Subprime mortgages

And folks mock that yes as if oh remarked you know is playing great it's appropriate -- of the great national effort as a worthy of commentary positive commentary while it is entertaining -- terror exerting itself. Showing its lead our -- out now you know reproducing. You're a poor performance up -- let's go to -- do the Boston business report today with Steve's -- from the -- Boston Globe today's edition has been brought to you by. SBL I savings bank life insurance is. No no nonsense life insurance company good morning Steve -- air.

Good morning guys demonstrate wannabes. You're pretty rough on the callers so -- this morning.

Euro part of the team. Taught -- quite impatient today I have no idea why. IQ that's -- he's just -- keep the calls -- okay 28 year old punks from land should not be entrusted with -- policy where it is too much it's similar to having 24 year old striving fined fifty -- 200 hurts 300 people are harmony the -- those cars those ten million dollars worth of sheet metal you've got -- that's not why Steve is here Steve is here to talk about any really fascinating story. In light of the a meltdown of the mortgage markets and in the whole debacle on the financial markets the last couple years. Here comes Goldman Sachs giving sixty million dollars -- the state of Massachusetts what is going on Steve.

Well this does is it really is very interesting side -- in this whole kind of sub prime fiasco of this state and particularly Martha Coakley has been. Investigating for a long time and you know they've identified people who were. On the ground. Level writing loans that were really. W loans that you know never had a chance to be paid and identified some of those people and and did something about it is that they cut. But the next step up the people who really made that happened with their money. Who facilitated that whole process they've never been touched before most of those. People are working on Wall Street in big firms and you know these little companies or riding -- you've never heard of them but the ones on the next step up to happen. Goldman Sachs is the one in the spotlight today as far as I note this is the first time anywhere in the country that. A regulator of any kind has gotten one of those Wall Street companies the next step up to. Not concede that they had a role in this because they're not conceding anything. But to write -- and basically. You know she put the pressure on them and they agreed to. Paid fifty million dollars to people who ended up with these loans to reduce their principal and also the state gets ten million.

Ten million rock. Up I I loved it just that's a melting. Well it's just knowing he had not really a penalty -- because they're not admitting any wrongdoing I let my description of the impeding stun me loans is no question about it. And I I suspect. Steve that Goldman comes to this decision right out of big check fifteen of the homeowners tend to the state totaled sixty million dollars. Because they know inside what they did was absolutely totally indefensible and in the court of public opinion. There would cost them says hundreds of their buying some and I composite out until they do it here adult safety to a nation -- they only do this and certain region Steve.

No I believe that they have exposure -- world like I can't say I'm an expert. And where Goldman's taxes was funding sub prime mortgages but. I fully expect that this is not a specific Massachusetts experience to them but also. Goldman Sachs is hardly alone elsewhere and in Massachusetts as well as well kind of opens new doors and all kinds of different directions -- it's got to step back for a second look at how this process work you have. As they say these ground level companies that work. Originating creating loans that where really static that they knew people had no chance of paying. And then it right because they say all right well now what am I gonna do with them so well we're gonna turn them into securities. But we can't do that so we're gonna sell home loans to places like Goldman Sachs and Morgan Stanley Lehman Brothers Bear Stearns. And they buy these loans and it didn't it say about your take on their goods and of course -- And so you know that they don't have many don't Goldman Sachs you know but and they look at these things that they yep they're good nature around they package them. Input of men and makes securities the insult them to their own customers around the world would say hey maybe they're -- but you know I had. Nobody things and.

I'd -- so Goldman at Goldman was not the Goldman wasn't generating the original -- so somebody else who was skimming the homeowner.

Well yes but Goldman is in the is the middleman taking money out.

Goldman is the enable -- of gold and as the enabled because and the sky ME loan originated can go back to another sure they now are capital you know do it again innocent and stupid I I don't -- eliminate the responsibility for the person who's taking alone in the end the ultimate. Ultimate responsible party is the dumb person's sign and up for half a million dollar -- I don't even have a -- there's also the ultimate sleazy person is that person who's going directly to the -- to the homeowner the potential -- and hustle -- capsule away like this isn't even the first -- so this is though -- once removed no hustle -- occur with hardly -- mentioned that -- nevertheless right nevertheless -- of secondary responsibility primary responsibility would be local bank or mortgage writer you know that goes in rents and sells a loan to somebody they know they can't pay -- that this is bizarre to -- Steve.

it gets into your local savings bank it's writing these loans to mean if you look at this specific case. The way Coakley got involved with Goldman Sachs is that. She was looking at a well -- writer that was called Fremont investment and loan which is in California. And was writing crappy loans all over the place. And they identified this company as. Creating loans that were particularly companies and that. State they built the case against spam and got some action there. And then sort of started working at the food chain what you know there is Goldman Sachs. And you know again Goldman was hardly alone in this process. Some cases and and I don't know what's been happening in this one but I know in the past and for a company like Lehman Brothers for example not only would they -- is -- but they had a huge pipeline of these things that they were. You know processing and making fees are along the way and so they would go to. Crappy mortgage originators and say what you. To be out there are finding these loans for us so we can package so. We're gonna give you that company alone up front so you can write these things package them sell us until we refine. -- you'd get off the ground.

So there are those really instigating. An -- using these companies as agents to go right bad loans on their behalf.

Absolutely yes and you know not all of them were terrible and I'm not sure every one of them was recognizes young but you know by. Wall Street firms when they were packaging them but. You know there is the idea that they were completely. You know blind sided by this is a joke and mean that everybody there there -- you know ultimately to a dumb people on this process. The person who who takes out a loan and the person who in depth. In the security at the very into the process and in the middle there are people working a pipeline were making money each step of.

and don't be -- making money hand over fist and all of them know Steve's to a certain extent. That we had dealing with it godly Chia. Absolute -- I -- I have a newspaper questioned Torre is Steve the headline here says state gets sub prime loan cuts for 700 blah blah blah they reach a 660 million dollar record this is Martha Coakley is worth Perry asking -- the -- comes off the page hell not gonna cancer I'm I'm curious as to why the headline -- to say something. -- Lee wins from whatever unusual settlement massive settlement. And I did just the way this is present.

I thought -- know what what -- hope that the politicians ever name and.

And the relative well I'm wondering ER cent to some best politicians get their names and headlines for things that they really only mortgages is a volatile historically and -- story too if they had to tell this and I'm not blowing smoke and Martha Coakley a lover come on -- get try to reach out to a today and in and talked about this but. Debian said. I'm just curious as to how any newspaper goes about setting without in -- of the presentation of the story.

Well I don't go in this particular case whether. Martha -- whose -- was considered for headliner not I think. The -- to be important element of this story is the first time that date. Agency current state prosecutor as created this kind of successful settlement in an important case and you know -- well you know. -- Martha -- get you know supply and won't cut to 700 people but. You know may stay fit in this particular case I'm not sure but you know in the end as the one thing that you point out here is that. It in terms of this fifty billion dollars that goes the homeowners -- that the function that happened here is that. The principal and it won't get cut weight down about. As much as 35%. And perhaps that makes it won't ultimately if we're report that that's. That's kind of the way the mechanics of the settlement work but just be trying to chart I think market Martha -- get. All the credit in this story and and and deservedly so.

It is the way the money is being distributed decided by a -- clears up part of the deal with Goldman.

Well it's a good deal that's been struck by horror.

Yes -- of them made it part of that deal that the money is that the specifics of the use of the money -- going to be -- reduce the the capital. On the loans by a fixed percentage amounts such.

Right that's fifty out of the sixteen million settlement at six because the state.

Why is very interesting stuff -- did you would expect more -- as you mentioned Wells Fargo -- gone of course but other banks have to -- I would have to think that -- this is just the first dominate and -- Goldman -- because gold in the legend Ron Goldman as the brightest people on the world yes another used to -- their risk offices -- you know -- holiday I -- while all this -- what's going on but do you expect they'll be more dominoes and that's what Steve.

I absolutely think so I mean you know again I'd I don't know the specifics of this case of there was something good. It's -- agreed to that made them more vulnerable and I don't think so I can't believe that Goldman was. Any difference in how they handle these things then that a lot of other firms some of them as you point out aren't here anymore but many others are.

All right Stephen thank you for a hallucinating as usual is that a -- to listen and listen there are a okay in illuminating it eliminates him how to elect them. So from the Latin aluminum body -- thank you suicide that's the business report today with the Boston Globe -- side has been brought -- SB LI savings bank life insurance is these no nonsense life insurance companies so the story is what I'm nonsense why a lot of life insurance you do when you. So I'm gonna -- The it's got a -- I like that site like cells are very good settlement. You do yes I I want to see more of this because of scum bag bankers. Who wrote these nasty loans let's be -- okay scumbag mortgage shares is maybe that's a little -- that's a little bit better whoever that there or who sat there. Smuggling via knowing that they were writing mortgages for folks who would you not be able to afford the payments up. Those guys deserve much worse than have -- cough up money there's like hobbled by the way of silly people greedy people corrupt people in the like. And some of the stats with the borrowers themselves the ultimate personally that it is making a judgment sign on not signed this is -- going to do it.