"Citigroup Inc. reported Tuesday it had suffered a $10 billion loss for the last three months of 2007, reflecting bad bets on investments backed by subprime mortgages."
This makes me so angry. You would think that the people who manage our banks would know something about money. Even I know that if you can't afford a house, you can't afford a house even if you are offered no money down and a subprime mortgage for a year or two. At some point you are going to have to pay the going rate, maybe even higher, and you will face rising property taxes. Oh, it could all work out if the borrower wins the lottery but there aren't many lottery winners every year. How could these Harvard MBA types think that buying up sub-prime mortgages would be a back-up for investments.
I am willing to bet that the guys that managed Citigroup into this mess, received their bonuses. The Real Estate Brokers received their commissions.
Now who is going to pay for this stupidity? Those of us who didn't gamble and make bad bets. Grrr....sorry but I just had to write this rant!
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"You would think that the people who manage our banks would know something about money."
This and other failures are mostly about greed. One of my brother-in-laws was a sub-prime lender middleman where he would massage primarily Hispanic folks credit scores and financial statements so they could qualify for a loan - knowing full well these people were going to be on the hook for something they probably couldn't afford.
He would make 2-4 thousand for each successful loan - this wasn't bank points but loan fees on top of loan fees - The process was complicated and difficult for families that could either not or barely speak English.
I asked him several times if he didn't feel guilty putting these people, people of his own race, in such jeopardy (to lose everything), he merely looked at his shoes.
This was several years ago. I was greatly saddened by what I saw and knew was going on. People had no trouble watching the values of their houses skyrocket without asking how and why is this happening.
Yes, the bankers should have known better - but so should most logically thinking people. How can you keep turning low to middle class neighborhood housing into $200,000 and up houses - by the energy of greedy people. I was asking myself, "Who is going to buy these inflated houses?"
That house of cards was destined to fall. The only thing that prolonged the nonsense was "creative" financing where upon people could buy these hugely inflated properties with less money down, for longer terms and varying, easy to pay in the beginning, loans. ugh!
Stupid people.
Juan
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