If you knew your broker called a stock “toxic waste” and nicknamed it as “Subprime Meltdown”, “Hitman” “Nuclear Holocaust” and “Mike Tyson’s Punchout” (a reference to a bag of human waste), would you buy it?
According to an article by Jesse Eisinger of ProPublica, on March 16, 2007, team members of Morgan Stanley suggested these nicknames for a financial derivative known as a collateralized debt obligation (CDO), the very products that were at the center of the systemic collapse in 2008. Then they renamed it and sold it as gold to their investors. Human waste into gold. That’s some alchemy.
Not one Too Big To Fail (TBTF) bank has been held accountable for torpedoing the economy back in 2008. The Justice Department and the Securities and Exchange Commission are seemingly unable to find any wrongdoing despite reams of evidence.
The banks were bankrupt and had to be bailed out by the taxpayer. Unsuspecting investors bought mortgage-backed securities and other fancy financial mechanisms that the banks knew were worthless. But it took a Taiwanese bank, one of those unsuspecting investors, to overcome the high hurdle of document discovery to give us a glimpse of TBTF criminality.
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