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September 03, 2007


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Joan A. Conway

Quid pro quo policies lead to over-lending activities.

If incentives are tied to making and processing loans, whatelse can one expect but abuse of tools of economic gain.

They simply get a green light by the Chief Executive Officer, like everyone else, even in a highly regulated banking and mortgage industry, where one cannot tell the crooks from the bad guys.

Business is based on top connections and those connections turn sour during the process: read Sentinel's recent bankruptcy and defrauding future traders their cash account, among others.


The appetite of the financial markets for CDOs or other more specialized debt-backed securities had, from what I have seen, more to do with the rapid expansion of no-doc and low-doc lending than any regulatory mandate to expand low income home ownership. The abuses that followed, as the commenter above seems to me to suggest, flow from a short-term treatment of the business models that resulted. If one's base comp or bonus is tied to the volume of CDOs one closes in a year, then one fills tranches and does deals with the parties that can get them filled, and maybe doesn't ask enough questions about how they're getting it done. That, anyway, would be the obvious temptation. Can regulation prevent similar abuse in the future? I would argue in the affirmative.

Peter Lederer

As almost always the case, Saul, your post has produced a significant insight for me: this time a better understanding of why the 55mph maximum/40mph minimum signs have both amused and annoyed me all these years.

I am less sure where your musings concerning affirmative action take me. You write: "employers and universities were first pushed to diversify their workforces and student bodies". Indeed they were, and arguably some moved a good deal more quickly than they would have absent some pushing.

But of what drawback do you now complain? That there has been pushback? Or that there was a failure to anticipate pushback? Or that other and better mechanisms to achieve diversity were available? Or (ultimate horror!) that it was not a worthy goal?

JOan A. Conway

"But without the information necessary to comply in the first instance," does not describe the motive(s) attached to the pushing where voluntary or involuntary, like EEOC investigations and pending lawsuits.

In my own case, the State simply put an inexperienced female in the top spot, who like Gonzales rose quickly in the ranks. The men she displaced where highly experienced guys with a lot of baggage in being anti-diversity, especially with females.

Nepotism still exists, and the men lucky to find a wife on the job, cause another problem.

saul levmore

To respond to Peter, only that when we first see a policy pushing in one direction (more diversity), we need to see that those wo are regulated are likely to think of it - somewhat correctly as it turns out - as the first step towards command-and-control. They are not being told to diversify, they are being told to diversify only as much as absolutely necessary (which is usually a bad thing) because soon enough there will be rules penalizing or at least litigating against those who diversified "too much" or too explicitly. This sort of regulation is not necessarily bad, but in thinking about the costs of regulation it is useful to see that those who are regulated are often asked to predict future regulation (as I have argued elsewhere we want them to do)and to walk a thin line. My comment is also political. Politicians who complain about insufficient loans to the working class should not now be the first to jump up and down and say that the banks were too aggressive in lending to those who might more likely default.


Anyone wonder about the other side of the equation? As in, where did all these "subprime" borrowers come from? Were all of these borrowers subprime when they closed their mortgages? I think not.

The Bush administration's mishandling of the economy, creating thousands of burger flipping jobs while sacrificing traditionally higher paying jobs to offshore is as much to blame for this meltdown as anything else they would rather you believed.

I can't see putting most of the blame on mortgage lenders, rating agencies and fraudulent borrowers..what we have here is a rapidly sinking middle class with tremendous wage and FICO score erosion.

Face it - the Bush/Cheney economic policy is criminally negligent.


Hi, nice blog. Pretty informative. But,before you start signing papers with a broker, it is important to discuss fees. Brokers work on a commission basis and often receive lender fees. The broker is usually paid by the buyer or lender. You can pay the broker with cash, rebates, or proceeds from your loan. The fees are added to your total amount.

thanks, john http://www.thejohnbeck.tv

Karen Marie Kline

I paid for 17 years on my condo. It was built over an old privy pit. I excavated the pit at a cost equal to 25% of what I paid for it initially. The Developer, who refused to make good in any way, was getting Realtor of the Year while I was having the remediation done. But not done in time to keep me from living in hydrogen sulfide for two years after the subsidence caused my sewer pipe to break underground.

I'm angry and I have some brain injury, so I may not be putting this as clearly as I'd like.

I was getting it ready to sell, and spending thousands on it when I got an offer, and at that point a Realtor where I had it listed told my listing agent it belonged to him.

There was no hearing in the foreclosure, no hearing on my disability after I filed a motion asking for accommodation, there was no notice to me of the foreclosure judgment or date set for the sale.

I was given less than 24 hours notice before the hearing to Approve the Sale.

At the hearing I could not understand the plaintiff's lawyer. I could not understand why the judge didn't think it was important that I'd been served the Amended Complaint after I filed Chapter 13 and before the stay was lifted.

Only when I listened to the CDs in preparing my Brief, and I had to listen more than 10 times to be sure I heard it right, did I recognize that the plaintiff's lawyer lied.

Yes, I mean that what he said was belied by the record.

I was livid about that. But then, as I listened to the CDs, repeatedly so that I could put quotes into my Brief, I began to see that the lawyer could not have lied without the complicity of the judge.

So I have to ask, What's happened to integrity in the courts?

Why is it not surprising that a key part of what the judge said near the end of the May 5th hearing is missing from the CD, and the CD sounds a little odd at that point?

Could it be because absolute immunity is harmful to innocent people like me?


Mortgage Refinancing

"But,before you start signing papers with a broker, it is important to discuss fees." I definitely agree, this is often times a major point that is overlooked.

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