WILLIAM K. BLACK: Liars' loans.BILL MOYERS: Why did they call them liars' loans?
WILLIAM K. BLACK: Because they were liars' loans.
BILL MOYERS: And they knew it?
WILLIAM K. BLACK: They knew it. They knew that they were frauds.
WILLIAM K. BLACK: Liars' loans mean that we don't check. You tell us what your income is. You tell us what your job is. You tell us what your assets are, and we agree to believe you. We won't check on any of those things. And by the way, you get a better deal if you inflate your income and your job history and your assets.
BILL MOYERS: You think they really said that to borrowers?
WILLIAM K. BLACK: We know that they said that to borrowers. In fact, they were also called, in the trade, ninja loans.
BILL MOYERS: Ninja?
WILLIAM K. BLACK: Yeah, because no income verification, no job verification, no asset verification.
Go to the Bill Moyers Journal, it gets even better, believe me.
2 comments:
Bob:
I'm not sure what's crazier--that the banks made these loans of that investors bought the bonds backed by them and believed they were AAA.
Then again, I've got a liar loan myself. Refinanced when I was starting up my solo practice and didn't have the income to qualify for the mortgage I wanted.
Just read Tom Geoghagen's excellent essay "Infinite Debt" in the April Harper's. He puts a lot of the blame on the repeal of usury laws in the 70's and 80's, which both shifted financial and intellectual capital into finance and out of manufacturing and also put many people on a treadmill of debt-based indentured servitude.
Thank Ben for the terrific comment. I will read Infinite Debt to learn more about the disastrous monetary system we are saddled with.
Best,
Bob
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