fumbling_IHB
New member
<strong>By <a href="http://apps.thestreet.com/cms/email/rmyEmailStory.do?storyId=10393452&authorId=1005529&storyUrl=/p/rmoney/stevensmithblog/10393452.html">Steven Smith</a>
Senior Columnist
12/7/2007 12:12 PM EST</strong>
URL: <a href="http://www.thestreet.com/p/rmoney/stevensmithblog/10393452.html">http://www.thestreet.com/p/rmoney/stevensmithblog/10393452.html</a>
Sorry I got off to a late start, but I was busy this morning getting a lot of paperwork together to sue the analyst that recommended I buy <strong>Sycamore</strong> (SCMR) at $100 a share back in 2000.
<p> </p>
Everything was going great as the stock hit $200 a few months later, so it made perfect sense to withdraw those paper profits to put 10% down on a new home. Of course, I used an ARM because I wanted to have as much cash available as possible to keep buying more stocks and possibly a second home.
<p> </p>
Long story short, when Sycamore fell and fell and ultimately landed at $5 a share, my stock broker gave me the requisite margin call. No problem. I can just flip my house for a profit and go on living the life. The problem was I lived in San Francisco, which saw property values drop along with the bursting of the tech bubble. Oops. No more stock profits, no more house.
<p> </p>
None of that has happened to me, but I'm sure that scenario played out for a number of people. I guess I just can't get this mortgage freeze off my mind. Those people were not given back their money or house. But the government did zero in on the conflict of interest that was occurring in the brokerage firms, as analysts issued bullish research reports, so the investment bankers and brokers could go out and sell product, and it resulted in huge fines, mostly thanks to the efforts of Elliot Spitzer that indentified companies that clearly provided inappropriate investment advice or kickbacks that were occurring in the insurance industry.
<p> </p>
And guess what. Those companies and individuals paid the price. Whether it be Enron, which spawned Sarbanes-Oxley and did manage to put a dozen executives in jail, or Hank Greenberg losing control of <strong>AIG</strong> (AIG) -- the insurance company he built because the buck does stop at the top -- or Henry Blodget being fined and banned from the securities industry for issuing buy recommendations on companies that he personally thought were worthless.
<p> </p>
I'm not big on government involvement, and certainly think this country is far too litigious, but it's clear that many of mortgage companies engaged in the practice of steering borrowers to inappropriate and higher-cost loans for which the brokers received a higher commission.
<p> </p>
If this not a clear violation of their fiduciary duty and essentially acts as kickback for pushing people into "pigs with lipstick" mortgage products, than I'm even dumber than I thought.
<p> </p>
Basically I want to see Angelo Mozilla, that thing in charge of <strong>Countrywide</strong> (CFC) take the perp walk. The flashbulbs will help his tan.
Senior Columnist
12/7/2007 12:12 PM EST</strong>
URL: <a href="http://www.thestreet.com/p/rmoney/stevensmithblog/10393452.html">http://www.thestreet.com/p/rmoney/stevensmithblog/10393452.html</a>
Sorry I got off to a late start, but I was busy this morning getting a lot of paperwork together to sue the analyst that recommended I buy <strong>Sycamore</strong> (SCMR) at $100 a share back in 2000.
<p> </p>
Everything was going great as the stock hit $200 a few months later, so it made perfect sense to withdraw those paper profits to put 10% down on a new home. Of course, I used an ARM because I wanted to have as much cash available as possible to keep buying more stocks and possibly a second home.
<p> </p>
Long story short, when Sycamore fell and fell and ultimately landed at $5 a share, my stock broker gave me the requisite margin call. No problem. I can just flip my house for a profit and go on living the life. The problem was I lived in San Francisco, which saw property values drop along with the bursting of the tech bubble. Oops. No more stock profits, no more house.
<p> </p>
None of that has happened to me, but I'm sure that scenario played out for a number of people. I guess I just can't get this mortgage freeze off my mind. Those people were not given back their money or house. But the government did zero in on the conflict of interest that was occurring in the brokerage firms, as analysts issued bullish research reports, so the investment bankers and brokers could go out and sell product, and it resulted in huge fines, mostly thanks to the efforts of Elliot Spitzer that indentified companies that clearly provided inappropriate investment advice or kickbacks that were occurring in the insurance industry.
<p> </p>
And guess what. Those companies and individuals paid the price. Whether it be Enron, which spawned Sarbanes-Oxley and did manage to put a dozen executives in jail, or Hank Greenberg losing control of <strong>AIG</strong> (AIG) -- the insurance company he built because the buck does stop at the top -- or Henry Blodget being fined and banned from the securities industry for issuing buy recommendations on companies that he personally thought were worthless.
<p> </p>
I'm not big on government involvement, and certainly think this country is far too litigious, but it's clear that many of mortgage companies engaged in the practice of steering borrowers to inappropriate and higher-cost loans for which the brokers received a higher commission.
<p> </p>
If this not a clear violation of their fiduciary duty and essentially acts as kickback for pushing people into "pigs with lipstick" mortgage products, than I'm even dumber than I thought.
<p> </p>
Basically I want to see Angelo Mozilla, that thing in charge of <strong>Countrywide</strong> (CFC) take the perp walk. The flashbulbs will help his tan.