stage was now set for investment banks to reap immense near-term profits by betting on the continuing rise of real-estate values—and also for such banks to fail once the billions on their balanced sheets proved illusory because ultimately, overextended American borrowers— who had been sold more debt than they could afford, secured on ephemeral assets—began to default. Then the salesmen were gone, leaving behind a new debtor holding new keys and perhaps a faint suspicion that the deal was too good to be true.The salesmen could make these deals without investigating a borrower's fitness or a property's value because the lenders they represented had no intention of keeping the loans. It was originally supposed to buy the banks' bad mortgage investments, but has since been used for a wide range of bailouts. Many salesmen didn’t ask borrowers for proof of income, job or assets.

The only problem with relying on those data and trends was that American laws and regulations had recently changed. According to the ProQuest newspaper database, the phrase "since the In mid-September catastrophe erupted, dramatically and in full public view.

Federal policy conspicuously supported the American dream of homeownership since at least the 1930s, when the U.S. government began to back the mortgage market. The company's stock is down for the year -- but then again, so is everybody's -- and only time will tell if Dimon's moves were smart.

In a matter of days, the company's shares became nearly worthless. The losses on Wall Street have reverberated throughout academia and the Ivy League. Anyone with a lot of … Tufts University has written off a $20 million investment with Madoff, and Yeshiva University is another reported victim. Even foreign automakers are feeling the pain. The secretary of the treasury, Hank Paulson, had—reporters said—"concluded that the financial system could survive the And because that system had become a globally interdependent one, the U.S. financial crisis precipitated a worldwide economic collapse. An employee of Lehman Brothers Holdings Inc. carrying a box out of the company's headquarters after it filed for bankruptcy.To prevent the Great Depression from ever happening again, the U.S. government subjected banks to stringent regulation.

Insurance giant American International Group, or AIG, got $40 billion from TARP.

One such institution was the Reserve Management Corporation, which in September re-valued its Lehman securities at zero and then had to announce it could no longer afford to redeem shares in its money-market fund at par value. Many people lost money when insurance giant American International Group, or AIG, was taken over by the government. At the time of AIG's collapse, Greenberg, privately or through the companies he runs, still owned a private jet, an office on Park Avenue and homes in New York City and Brewster, N.Y. First, The money market, some $3.5 trillion in size, provided vital short-term financing to U.S. corporations—but now it joined banks, mortgage lenders, and insurance firms among the faithless giants of the financial system that had suddenly proven spectacularly unworthy of confidence.

Wal-Mart posted a 10 percent increase in third-quarter profits. The billionaire has lost at least $16.6 billion this year thanks to his Sands holdings, according to analysis by Steven Hall & Partners, a compensation-consulting firm in New York. The pain has hit all: big-time investors, everyday savers, pension funds and even charities.
Then, in September, the market was hit with another devastating blow: Lehman Brothers announced that it, too, could no longer continue operations and was filing for Chapter 11 bankruptcy protection.

In an ever-speeding spiral, the bundled mortgage securities lost their AAA credit ratings, and banks fell headlong into bankruptcy. And the Mortgage Bankers Association reported earlier this month that about one in 10 homeowners were late or in foreclosure. Trillions in retirement savings — gone. Most of what remained was repealed in 1999 by act of Congress, allowing big commercial banks, flush with the deposits of savers, to lumber into parts of the financial business that had, since the New Deal, been the province of the smaller, more specialized investment banks.These nimbler firms, crowded by bigger brethren out of deals they might once have made, now had to seek riskier and more complicated ways to make money.
Many mortgages have been reworked by banks, but it doesn't appear that those modifications are necessarily working.


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