How we cite our quotes: (Chapter.Paragraph)
Quote #1
The "consumer loan" piles that Wall Street firms, led by Goldman Sachs, asked AIG FP to insure went from being 2 percent subprime mortgages to being 95 percent subprime mortgages. (3.25)
The rise of the subprime mortgage market is a case study in the power of greed. Subprime mortgages are not good long-term investments—the word "subprime" should tip you off on that one. But here's the thing: they're somehow hugely profitable. This contradiction sparks the expansion of subprime mortgages and sets the stage for the stock market crash of 2008.
Quote #2
The market was paying Goldman Sachs bond traders to make the market less efficient. (3.32)
But why would you want to do that? It's simple: it pays. Greed is so powerful on Wall Street that most peeps would rather make quick cash than do something of value. Hey, you don't become a Wall Street banker because you want to make the world a better place…
Quote #3
The market for "synthetics" removed any constraint [...] To make a billion-dollar bet, you no longer needed to accumulate a billion dollars' worth of actual mortgage loans. (3.39)
If the rise of the subprime mortgage market is an example of how greed can be corrupting, then the rise of the synthetic market shows how greed can make you act like a straight-up fool. Everyone involved in this market knows that they're just dealing in fake money, but they're too focused on commission checks to think about long-term consequences.