Sub-Prime Insanity

Sunday, February 25, 2007
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Read this excerpt and make sense of it…..oops, nope, don’t try unless you truly understand the corporatist and corrupt nature of the monetary system we have in this country and why the Federal Reserve was formed in the first place. The article is here.

Brokerages Are Buying

The company told officials the project, which is now in early construction, would cost $60 million to $70 million, Dickinson said in an interview. MLN separately announced plans to open a 180,000-square-foot facility with 650 jobs in Phoenix and expand offices near Philadelphia and Atlanta .

Closely held MLN is the 15th-biggest issuer of sub-prime mortgages, with $3.3 billion of loans in the third quarter, according to the industry publication National Mortgage News. Sub-prime mortgages are made to people with low incomes, a track record of missed payments or limited credit histories.

Brokerage firms including Morgan Stanley, Barclays Plc and Deutsche Bank AG have been buying mortgage companies, including sub-prime lenders and servicing units, so they can repackage home loans into larger securities, which spreads the risk of default. The firms can then sell the securities to clients who want interest income. On Dec. 30, Merrill Lynch & Co. completed the $1.3 billion purchase of National City Corp.’s First Franklin sub-prime lending and servicing unit, National City said today.

They ain’t buying sub-prime lenders because they are profitable in the long-term. They are buying these fucked-up lenders because the Fed-induced credit bubble and Wall Street-enhanced financing schemes make short-term profits and tomfoolery completely doable.

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