stand to lose the most if prosecuted, the operative word being "if".

 

[Bestwifeever]

Plenty of blame to go around. I don't know anyone personally who would admit to getting a mortgage with no ability or intention of paying it, but I know someone pushed to sell houses for a developer to people like that in the mid-2000s, and another person (no connection to the first person) on his way to prison for mortgage fraud at the lender level. And a couple of real estate lawyers I'm not too sure didn't have their fingers in the pie. So there are a couple of meaningless anecdotes.

We are going to see this movie today. I love Christian Bale in anything.

 

[HFWR]

Could be, but I know for certain of two separate people who knew exactly what they were doing. Their plan was to just live in a $1M house, stiff the bankers and run when things got hot.

I don't doubt there was outright fraud, but, as we've exhaustively discussed on this very forum, even "smart" people can be incredibly naive when it comes to financial matters. So, not sure how much fraud there was as a percentage, but I still submit that the mortgage brokers and bankers should have known better...

 

[travelover]

I don't doubt there was outright fraud, but, as we've exhaustively discussed on this very forum, even "smart" people can be incredibly naive when it comes to financial matters. So, not sure how much fraud there was as a percentage, but I still submit that the mortgage brokers and bankers should have known better...

In the bad old days when banks kept their mortgage loans, people with bad credit would have been shown the door.

 

[Bestwifeever]

Well, that was really good and really depressing.

 

[kcowan]

Where there is easy money to be made, there will always be corrupt people to take advantage. But it does highlight an ongoing flaw in the financial system. It was designed back when honor counted.

 

[travelover]

Where there is easy money to be made, there will always be corrupt people to take advantage. But it does highlight an ongoing flaw in the financial system. It was designed back when honor counted.

Honor and skin in the game. Like I said, when banks held their own loans, they didn't finance million dollar houses for day laborers.

 

[MichaelB]

Honor and skin in the game. Like I said, when banks held their own loans, they didn't finance million dollar houses for day laborers.

Honor in the banking system is as common as a maiden in a bordello. Skin in the game did, and would again, make a big positive difference. The same applies to universities and student loans.

 

[kcowan]

Honor in the banking system is as common as a maiden in a bordello.

and that the is the core of the problem. All our systems are based on that assumption that no longer works.

 

[pb4uski]

If lenders were required to keep 25% skin in the game the problem would go away. In the current situation they just collect their commission and run.

Sent from my SAMSUNG-SGH-I777 using Early Retirement Forum mobile app

 

[frayne]

Honor in the banking system is as common as a virgin in a bordello. Skin in the game did, and would again, make a big positive difference. The same applies to universities and student loans.

I fixed that for you.

 

[TallTim]

+1 on the excellence of the movie. I liked it more than the book (unusual for me). The Aha moment for us was when DD came home saying she really wanted to see it, in part to collect extra credit for AP Econ, but also in major part b/c she couldn't really believe what her teacher was saying was in fact really going on back then ... her comment was that she didn't remember 08-09 being a big deal for our family (it wasn't), but it was a useful eye-opener IMO.

Hopefully the lesson sticks!

 

[Lucantes]

"Skin in the game did, and would again, make a big positive difference."
Wouldn't this be great if it was just actually applied to everything?