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Showing posts from December, 2011

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…