I’m going to cut to the chase and tell you our conclusion first.
We believe we can show that some Wall Street bankers had evidence, a year or two before the financial crisis hit, that there were serious problems with subprime mortgage investments.
Rather than wind down this business, they sped it up using financial trickery. These people earned huge bonuses for their actions. They also made the crisis considerably larger and more damaging.
CDOs [collateralized debt obligations] were the combined mortgages, student loans, car loans, commercial loans and credit card debts rolled into a new currency that was sold, as well as, bet against, in a world that allowed 30:1 leverage.
The ratings agencies gave all these new CDOs untenable AAA ratings.
The fix was in on this game using fantastical “monopoly money” that these financial knew was bullshit.
And was was their punishment for the greed and avarice? Bonuses and bailouts.
(Source: NPR)
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