The Big Short Reveals the Shady Underside of Mortgage Markets

Back in 2007, at the height of the foreclosure crisis, Citibank CEO Chuck Prince told the Financial Times that, “As long as the music is playing, you’ve got to get up and dance. Prince continued, “we’re still dancing.”   It appears the Big Banks are still dancing- while the judiciary has turned into a giant electronic music festival sponsored by an unconcerned judiciary and impotent government agencies. Since 2007 nothing has changed- consumers are still being foreclosed on by banks who have no standing to do so- and the foreclosure epic continues unchecked.

The Big Short, a film written by Michael Lewis (Moneyball, The Blind Side, The Big Short), will be released on December 23rd, 2015 and will hopefully provide enough outrage that Americans take to the street in protest. The movie, starring Brad Pitt (who also produced), Steve Carell, Christian Bell and Ryan Gosling- tells the story of five real estate investors who were able to anticipate that subprime mortgage loans were engineered to create the illusion of security, and exploit the market for personal gain. Michael Lewis, in his book by the same name; stated that, “Whenever an investment opportunity is presented with a high degree of security and confidence, it should warrant extra scrutiny.” In lieu of the mortgage crisis, truer words have never been spoken.

The movie reveals that the real estate crash resulted, in part, from the shadowy bond and real estate derivatives markets created by the banks to create the illusion of security. These incredibly complex and impenetrable securities were created to take advantage of lower and middle class Americans who were leveraged by stagnant incomes, high household debt, and a nationwide recession. The banks offered Americans predatory loans they couldn’t afford and knew they would fail. The banks then proceeded to bet against the loans they had created, foreclosed on homes they didn’t own and proceeded to make trillions of dollars in profit off of the misery of homeowners who lured into illegal loan contracts.

Starting in approximately the year 2000, banks began issuing mortgages that often required no down-payment and often contained adjustable rates. People began purchasing more home than they could afford believing that real estate would continue to drastically increase in value after an unprecedented run of growth. When the bubble popped in 2007, the fraud began to be exposed and it became obvious that the multi trillion-dollar mortgage bond market operated in a shadowy area without SEC oversight.  (see Shadow Banking) The Big Short is a movie that attempts to illuminate the casino like real-estate investment market- but despite Brad Pitt’s best efforts The Big Short only touches on the fraud that has been perpetuated on the American public.

The Big Short will reveal to the general public, who are still relatively unaware of what caused the real estate market to collapse, how “collateralized debt obligations” and “credit default swaps” led to unprecedented financial market fraud — the selling of “loans” that never happened 5, 10, 20 even 40 times over and then getting an unsophisticated judge to give a rubber stamp of approval on the wind-up pf a scheme that depended upon the illusion of legality.

Perhaps once people understand how their homes, retirement funds, and livelihoods were exploited by Wall Street and corporate banking interests- they might force the judiciary, government agencies and representatives to finally resolve this issue. Brad Pitt said he decided to produce The Big Short because, “It’s a story that needs to be told because nothing has changed.”

The Big Short injects humor into an issue that has destroyed the lives of millions. In one scene, mortgage brokers are seen explaining how they are pushing risky adjustable-rate loans on unqualified buyers- because those mortgages provided higher broker fees than placing borrowers into safer loans. “Why are they confessing?” Carell asks one of his employees. “They’re not confessing, they are bragging,” the employee responds. On November 24, 2015, the New York Times asked comedian Steve Carell to describe what a synthetic collateralized debt obligation was. Carell, taking a breath, responded,” You have CDO A and CDO B, and you can combine those two and put them into a CDO C, which is then made up of CDO A and B. CDO C is the synthetic CDO.” The reporter proceeds to ask Carell where he plans on keeping his money, Carell responds, “My Mattress.”

Carell echoes the sentiment of millions of Americans who have no faith in their governments, the markets, the banks or the courts. If the United States government and courts don’t deal directly with the banking fraud situation that has been allowed to continue for over 14 years now, Americans are going to lose faith and refuse to participate. It will be fascinating to see how the general public responds to this enlightening film.

The Big Short successfully conveys how families, who were subjected to predatory loans, fell victim to soaring unemployment, a recession and declining home values. However, the film fails to effectively demonstrate the fraud the banks perpetuated (and continue to perpetuate) on unsuspecting consumers, investors, and the courts.

The mortgage debacle was a criminal banking enterprise motivated by greed with no consideration for the Americans who fell victim to their predatory scheme. The Big Short fails to develop this critical element of the mortgage story. Towards the film’s end, Christian Bale’s character accuses Goldman Sachs of failing to fairly price his market bets until the bank could repackage and off-load their own liabilities onto other investors. In reality, in-house traders at Goldman were describing their own mortgage bond offerings as garbage while selling this ‘junk’ to investors and profiting handsomely. The big question is why aren’t any of these bankers in prison for their criminal venture?

The Big Short does not delve deeper into the fact that the banks have foreclosed on homes they don’t own, claimed to have funded loans they didn’t fund, and have deceived the courts in millions of foreclosure cases nationwide over the past decade. In order to cover their original fraud, the banks have resorted to more fraud in order to escape detection by filing fraudulent affidavits, forged mortgage notes, and false assignments in county records and in the courts. Although I have only reviewed movie trailers to date, I am interested not so much in the film, but how the public will respond. Will some borrowers secure mortgage audits to see if their loan was securitized? Will others conduct chain of title assessments? Will others take to the streets and demand change? The banks are not going to stop their ongoing fraudulent lending practices, court deception, or the creation of indecipherable, deceptive investment vehicles- until they are forced to. Without action, we can expect future bubbles, recessions, depressions and market volatility. Hopefully The Big Short will incite consumers to demand change.

 

 

 

 

13 Responses

  1. Elaine, tell your relatives that the judges and clerks of court have a pension plan invested in mortgage backed securities and they sued the banks for bad MBS’s and settled quietly and off the record.

  2. @Greg – I doubt seriously that anyone will see this film. Lives get blown up (not cars), families get pulled apart (not bodies) – people don’t care. The posters here will probably be the only people to see this film. Movies goers stayed away from Inside Job and 99 Homes. Why will they see this. People don’t even look at their own 401k – they have their head so far in the sand – either that or they are so busy working their asses off to keep up that they don’t go out to the movies.

    Can we start a campaign here? FORECLOSED LIVES MATTER! Mainstream media has largely ignored us because they are corportely owned here. If it bleeds it leads – I guess it only counts if is actual blood. We as a nation have had it stuck to us but not one seems to mind – they are more interested in what the Kardashian’s are doing I guess.

  3. I am quoting Neil: “It will be fascinating to see how the general public responds to this enlightening film.” Fat chance of that happening. People didn’t watch Inside Job. They stayed away in droves for 99 Homes. They are not going to see this film. The foreclosures were all our fault. We are all deadbeats. Ask anyone in my family. I lost ancestral waterfront property because… well….I got in over my head and just didn’t pay the mortgage. It matters not a wit to anyone unless this has happened to them.

  4. Trespass Unwanted…. 1st Time I seen you Laugh in all 5hese years!
    It suits you!

    I am No Criminal … Everybody knows that!

  5. Well, I hope The Big Short comes to my area. Many people here in SC do not understand what happened in the mortgage crisis. Many people do not understand what is going on with debt collection. That is where I first started to understand the mortgage crisis. The lack of credible documents in debt collection is also part of the mortgage crisis. They just make the documents up as they go along–forgery, fraud, theft and lack of standing all the way through.

  6. In shadow banking. …
    The cat will not rebag …
    NOT IN OUR LIFETIME !!!

    Croak! 👀

  7. since this is the new “hot topic” i will borrow this opportunity to post this unrelated and interesting question… damn me for my audacity…
    http://www.merriam-webster.com/dictionary/amotion

    question – is the phrase “a motion” a decapitation of the word “amotion” and is it being used in legalese in a deceptive fashion so as to redirect the true nature of what a man should be doing?

    e.g. file a motion; or; file amotion

    just asking… i know what a lawyer will say (i checked)… what do you think?
    -gg
    ———————————————————————————————————
    amotion
    noun amo·tion \aˈmōshən, əˈ-\
    plural
    Definition of AMOTION
    1 a : removal of a specified object from a place or position
    1 b : ousting; specifically : removal of a corporate officer from office —distinguished from disfranchisement
    2: deprivation of possession of property

    Origin of AMOTION
    Latin amotion-, amotio removal, from amotus (past participle of amovēre to remove) + -ion-, -io -ion — more at amove
    First Known Use: 1641

    This word doesn’t usually appear in our free dictionary, but the definition from our premium Unabridged Dictionary is offered here on a limited basis. Note that some information is displayed differently in the Unabridged.

  8. Reblogged this on Deadly Clear and commented:
    Absolutely remarkable. See the movie! Read the book.

  9. Neil is right, I love this quote he put in the blog:
    This cat will not REBAG ANYTIME SOON! CAN ANYONE SAY: “NOT IN OUR LIFETIMES, AT LEAST”

    I can say it, The cat will not REBAG; NOT IN OUR LIFETIMES AND NOT IN THEIR LIFETIMES.

    Game over.
    Ha-ha-ha-ha.

    The debtor robs the creditor and claims to be the creditor.
    You are a thieving debtor, that’s what you are.

    Fraud, deception, deceit, theft, coercion, force, lying, cheating, stealing, plundering, pillaging, pilfering, and esoteric energies attached to their soul via karma.

    One of many good articles as we document the collapse.
    We will feel it, but the good people of this country felt it, a few years after the Fed was created, also.

    Their creation and demise hurt everybody; and, the-perpetrators-of-the-biggest-fraud-in-the-history-of-the-world-have-got-to-be-removed-from-our-lives-for-eternity.

    They made the world their slave, while they lived free and did whatever they wanted, went wherever they wanted, ate wherever they wanted, and got the world slaves to entertain them, steal our property for them, feed them, hide them, and protect them from the rest of the slaves.

    Slaves helping them keep the rest of us slaves.

    All slaves are equal, the slave has no power over the slave.
    House slave has no power over the field slave.
    Field slave has no power over the house slave.
    Military slave has no power over the militia slave.
    Militia slave has no power over the military slave.

    Slavery, by force, deception, coercion, theft of wealth, etc, is illegal.
    The entire banking system is illegal and unlawful, and the people have been forced to accept it by the slaves of the system that controls them.

    thewealthwatchman – article Titled:
    New Cracks Appear: Time is Running Out for a Cornered Federal Reserve
    in the link:
    cracks-are-appearing-time-is-running-out-for-a-cornered-federal-reserve

    Trespass Unwanted, Creator, Corporeal, Life, Free, People, Independent, State, In Jure Proprio, Jure Divino

  10. The collapse began in 2006. The unwind began in 2007 when the hedge funds realized they could package the CDO tranche. The rest was the leverage unwinding.

    Let’s see is anyone in the movie mentions rehypothecation or the term “Held to maturity”

  11. How? In this world, or, any other, for that matter, does anyone, on this planet, currently enmeshed in the international criminal FRAUD that is “central banking”, owe anything, whatsoever to these criminal PIGS?

    They ARE INSOLVENT. THEY HAVE DESTROYED THEMSELVES. THEIR BOOKS ARE UNAVAILABLE, AND, WITH GOOD REASON; AS FINANCIAL ENTITIES THEY ARE HOPELESSLY RUINED BY THEIR OWN BEHAVIOR.

    http://www.zerohedge.com/news/2014-09-25/5-us-banks-each-have-more-40-trillion-dollars-exposure-derivatives

    The banks owe more than 20 times the combined GDP of every country on the planet.

    Their behavior is now universally recognized by everyone on the planet- with the exception of Fox News viewers- as entirely criminal.

    This cat will not REBAG ANYTIME SOON! CAN ANYONE SAY: “NOT IN OUR LIFETIMES, AT LEAST”.

    I don’t blame the victims of this fraudulent, criminal deceit. The Greeks figured it out and now Putin knows that a select minority elite that is shielding itself behind the American Electorate conspired to destroy the Russian Ruble as well.

    The emperor has no clothes; pre-schoolers have a better claim to the TRUTH than any herd of Murdoch-media-mesmerized maladroits.

    This country has a choice: allow the rest of the world to judge US as We The People protect a wholly-criminal elitist cabal, or get on with it ourselves and thereby return this country to its rightful condition: “democracy governed by We The People, not those that manipulate US, to serve, as a means to an end”.

  12. did you see where this film was getting nominated for best comedy??
    what a joke. for us victims there has been nothing funny about it!!

  13. Great overview Neil!.. as Henry Ford said…

    “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

    Maybe Brad Pitt & Company will have better luck?

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