Reply #27: It must have been accidently left off.

[Octafish]

That "joke" is the kind of idea that very rarely gets mentioned in Corporate McPravda.

Wall Streetwalkers: The Sleazy Lehman Brothers Subsidiary

Lehman Brothers maintained its squeaky-clean image by relying on its seamier subsidiary. Just call her Aurora.

By Graham Rayman
The Village Voice
published: November 05, 2008
John Lang

Willie Davis/Veras

Philip Grant found that he was one of many with Aurora horror stories.
AP Photo/Susan Walsh

Fuld gets his pink slip after congressional hearings.Lehman Brothers CEO Dick Fuld told Congress on October 6 that the Wall Street investment bank was destroyed by a “financial tsunami”—a natural disaster, an act of God.

In other words, it wasn’t his fault.

But the truth is that Lehman’s fall in the subprime-mortgage crisis was a man-made disaster. The white-shoe firm was not just deeply involved in the murky subprime-mortgage market; Lehman and the other dominant Wall Street investment banks, experts tell the Voice, actually created the demand for the mortgages that they would then package and swap for enormous returns. Addicted to the profits that such securities brought in, Lehman was desperate for the risky mortgages they required.

“Sure, there were sleazy brokers out there who were fooling people, but you have to understand—to use a drug analogy—they are like the ‘corner boys,’ “ says Irv Ackelsberg, a Philadelphia lawyer who specializes in representing homeowners in foreclosure cases. “You have to look at the cartel at the top. The brokers were basically creating loans that had been ordered by Wall Street.”

Put another way, Lehman and other top financial firms “primed the pump and controlled production,” says Kevin Byers, an Atlanta forensic accountant who has spent years tracing the evolution of the subprime market.

“Lehman was very early in getting this deal machine into place,” he says. “With one hand, they loaned the money to the mortgage lender to allow them to originate loans to home buyers. With the other hand, they ostensibly bought the loans originated with their line of credit, and resold them as securities to investors.”

The scheme worked like this: Homeowners signed mortgages with loan companies. Lehman bought those mortgages and bundled them into “tranches,” which they then sold to investors—often large pension funds and other financial institutions.

Jay Weiser, an associate professor of law and real estate at Baruch College, says the system was set up to assure the owners of the mortgage-backed securities that they would get a steady return. “Since everyone at the top was paid for how many mortgage-backed securities they put out each year, they had every incentive to look the other way and overstate the quality of the loans they were making,” he says.

CONTINUED...

http://www.villagevoice.com/content/printVersion/725636

For every bubble that comes along, I get in just as it's about to burst.

Thank you for the heads-up on the show, itsjustme. When the newsmedia scrub the truth, you know we are in perilous times -- now going on 46 years.