(Continued from:  What Goes Up . . . PART I)

Okay, remember that it's not complicated . . . for some. 

Remember, like the chemist who sees a glass of water as a scientific equation, so too, the banksters treat mortgages (amassed) as "investment vehicles" -- which  carry with them very REAL mathematical formulas. 

For an example of a "PUT OPTION" formula, CLICK HERE AND SCROLL DOWN

Remember it's not complicated:  SEC -- didn't regulate.

AIG -- "As Lehman Brothers (the largest bankruptcy in U.S. History) suffered a catastrophic decline in share price, investors began comparing the types of securities held by AIG and Lehman, and found that AIG had valued its Alt-A and sub-prime mortgage-backed securities at 1.7 to 2 times the values used by Lehman which weakened investors' confidence in AIG. ^{. . .}  In the meantime,  New York regulators allowed AIG to borrow $20 billion from its subsidiaries"  READ ABOUT AIG

Hmmm AIG LIED and inflated the portfolio values?!?  You don't say. 

And because they lied . . .

• "AIG was required to post additional collateral with many creditors and counter-parties, touching off controversy when over $100 billion was paid out to major global financial institutions that had previously received  TARP  money. While this money was legally owed to the banks by AIG (under agreements made via credit default swaps  purchased from AIG by the institutions), a number of Congressmen and media members expressed outrage that taxpayer money was going to these banks through AIG In January, 2010, a document known as "Schedule A - List of Derivative Transactions" was released to the public, against the wishes of the  New York Fed." 

• "Had AIG been allowed to fail in a controlled manner through bankruptcy, bondholders and derivative counterparties (major banks) would have suffered significant losses, limiting the amount of taxpayer funds directly used. Fed Chairman Ben Bernanke argued: "If a federal agency had [appropriate authority] on September 16 [2008], they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders, and impose haircuts on creditors and counterparties as appropriate. That outcome would have been far preferable to the situation we find ourselves in now." The "situation" to which he is referring is that the claims of bondholders and counterparties were paid at 100 cents on the dollar by taxpayers, without giving taxpayers the rights to the future profits of these institutions. In other words, the benefits went to the banks while the taxpayers suffered the costs."

IndyMac -- "The primary causes of IndyMac's failure were largely associated with its business strategy of originating and securitizing Atl-A loans on a large scale. This strategy resulted in rapid growth and a high concentration of risky assets. From its inception as a savings association in 2000, IndyMac grew to the seventh largest savings and loan and ninth largest originator of mortgage loans in the United States. During 2006, IndyMac originated over $90 billion of mortgages.

IndyMac's aggressive growth strategy, use of Alt-A and other nontraditional loan products, insufficient underwriting, credit concentrations in residential real estate in the California and Florida markets, and heavy reliance on costly funds borrowed from the Federal Home Loan Bank (FHLB) and from brokered deposits, led to its demise when the mortgage market declined in 2007.

IndyMac often made loans without verification of the borrower's income or assets, and to borrowers with poor credit histories. Appraisals obtained by IndyMac on underlying collateral were often questionable as well. As an Alt-A lender, IndyMac's business model was to offer loan products to fit the borrower's needs, using an extensive array of risky option-adjustable-rate-mortgages (option ARMs), subprime loans, 80/20 loans, and other nontraditional products. Ultimately, loans were made to many borrowers who simply could not afford to make their payments. The thrift remained profitable only as long as it was able to sell those loans in the secondary mortgage market."  INDY MAC aks OneWest Bank

• Washington Mutual, Inc., was a saving bank holding company and the former owner of Washing Mutual Bank, which was the United States' largest saving and loan association until it became the largest bank failure in U.S. history.  WASHINGTON MUTUAL RIP

Henry "Potter" Paulson was then head of Goldman Sachs.  He then was appointed to run the Treasury.  Of course, in this position, he was able to open up the TAX PAYERS' POCKET BOOK TO help out his "colleagues" that SCREWED UP!

Bank of America -- stopped doing subprimes in early 2000's but bought Countrywide's toxic puke

• Barney Frank "I think this is a case where Fannie and Freddie are fundamentally sound, that they are not in danger of going under. They're not the best investments these days from the long-term standpoint going back. I think they are in good shape going forward." Barney Frank on CNBC on July 14, 2008

FANNIE MAE / FREDDIE MAC (Daddy) -- now OTC, trading at $0.23/share and a negative $-0.05/share a few days ago.

Lehman Bros DOA "On September 15, 2008, the firm filed for Chapter 11 bankruptcy protection following the massive exodus of most of its clients, drastic losses in its stock, and devaluation of its assets by credit rating agencies. The filing marked the largest bankruptcy in U.S. history LEHMAN BROS

Bear Stearns DOA  The collapse of the company was a prelude to the risk management meltdown of the Wall Street investment bank industry in September 2008, and the subsequent global financial crisis and recession. In January 2010, JPMorgan discontinued use of the Bear Stearns name  THE RISE AND FALL OF BEAR STERNS

CITI Group, Inc. is a large American commercial and consumer finance company, founded in 1908. The company filed for Chapter 11 bankruptcy in 2009.  

ETC., ETC., ETC.

• Largest Bankruptcy filing in US History - Lehman Brothers
• Largest bank failing in US history - Washignton Mutual
• AIG stock dropped 60% in one day 9/16/08 - 4th quarter '08 posted a $61.7 Billion LOSS -- Greasted posted loss ever for any corporation.

The Teapot Dome scandal and the Great Depression ain't got nothing on this little . . . hmmm . . . little SNAFU. 

• Exotic Derivatives
• Hedge Funds
• Mortgage Back Securities
• Stock "Puts"
• Naked short selling
• Interest Rate Swaps
• LIBOR
• Credit default swaps
• Naked credit default swaps
• Fixed-for-fixed swap -- different currencies
• Fixed-for fixed swap -- same currency
• Swap rate
• Interest rate cap and floor
• Strike Price
• European put options
• Basic fixed income derivative hedging

THIS IS THE DERIVATIVE MARKET -- [CITED: FLOW CHART] 

Hey GENUISES -- Those that want to BLAME THE HOME OWNER / THE BORROWER . . . decipher this: 

"A number of other variations are possible (fixed-for-fixed rate swap), although far less common. Mostly tweaks are made to ensure that a bond is hedged "perfectly", so that all the interest payments received are exactly offset by the swap. This can lead to swaps where principal is paid on one or more legs, rather than just interest (for example to hedge a coupon strip), or where the balance of the swap is automatically adjusted to match that of a prepaying bond (such as RMBS Residential mortgage-back security)."

And if YOU DON'T QUITE UNDERSTAND IT -- you think the average consumer, the borrower, the homeowner . . . I like to call them Americans . . . did?!?

But, hey, it was the greedy home buyers.  Those bastards, they killed Kenny the housing industry using their house like an ATM. 

Keep repeating the lies.  The banksters would like it that way. 

It's not that complicated.  The minute the ink dried on a borrowers loan documents, those mortgages morphed into an "investment vehicle" . . . churned up into the ABOVE . . . until the banksters broke the bank.

EBA Portland ~~ 100% BUYER REPRESENTATION ~~ 100% of the Time

EBA Portland, LLC is an Exclusive Buyer Agency serving the Metro Portland real estate market since 1999. If you’re a Buyer in the Metro Portland area (including: Beaverton, Tigard, Hillsboro, Lake Oswego, Downtown Portland,) and contemplating a purchase, talk with a Buyer’s Agent . . . better yet, talk to an Exclusive Buyers Agent. Exclusive Buyers Agents do not work for listing brokerages or Sellers. An EBA’s fiduciary duty is: 100% BUYER REPRESENTATION . . . 100% of the Time.

Carla Muss-Jacobs 503-810-7192 Carla@carlahomes.com

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