Current Latest News

Manipulation of commercial mortgage funds could lead to another collapse

Whereas the fraud during the last crisis was in residential mortgages, the complaint claims this time it’s happening in commercial properties like office buildings, apartment complexes and retail centers. The complaint focuses on the loans that are gathered into pools whose worth can exceed $1 billion and turned into bonds sold to investors, known as CMBS (for commercial mortgage-backed securities). […]

In theory, CMBS are supposed to undergo a rigorous multistage vetting process. A property owner seeking a loan on, say, an office building would have its finances scrutinized by a bank or other lender. After that loan is made, it would be subjected to another round of due diligence, this time by an investment bank that assembles 60 to 120 loans to form a CMBS. Somewhere along the line, according to John Flynn, a veteran of the CMBS industry who filed the whistleblower complaint, numbers are being adjusted — inevitably to make properties, and therefore the entire CMBS, look more financially robust.

The complaint suggests widespread efforts to make adjustments. Some expenses were erased from the ledger, for example, when a new loan was issued. Most changes were small; but a minor increase in profits can lead to approval for a significantly higher mortgage.




“It’s hard to lead a cavalry charge if you think you look funny on a horse.”
Adlai E. Stevenson II



At Daily Kos on this date in 2010—60 Minutes: Despite damaged blowout preventer, BP cut corners immediately before explosion:

Last night 60 Minutes broadcast a stunning report on the Deepwater Horizon disaster featuring an eyewitness account from crewmember Mike Williams and analysis from Dr. Bob Bea, a UC Berkeley engineering professor asked by the White House to help figure out what went wrong.

According to Williams, several weeks before the explosion, the blowout preventer was damaged but despite the damage, BP ordered the rig operator to ignore critical a safety measure when sealing the well. BP wanted the rig operator to seal the well without using drilling mud, a heavy liquid used to keep oil and gas from burbling up as cementers completed the seal.

According to Professor Bea, the accident would not have occurred had the drilling mud been used. Instead, BP cut corners in an attempt to save money, and now we’re left with this enormous economic and ecological disaster.

Source link

Related posts

Leave a Comment

* By using this form you agree with the storage and handling of your data by this website.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy