Street

Why did the Federal Government sue the Wall Street banks that sold Fannie and Freddie bad mortgages?

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Question by ideogenetic: Why did the Federal Government sue the Wall Street banks that sold Fannie and Freddie bad mortgages?
Shouldn’t the “buyer beware”* or is there a role for regulation to prevent criminal economic activity in the debt securitization markets that lead to catastrophic financial collapses?

* Since S&P had ‘AAA’ ratings on the junk paper, how would the buyer know?
For those who missed it:
“Federal Regulators Sue Big Banks Over Mortgages”
http://www.nytimes.com/2011/09/03/business/bank-suits-over-mortgages-are-filed.html

Best answer:

Answer by TheOnlyBeldin
Because Barney won’t let them go after the true culprit: Fannie and Freddie themselves.

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Q&A: Wall Street Rating Agencies?

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Question by Maxwell: Wall Street Rating Agencies?
This is for my test…

Wall street had to sell the rating agencies on the concept of securitization, where mortgages moved off the balance sheets of banks. And into a pool of securitized and backed by many mortgages so that the risk of default was minimized. Discuss the role of the rating agencies. Were they were involved in fraudulent activity since they made money by reviewing the bonds and making money on the bonds? If not fraudulent activity, what other rememdies could be made to protect the public interest?

thanks for the help. Will give out Best Answer to whoever even remotely helps me with this

Best answer:

Answer by Dr. Mengele
Well to put it simply the rating agencies, like Stand and Poore’s, were actually paid by investment banks to rate their securities. It was not fraudulent since the agency offers a opinion which is not legally binding. Since the agencies gave CDOs a AAA rating, they were popular among pension funds. Since pension funds backed up their securities with insurance agencies, the default of CDOs destroyed AIG. So in conclusion no, legally there is nothing there you can say was fraudulent, however the rating agencies destroyed the biggest insurance company in the world.

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Can someone explain Wall Street, market capitalization, company equity, *stock exchange & more?

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Question by KAI: Can someone explain Wall Street, market capitalization, company equity, *stock exchange & more?
I’m really stupid, and would like to know.

10 POINTS AND APPRECIATION FOR THE PERSON WITH THE BEST ANSWER!
was unsure of what section to put this in, sorry.

Best answer:

Answer by juicebox
wall street: a financial district in New York, home of various stock exchanges, like the New York Stock Exchange. It’s essentially the financial center of the world.
Market Capitalization: the number of shares a company has multiplied by their market price. So if a company had 1,000,000 shares at 5$ each, it’s market capitalization would be $ 5,000,000. A share is basically a security that represents ownership in a company.
Company Equity: the assets of a company minus its liabilities. Assets are anything that generate revenue for a firm or increase its value, like plant equipment, cash, inventory, and accounts receivable (accounts receivable is very simply “money owed to a company by its debtors”. An example would be when you purchase a car. You don’t normally pay the whole thing up front; you enter a plan where you make monthly payments to pay it off). Liabilities are financial obligations a company has. So this means, in the future they will have to spend revenue to meet those obligations. An example would be a company that has financed itself through bonds which are debt instruments.
Stock Exchange: a stock exchange is the market for securities and equity derivatives trading (the trading of company shares, equity derivates: search options and futures).
Search “equity financing investopedia” or “share investopedia” and there will be a more clear and comprehensive definition with articles that will give you a walk through. Investopedia is actually the best site for finance and economics; it has articles and definitions for introductory financial and economic concepts all the way up to the more complex ones like derivatives, securitization and hedging. Sorry if this wasn’t any help

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Q&A: Why is Obama blaming Wall Street executives for the economic crisis ?

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Question by Jim R: Why is Obama blaming Wall Street executives for the economic crisis ?
For the most part, Wall Street was playing by the rules which were set and/or mandated by Congress. Why are Barney Frank, Chris Dodd, the Carter/Clinton Community Reinvestment Act, etc held blameless by this President-Elect? Moreover, why should we trust/allow these same politicians who helped to create the crisis to be tasked with solving the issue?

Best answer:

Answer by The Breeze
uh, maybe because they caused it and now they are flying to Washington DC on their private Lear jets, begging for handouts? Duh…

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