Toxic loans v 有毒奶粉

中国有毒奶粉的新闻看了令人痛心，的确在中国，人命是无价，不值钱的。

但是，不要忘记，美国的金融风暴，也是有毒的，接下来会害死很多人。

次贷有毒，请看以下文章：-

Calling Out the Culprits Who Caused the Crisis

By Eric D. HovdeSunday, September 21, 2008; B01

Looking for someone to blame for the shambles in U.S. financial markets? As someone who owns both an investment bank and commercial banks, and also runs a hedge fund, I have sat front and center and watched as this mess unfolded. And in my view, there's no need to look beyond Wall Street -- and the halls of power in Washington. The former has created the nightmare by chasing obscene profits, and the latter have allowed it to spread by not practicing the oversight that is the federal government's responsibility.

I find it hard to stomach the fact that investment banks that caused this financial crisis immediately ran to the government asking for assistance, which Bear Stearns received and Lehman Brothers, thankfully, did not. This is one of many eerie parallels that the current meltdown bears to the Great Depression, when Washington and the taxpayers had to step up and take unprecedented action to stabilize the financial markets and the economy.

Unfortunately, the government today has already put enormous taxpayer resources at risk -- bailing out investment firm Bear Stearns, mortgage giants Fannie Mae and Freddie Mac and insurer AIG, and proposing to buy risky assets from the banking system -- to stop the economy from plummeting into another depression. But these events only underscore the toxic relationship between Washington and Wall Street that has brought us to this point.

To understand the role of that relationship in our current troubles, let's go back to 1999. That was when the hype about the Internet reached its pinnacle. Technology spending by the government and corporations was booming as both sought to address economic and security fears surrounding the so-called Y2K problem, a potential massive computer shutdown at the start of the year 2000.

In the run-up to the millennium, the Federal Reserve, led by then-Chairman Alan Greenspan, began to pump money into the capital markets to deal with any financial problems that might arise from a Y2K meltdown. In the end, 2000 arrived to nothing but a wonderful celebration. But the monetary stimulus, coupled with the aforementioned hype, created an unfortunate bubble in Internet, technology and telecommunications stocks.

At the center of this bubble were the large Wall Street investment banks, which understood the profit potential in promoting the technology boom to overeager clients looking for the investment of a lifetime. From mid-1999 to mid-2000, Wall Street firms took approximately 500 companies public, raising a total of nearly $77 billion for these companies through initial public offerings, or IPOs. For every IPO, the investment banks themselves earned an underwriting fee of 6 percent, returning them an enormous profit.

But apparently that was not enough for Wall Street. As the middlemen between the insatiable investor demand for anything technology-related and young tech entrepreneurs needing to raise capital, the investment banks demanded the opportunity to invest in these companies before the public offerings, when the companies's stocks were valued at a fraction of what they would bring post-IPO. It wasn't uncommon for Wall Street firms to invest tens of millions of dollars in "anything.com" before taking it public, charge a multimillion-dollar fee for the public offering and then watch their investment multiply within a matter of months.

Main Street investors, meanwhile, did not realize that the investment banks had essentially thrown away their underwriting guidelines, which had been in place since the Depression, to take companies public. Among these guidelines were rules requiring that a company be in business for more than five years, be profitable for two or three consecutive years and have certain levels of revenue and profitability. The business models of many of the companies that went public simply weren't viable. Once the Internet bubble burst and the dust settled, America's corporate landscape was littered with bankruptcies and mass layoffs, and investor losses have been estimated at more than $1 trillion.

In an effort to offset the economic strain from these losses, the Fed once again rapidly increased the money supply and slashed short-term interest rates to 1 percent -- a level that hadn't been seen in more than 45 years. This enormous monetary stimulus (along with significant federal spending) energized the overall economy, but it also led to the greatest housing boom -- and possible bust -- this country has ever encountered. From 2002 to 2006, housing values appreciated at an astounding rate of 16 percent per year. It became impossible for the typical American family to buy an average-priced house using a conventional 30-year fixed-rate mortgage. Wall Street found another perfect opportunity to propel and take advantage of another forming bubble.

The result was the explosion of toxic new mortgage products that enticed homebuyers into supporting escalating housing prices while eliminating the need for the traditional 20 percent down payment. Whether it was interest-only loans, low- or no-doc "liar loans," or piggyback home-equity loans, the mortgage and banking industries found a way to place almost anyone with -- or even without -- a credit score into a home. Wall Street played its part by packaging those mortgages into complex financial products and selling them to other investors, many of whom had no idea of what they were buying or the associated risks.

Once again, the investment banks raked in billions of dollars in fees, giving them incentive to keep lowering underwriting standards, allowing mortgage companies to originate and sell even the most unscrupulous home loans, which Wall Street then dumped onto the investment community. Wall Street never once questioned the ethics of these activities; it too was focused on the enormous rewards that allowed its firms to pay out an unfathomable $62 billion in bonuses in 2006 alone. Without Wall Street, the housing bubble would have ended shortly after the Fed started to raise interest rates in 2004, because no lenders would have originated these toxic mortgages if they had to keep the loans on their own balance sheets.

The price of all this greed? Sadly, because of the actions of the investment banks, the mortgage industry and the rating agencies, the investment community has now incurred an estimated $1 trillion and more in losses. Even more troubling, housing prices have dropped 20 percent from their July 2006 highs, with the very real likelihood that housing could contract another 15 to 20 percent -- essentially wiping out more than $4 trillion in housing values. This would be the biggest hit since the Depression to Americans' most important asset.

What is even more remarkable is that at the same time, firms such as Goldman Sachs and Lehman not only made billions of dollars packaging and selling these toxic loans, they also wagered with their own capital that the values of these investments would decline, further raising their profits. If any other industries engaged in such knowingly unscrupulous activities, there would be an immediate federal investigation.

Why is Washington so complicit in this intricate and lucrative affair? First, the Fed laid the groundwork for both these asset bubbles by lowering interest rates to historic lows. In an attempt to protect his legacy after the Internet-bubble collapse, Greenspan provided unprecedented stimulus to re-inflate the economy and maintain his popularity with Wall Street. (Remember the "Greenspan put"?) But in doing so, he spawned the largest debt and asset bubble in U.S. history.

At the same time, federal regulatory agencies such as the SEC stood idly by as Wall Street took advantage of the investment public during both the Internet and the housing bubbles. The SEC took almost no action against Wall Street after the dot-com implosion. And in the midst of the housing bubble, in 2006, only the Office of the Comptroller of the Currency pushed for any level of regulation to address subprime lending.

One has to wonder why Treasury secretaries under Presidents Clinton and Bush -- Robert Rubin and Hank Paulson, respectively -- took no action to curb these abuses. It certainly was not because they did not understand Wall Street's practices -- both are former chief executives of Goldman Sachs. And why has Congress been so silent? The Wall Street investment banking firms, their executives, their families and their political action committees contribute more to U.S. Senate and House campaigns than any other industry in America. By sprinkling some of its massive gains into the pockets of our elected officials, Wall Street bought itself protection from any tough government enforcement.

This is no doubt the same reason why so many members of Congress were consistently blocking attempts to reform and downsize Fannie Mae and Freddie Mac, which are essentially giant, undercapitalized hedge funds. These two entities have been huge money machines for Democrats in both the House and the Senate, many of whom recently had the gall to ask why these companies hadn't been reformed in the past. Nor should several Republican congressmen and Senators who likewise contributed to watering down legislation aimed at reforming these institutions be let off the hook.

Wall Street's actions are now profoundly hurting American families, communities and the entire U.S. financial system. People are being thrown out of their homes. Once seemingly indestructible financial entities are succumbing to the crisis they have created and have jeopardized the stability of the global financial system. Isn't it ironic that the same firms that preached free-market capitalism are now the ones begging for a taxpayer bailout? Many investment professionals operating in my world believe, as do I, that we are facing the greatest financial crisis since 1929.

Fortunately, today we have safety nets, such as federal deposit insurance, that were non-existent during the Great Depression. Yet there has not been a time since the 1920s when Wall Street has enjoyed as much influence over Washington as it has for the last 12 years. Let's hope that this influence fades rapidly -- and that this financial crisis doesn't end the same way as the one of nearly 80 years ago.

Eric D. Hovde is chief executive of Washington-based Hovde Capital and Hovde Acquisitions.