7 of the Nastiest Scams, Rip-Offs and Tricks From Wall Street Crooks
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But investors wanted to buy bonds that were safe. So they turned to the ratings agencies. These are the companies responsible for determining the safety of investments. The ratings agencies had conflicts of interest , being paid in various ways by Wall Street to help mislead investors and tell them that the “toxic assets” bonds that Wall Street was selling had the highest safety rating of AAA. Then the investors lost, the economy was tanked and the taxpayers are now and into the future paying the bill.
William Black was a regulator during the S&L crisis. He explains at the Huffington Post, writing in, The Two Documents Everyone Should Read to Better Understand the Crisis ,
The first document everyone should read is by S&P, the largest of the rating agencies. The context of the document is that a professional credit rater has told his superiors that he needs to examine the mortgage loan files to evaluate the risk of a complex financial derivative whose risk and market value depend on the credit quality of the nonprime mortgages "underlying" the derivative. A senior manager sends a blistering reply with this forceful punctuation :
Any request for loan level tapes is TOTALLY UNREASONABLE!!! Most investors don't have it and can't provide it. [W]e MUST produce a credit estimate. It is your responsibility to provide those credit estimates and your responsibility to devise some method for doing so.
The rating agencies never reviewed samples of loan files before giving AAA ratings to nonprime mortgage financial derivatives. …
…Worse, the S&P document demonstrates that the … banks … engaged in the same willful blindness. They did not review samples of loan files because doing so would have exposed the toxic nature of the assets they were buying and selling. The entire business was premised on a massive lie -- that fraudulent, toxic nonprime mortgage loans were virtually risk-free. The lie was so blatant that the banks even pooled loans that were known in the trade as "liar's loans" and obtained AAA ratings despite FBI warnings that mortgage fraud was "epidemic."
In other words, superiors at the ratings agencies told their underlings to just make up fraudulent credit ratings.
Today the people who were at the top of the ratings agencies and the Wall Street firms have millions and live in big houses. How many of the rest of us now or will have to live in cars and cardboard boxes because of what they did?
- Banksters Who Made Out Like … Bandits
Many financial-company executives made millions (hundreds of millions, actually) while they were doing questionable things that ended up crashing their companies and the economy. But they got to keep the money. For example, when you hear that Wall Street firm “Lehman Brothers” went bankrupt, you might think, “serves them right.” But what actually happened was that a lot of regular people ended up losing their jobs while a few people at the top got really, really rich. CEO Richard Fuld, for example, ended up with almost half a billion . (Really, really rich.) Business Week: How Much Did Lehman CEO Dick Fuld Really Make?
"Mr. Fuld will do fine," Waxman said. "He can walk away from Lehman a wealthy man who earned over $500 million. But taxpayers are left with a $700 billion bill to rescue Wall Street and an economy in crisis."
So, no, “they” didn’t get what they deserved – and neither did top executives like Fuld.
- Insiders Profiting From Being … Insiders
Stephen Friedman was a member of the Board of Goldman Sachs at the same time as he was Chairman of the Federal Reserve Bank of New York. He has to resign from the NY Federal Reserve , keeping his position with Goldman Sachs, after it was revealed that he had purchased $3 million worth of Goldman Sachs stock while the Federal Reserve was regulating the company after it became a bank holding company in September 2008. This was around the time that the NY Fed negotiated for Goldman Sachs to receive payments from AIG, that would be paid at 100 cents on the dollar, even though AIG was in default. According to an Oct. 27, 2009 Bloomberg report, New York Fed’s Secret Choice to Pay for Swaps Hits Taxpayers ,