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Radio Interview: Subprime CDOs Played a Starring Role in the Financial Crisis

The Norris Group's Real Estate Radio Show
Riverside, California
December 31, 2011
Bruce Norris Interviews Robert Stowe England
Topic: Black Box Casino

Listen to the broadcast at this mp3 link:

Summary of the Interview:

This week Bruce is joined once again by Robert England. Robert is a journalist and author who has written extensively on mortgage finance, banking, retirement policy, and the financial and economic impact of aging population. His most current work is Black Box Casino: How Wall Street’s Risky Shadow Banking Crashed Global Finance. Previous works include Aging China: The Demographic Challenge to China’s Economic Prospects. Robert is also a senior writer for Mortgage Banking Magazine.

In our minds, we used to think that we would go to the bank, get a loan, make a payment to them until we paid it all off, then they hold the loan the whole time. This was called a portfolio loan. It was not until late 2007 when Bruce heard the term mortgage-backed security and CDO.

Bruce wondered…

The Fannie and Freddie Hate Storm

Holman H. Jenkins, Jr. writes in a column in the Wall Street Journal December 28:

Like amoebas feuding in a drop of water, pundits have been savaging each other all year over whether Fannie Mae and Freddie Mac "caused" the financial crisis. Lately the argument has become apoplectic.

But the question is phrased badly. Three things happened: a housing bubble, a collapse in lending standards, and a global liquidity panic when markets lost trust in the solvency of financial institutions.

Read more at this link.

Why the Left is Losing the Argument over the Financial Crisis

By Peter Wallison and Ed Pinto

American Enterprise Institute
December 27, 2011

The day before Christmas, Joe Nocera did it again—wasted a perfectly good column with another attack on us, Peter Wallison and Ed Pinto.

It’s worth reading for what it says about the Left’s current situation. According to Nocera, we “almost single-handedly” have created a “myth that Fannie Mae and Freddie Mac caused the financial crisis.” Those who have fallen for this myth, according to Nocera, include the congressional Republicans and the Wall Street Journal’s editorial page.

It’s somewhat implausible that two guys at a Washington think-tank, arguing that the financial crisis was caused by government housing policy, could create a widely accepted alternative to the conventional liberal narrative that the financial crisis was caused by the greed and lack of regulation of Wall Street. After all, the conventional narrative was created by the government, propagated by the New York Times, and accepted without quest…

Radio Interview: Congress Set Fannie, Freddie on the Road to Ruin

The Norris Group's Real Estate Radio Show
Riverside, California
December 24, 2011
Bruce Norris Interviews Robert Stowe England
Topic: Black Box Casino

Listen to the broadcast at this mp3 link:

Summary of the Interview:

257-TNGRadio – Robert England 12-24-11
Friday, December 23rd, 2011


This week Bruce is joined by Robert England. Robert is a journalist and author who has written extensively on mortgage finance, banking, retirement policy, and the financial and economic impact of aging population. His most recent work is Black Box Casino: How Wall Street’s Risky Shadow Banking Crashed Global Finance. Previous works include Aging China: The Demographic Challenge to China’s Economic Prospects. Robert is also a senior writer for Mortgage Banker Magazine.

Bruce said he really appreciated his Black Box Casino book and was familiar with the overall story. There are a lot of insider terms where when you are in Wall Street and you watch Squawk Box, they use the terms as if the world knows what they m…

Fannie Mae and Freddie Mac Pushed Rapid Credit Rescoring To Briefly Turn Subprime to Prime To Get Risky Loans Approved, Mortgage Broker Says

By Robert Stowe England
December 16, 2011

According to a former mortgage broker, members of Congress, Fannie Mae, Freddie Mac, and federal officials orchestrated and imposed on mortgage brokers and credit rating bureaus a policy to rapidly rescore consumer credit ratings so that more borrowers without reported incomes could get mortgages.

This coordinated effort enabled many subprime and nearly subprime borrowers to temporarily appear to be have credit scores high enough to be prime borrowers and, in the process, greatly expand lending in a period that stretched from 1998 to 2004.

“I'll bet 95% of the mortgages that went out of our office were subprime even if they weren't rated that way,” the broker said.

Mortgage brokers are wholesale lenders who originate their mortgages for large banks and other financial institutions.

“What infuriates me about when [President] Obama speaks or Barney Frank or anyone else who talks about these mortgage-backed securities and everything that happe…

Could the 2008 Crash Have Been Prevented?

MortgageOrb Person of the Week: Robert Stowe England

Phil Hall of MortgageOrb writes December 13, 2011:

It has been more than three years since the September 2008 financial crisis, and many people are still trying to piece together what went so horribly wrong. Veteran financial journalist Robert Stowe England has offered his insight on what happened with his new book, "Black Box Casino: How Wall Street's Risky Shadow Banking Crashed Global Finance" (published by Praeger). MortgageOrb spoke with England about the circumstances that triggered the economic catastrophe.


Q: Was it possible that the 2008 financial crash could have been avoided? Or was this the financial services equivalent of a runaway train?

England: Both statements are true to some degree. There were so many vulnerabilities building up in the global financial system, it had, indeed, become a runaway train, while most did not yet realize that. Combine that with an ever-rising level of hidden bad credits and hidde…

Black Box Casino Reveals Mad Max Follies of Crisis

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Full Text Follows:


What Went Wrong

By Robert Stowe England


Remarks Made at a Book Signing at the Federal Street Gallery in Milton, Delaware

November 5, 2011


Good day.

My name is Robert Stowe England and I’m here today to shed a spotlight on the causes of the financial crisis of 2008.

If you are like me, when this crisis broke, you were shocked and outraged that things could get so out of hand and cause such an enormous calamity – the worst financial crisis of modern times.

Something had gone terribly wrong to deliver us into the world of Mad Max, where the norms we thought necessary for society have vanished. We saw financial institutions crashing all around us while authorities seemed powerless to do anything about it.

As a financial journalist, I covered the mortgage industry at the heart of the crisis. I was on the frontlines reporting a multitude of institutional and market failures that began to unfold early in 2007.

By August 2007, fully half the mortgage market had collapsed or had to b…

Rickards Says U.S. Making Same Mistakes As Japan

In an interview on Bloomberg TV November 10, James Rickards says that while the Fed is saying it does not want to repeat the mistakes of Japan, the Fed is, in fact, repeating the very same mistakes.
Rickards, senior managing director for Tangent Capital Partners, a merchant bank based in New York, is interviewed on Bloomberg's Money Moves with Deirdre Bolton.
Rickards has a new book, Currency Wars, that was released November 10, that focuses on the role of currency wars in modern history and the role the a gold standard has made and can make to provide the kind of stability that is needed for sustained growth.

Rickards criticizes the Fed for thinking that "they're playing with a thermostat" that they can dial up or dial down. However, they are, instead "playing with a nuclear reactor" with fuel rods. And, if they get it wrong, we can have "a massive meltdown." He sees the possibility of a lost decade in the United States as the best possible outcom…

Inside the Story of What Went Wrong

Remarks Made at a Book Party and Signing for Black Box Casino
Event Hosted at 3101 Chain Bridge Road, Washington, D.C. 20016

November 10, 2011

By Robert Stowe England

I’m here tonight to shine a spotlight on the causes of the financial crisis of 2008.

If you are like me, when this crisis broke, you were shocked and outraged.

Something had gone terribly wrong to deliver us into the world of Mad Max, where the norms vanished that we thought necessary to sustain our way of life.

Financial institutions were crashing all around us while authorities seemed powerless to do anything about it. It was the worst financial crisis of modern times.

As a journalist writing for Mortgage Banking magazine for more than 20 years, I covered the mortgage industry at the heart of the crisis.

In January 2007, I found myself on the frontlines of the crisis reporting on a multitude of institutional and market failures than were just beginning to get underway.

By August 2007, fully half the $11 trillion mortgage marke…

The Story of Writing Black Box Casino

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Financial author Robert Stowe England tells the story of writing his new book, Black Box Casino, at the Mortgage Bankers Association 98th Annual Convention and Expo at the Hong Kong Room at the Hyatt Regency Hotel in downtown Chicago on October 10, 2011. The comments were followed by a book signing. The event was sponsored by Titan Lending, IDS, and Depth PR.
The story of writing the book was also told the following day, October 11, at Barnes & Noble's DePaul Center Bookstore in downtown Chicago at DePaul University's Loop Campus. That event, too, was followed by a book signing.
Read more about the book at this link:

Greenspan: Idea U.S. Banks Are Not Exposed to Troubled Euroepan Banks "An Inappropriate View"

"You can't understand the United States at all unless you understand what's going in Europe," Greenspan stated in an interview on CNBC's Squawk Box October 7, 2011.

"I think we have been through a remarkably elaborate program to try to find out whether the single currencies work," he said. Like others, Greenspan thought it would work in the beginning because the markets bought into the idea it would work. This could be seen in the pricing of the currencies in countries like Greece, Italy, Spain and Portugal as they moved toward currency union. As the date of currency union approached in each country, the spread in interest rates of local currencies above the German bund would narrow dramatically from a level of a hundreds of basis points.

"I said and thought the markets are assuming that the Greeks and the Italians and the Spaniards and Portuguese are going to behave like Germans, and that's what [the markets] were telling us," Greenspan sai…

George Bush Takes Up Clinton's Subprime Mantle in 2002 with Fannie, Freddie Minorities Initiative

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This YouTube video is a recording of a RTL-Z Dutch television program of October 7, 2008. The Dutch news program plays an audio recording of President Bush in a speech in 2002 when he calls for increasing lending flexibility for blacks and Hispanics so that poor people "can have a house as nice as anybody else." He set a goal of 5.5 million new homes for minorities by 2010 to close the "homeownership gap" between whites and minorities. This was to be achieved he said, through new initiatives from Fannie Mae and Freddie Mac to make it easier for people with poor credit histories to qualify for a mortgage. President Clinton got the ball rolling and ramped up relaxed lending standards with a National Homeownership Strategy in 1995. As part of that, Fannie and Freddie introduced a raft of programs that made it easier for people with poor credit and little or no money down to obtain a mortgage.

Bernie Marcus Calls Dodd-Frank "Bonnie and Clyde" for Destroying Small Community Banks

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Speaking on CNBC's Squawk Box, Bernie Marcus, co-founder of The Home Depot, blasts the regulations coming from the Dodd-Frank Act as "Bonnie and Clyde" because they are going to destroy small community banks. In the process, there will be no loans made to potential start-ups and the source of future jobs creation will be lost.

Harry Dent Sees Dow Crash to 3,000 in 2013

Harry Dent, founder and CEO of HS Dent, is author of a new book, The Great Crash Ahead. He sees an economic and market crash between 2012 to 2014. As baby boomers pay down a sizable chunk of $42 trillion in private debt in the United States to deleverage, this will be an ever growing deflationary force. Baby boomers around the world will start saving and stop driving up consumption. Because of this deleveraging, Dent warns that a debt crisis is coming back stronger than ever.
Dent does not believe that efforts of central banks to inflate and provide stimulus to the economic to counteract this trend will fail. "In the United States, we keep taking viagra and nothing much happens." He predicts gold will crash after rising to $2,000. Silver has already peaked, Dent said. The U.S. dollar's role as the safe haven currency will be strengthened. That is because, as private debt is paid off, it makes dollars more scarce, and it restores value to the dollar, he explains.

ACORN Secretly Wrote 1992 Law That Set Fannie, Freddie 'On the Road to the Mortgage Meltdown'

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The Association of Community Organizations for Reform Now (ACORN) was a key architect of a law passed in 1992 that set Fannie Mae and Freddie Mac on the road to ruin, according to a new book by Robert Stowe England to be released September 30 by Praeger.

The book, Black Box Casino, uncovers the myriad factors that led to the financial crisis of 2008, the worst financial implosion of modern times. This story is one of many threads woven into the book's narrative.
Read more about Black Box Casino at this link.

ACORN was a key leader in clandestine negotiations among housing activists to shape new legislation that would set into place the regulatory regime that governed Fannie and Freddie.
According to an affordable housing advocate familiar with what transpired at the meetings, ACORN and other housing groups were "informally deputized" (Black Box Casino, page 42) in 1992 to write key parts of new legislation by former House Banking Committee Chairman Henry Gonzalez, a Texas …