gaming the system

I went on to read more in Matt Taibbi's Griftopia, to try to learn what happened.  And what else was there.

--------{excerpt}-------What is most amazing about the mortgage-scam era is how consistent the thinking was all the way up the chain.  At the very bottom, lowlifes like Solomon Edwards, the kind of shameless con man who preyed on families and kids and whom even other criminals would look down on, simply viewed each family as assets to be liquidated and converted into one-time, up-front fees.  They were incentivized to behave that way by a kink in the American credit system that made it easier, and more profitable, to put a torch to a family's credit rating and collect a big up-front fee than it was to do the job the right way.

["The right way" -- I remember a conversation with a co-worker in, maybe, 2009 -- we mentioned Goldman Sachs, or Wall Street, and he said, "I don't mind them making money, but they should make it the right way."  And I knew he meant, by Doing Something Legitimate.  Performing a service or producing something.]

...easier, and more profitable, to put a torch to a family's credit rating and collect a big up-front fee than it was to do the job the right way. 

And, amazingly, it was the same thing at the very top.  When the CEO of Goldman Sachs stood up in the conference room of the New York Federal Reserve Bank and demanded his money, he did so knowing that it was more profitable to put AIG to the torch than it was to try to work things out.  In the end, Blankfein and Goldman literally did a mob job on AIG,

burning it to the ground

for the "insurance" of a government bailout they knew they would get,

if that army of five hundred bankers could not find the money to arrange a private solution.

In their utter pessimism and complete disregard for the long term, they were absolutely no different from Solomon Edwards or the New Century lenders who trolled the ghettos and the middle-class suburbs for home-buying suckers to throw into the meat grinder, where they could be ground into fees and turned into Ford Explorers and flat-screen TVs or weekends in Reno or whatever else helps a back-bench mortgage scammer get [happy].  The only difference with Goldman was one of scale.

Two other things are striking about the mortgage-scam era.  One was that nobody in this vast rogues' gallery of characters was really engaged in building anything.  If Wall Street makes its profits by moving money around from place to place and taking a cut here and there, in a sense this whole mess was a kind of

giant welfare program

the financial services industry simply willed into being for itself.  It invented a mountain of money in the form of a few trillion dollars' worth of bogus mortgages and rolled it forward for a few years, until reality intervened -- and suddenly it was announced that We the Taxpayer had to buy it from them, at what they called face value, for the good of the country.

...
Meanwhile, investment banks tried to stick pensioners and insurance companies with their toxic investments....And at the tail end of all this frantic lying, cheating, and scamming on all sides, during which time no good jobs were created and nothing except a few now-empty houses (good for nothing except depressing future home prices) got built, the final result is that

we all ended up picking up the tab,

subsidizing all this crime and dishonesty and pessimism as a matter of national policy.

---------------------- [backing up to a couple of paragraphs where the author describes some of the mechanical workings of these strange operations]:

-{excerpt}----A class-action lawsuit against Washington Mutual offered a classic example.  A Mexican immigrant named Soledad Aviles with no English skills, who was making nine dollars an hour as a glass cutter, was sold a $615,000 house, the monthly payments for which represented 96 percent of his take-home income.  How did that loan go through?  Easy:  the lender simply falsified the documentation, giving Aviles credit for $13,000 a month in income.

The falsification mania went in all directions, as Eljon and Clara found out.  On one hand, their broker Edwards doctored the loan application to give Clara credit for $l7,000 in monthly income, far beyond her actual income; on the other hand, Edwards

falsified

the couple's credit scores

downward,

putting them in line for a subprime loan when they actually qualified for a real, stable, fixed bank loan.  Eljon and his wife actually got a worse loan than they deserved:  they were

prime borrowers

pushed down into the subprime hell

because subprime made the bigger commission.

[??!!????!!!!]
...Anyone who's seen Goodfellas knows how it works.  A mobster homes in on a legit restaurant owner and maxes out on his credit, buying truckloads of liquor and food and other supplies against his name and then selling the same stuff at half price out the bank door, turning two hundred dollars in credit into one hundred dollars in cash.  The game holds for two or three months, until the credit well runs dry and the trucks stop coming -- at which point you burn the place to the ground and collect on the insurance.

Would running the restaurant like a legit business make more money in the long run?  Sure.  But that's only if you give a f---.  If you don't give a f---, the whole equation becomes a lot simpler.  Then every restaurant is just a big pile of cash, sitting there waiting to be seized and blown on booze, cars, and coke.  [??!!]  And the marks in this game are not the restaurant's customers but the clueless, bottomless-pocketed societal institutions:  the credit companies, the insurance companies, the commercial suppliers extending tabs to the mobster's restaurant.

In the housing game the scam was just the same, only here the victims were a little different. ...------------------------{end excerpt}

{{ Griftopia, by Matt Taibbi.
Copyright, 2010.  Spiegel & Grau
New York}}
------------------------------
I don't think I ever saw Goodfellas; (that's my problem, I don't see the right movies, in order to know things....)  I've never striven to learn about this type of information because -- it did not seem relevant to my life, or existence.  I didn't want to scam, or be scammed, and since I'm not a detective or financial investigator, I felt like, NONEOFMYBUSINESS, along with THATDOESN'TSOUNDVERYNICE, and let it lie -- leave it for someone else.

But I feel moved to try to learn something about what was done to our economy and by whom because apparently my tax dollars are being used to subsidize it, and that does not sound good to me, if I may engage in understatement.  And also I feel like I have to try to help someone "fix" and straighten out the entire economy just so that I can make a living and try to save money.

Honestly, President Obama, do I have to do everything myself??

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