Secret Deals, Foreclosure Settlements,Stress Tests, and Vampire Squid Whistle-Blowers

By L. Randall Wray

No Hollywood scriptwriter could plot a more implausible story. Here is the plotline sequencing:

1. Bankers make NINJA loans, securitize them, and sell on to government GSEs
 
2. Bankers destroy all the loan documents and begin random and fraudulent foreclosures, throwing millions of innocent victims out on the street
 
3. GSEs sue bankers and force them to take back bad mortgages
 
4. Bankers sell servicing rights for the same bad mortgages back to GSEs, who overpay

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