November 8, 2015

The People Responsible For The Housing Bubble

For a weekend topic, a comparison in the ongoing discussion of the housing bubble. A blogger sent me this: The Research Project, Week Twenty Nine, New Hampshire Reality Check. “For years I wondered why hundreds of people didn’t go to jail when the housing bubble burst, plunging the economy into a recession. My assumption was that the people responsible for creating the housing bubble deliberately led millions of people into making risky real estate investments which, when the bubble burst, led to mass foreclosures and countless bankruptcies. As it turns out the traders at the heart of the housing bubble did worse than most on their housing investments when the bubble burst. This, according to research done by finance professor Ing-Haw Cheng at the Tuck School of Business at New Hampshire’s Dartmouth University.”

“Professor Cheng and his co-researchers from the University of Michigan, Ann Arbor and Princeton University then compared the results with the real estate transactions of plausibly uninformed control groups consisting of lawyers and Wall Street stock analysts over the same time period. They found that those who dealt in mortgage-backed securities did worse in timing their own real estate transactions than those in the control groups.”

“So I guess I have to rethink my assumption that the bankers who helped create the housing bubble deserved to do jail time. And now as a bonus here are some interesting posts that I found on The Housing Bubble Blog.”

A reader posted this Rolling Stone article today, from July 2015: “Eric Holder has gone back to work for his old firm, the white-collar defense heavyweight Covington & Burling. The former attorney general decided against going for a judgeship, saying he’s not ready for the ivory tower yet. ‘I want to be a player,’ he told the National Law Journal, one would have to say ominously.”

“Holder will reassume his lucrative partnership (he made $2.5 million the last year he worked there) and take his seat in an office that reportedly – this is no joke – was kept empty for him in his absence. The office thing might have been improper, but at this point, who cares? More at issue is the extraordinary run Holder just completed as one of history’s great double agents. For six years, while brilliantly disguised as the attorney general of the United States, he was actually working deep undercover, DiCaprio in The Departed-style, as the best defense lawyer Wall Street ever had.”

“Here’s a man who just spent six years handing out soft-touch settlements to practically every Too Big to Fail bank in the world. Now he returns to a firm that represents many of those same companies: Morgan Stanley, Wells Fargo, Chase, Bank of America and Citigroup, to name a few. Holder doesn’t look it, but he was a revolutionary. He institutionalized a radical dualistic approach to criminal justice, essentially creating a system of indulgences wherein the world’s richest companies paid cash for their sins and escaped the sterner punishments the law dictated.”

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Comment by Ben Jones
2015-11-07 10:45:18

‘I have to rethink my assumption that the bankers who helped create the housing bubble deserved to do jail time.’

I understand this bloggers viewpoint. But when we are considering possible crimes, it shouldn’t be who lost money that determines what comes next. The wall street guys can say in their defense, “hey I lost my house too, so obviously I didn’t know it was a bubble.” But that should happen within the legal system, which would consider all those things. The problem is the government failed to bring these individuals into that legal system. What would we know today if people had been put under oath, facing penalties if they lied? If investigators had dug into emails and trades? What is the future price of moral hazard?

Comment by Oddfellow
2015-11-07 14:57:15

Refusing to investigate sets a terrible precedent even if everyone involved was actually innocent, which seems rather unlikely.

Comment by ProxyServer
2015-11-08 06:45:06

Didnt those S&L bankers lose their asses also? They still went to jail. That Angelo Mozillo isn’t in jail right now is ridiculous.

Comment by Raymond K Hessel
2015-11-08 08:47:48

Eric Holder has been richly rewarded for his refusal to go after the Too Big to Jail banksters.

Comment by Rental Watch
2015-11-08 03:08:54

People want heads to roll. But, what laws were broken? Frauds committed?

Borrowers who stated their income on applications fraudulently.
Borrowers who bought several homes, claiming all were their primary residence (more fraud).
Mortgage Brokers who encouraged such activity, knowingly (more fraud).
Bankers who misrepresented mortgage loan products to investors (more fraud).
Credit Rating Agencies for incompetence?
Fiduciaries for large investors for not doing their homework (and simply relying on ratings agencies?)

Here’s the problem for prosecutors:

As far as I understand, there were no laws against the risky loans that were underwritten–I have no idea whether there were laws that didn’t allow bankers to rely upon the representations of borrowers.

And the much bigger problem…anyone who has ever seen a prospectus for an offering would recognize many tens of pages of “risk factors” for investors. Those risk factors include everything under the sun to protect those selling the “product”–essentially making RMBS investments “buyer beware”.

So, who do they go after?

Borrowers to committed fraud on their loan applications?
Mortgage brokers who encouraged it?

“What would we know today if people had been put under oath, facing penalties if they lied?”

On what basis could this be done? Without any reasonable evidence that the bankers knew something (and it wasn’t just fraud en masse by borrowers and mortgage brokers), how do they justify bringing charges? Searching their e-mails? Making them answer questions under oath?

Comment by Ben Jones
2015-11-08 03:24:01

‘But, what laws were broken?’

You left out, it’s all so long ago, can’t we just move along?

Good god, there’s millions of examples:

‘Bank of America CEO Ken Lewis has testified that former Treasury Secretary Hank Paulson and current Fed Chairman Ben Bernanke essentially forced him to acquire Merrill Lynch despite evidence of its growing losses. Even though this was certainly done with “America’s best interests” in mind, it’s still a bit troubling. It’s especially troubling because early this year, Merill CEO John Thain was forced out for hiding Merrill’s red ink. But doesn’t Lewis’ testimony reveal that explanation as completely, 100 percent bogus?’

“Did Paulson and Bernanke abuse their authority by ordering Mr. Lewis to go through with the Merrill acquisition, or did Mr. Lewis threaten to back out in order to squeeze more money out of the federal government?” Towns asked.’

‘Bank of America Chief Executive Ken Lewis, the sole witness at the hearing, agreed with lawmakers under questioning that there was pressure from the government to complete the deal despite growing losses at Merrill. “But it was in the context of them thinking it was in the best interests of Bank of America and the financial system,” Lewis said.’

“The threat was not what gave me concern. What gave me concern was that they would make that threat to a bank in good standing,” Lewis said.’

‘Does this mean that Ken Lewis lied to his his shareholders? As I wrote in April, BofA shareholders voted to approve the merger with Merrill on December 5. Bank of America reported Merrill’s loss of $15.84 billion in the fourth quarter on January 16. But Lewis had known that Merrill’s asset sheet was poisonous four months earlierin September, when Paulson and Bernanke were “putting a gun to the head” to Lewis’ head. Wouldn’t that timeline suggest that Lewis certainly did mislead shareholders about Merrill’s balance sheet months before he fired Thain for “concealing” something he already knew?’

‘Was John Thain screwed? It’s pretty clear that Lewis knew about the crap sandwich of assets waiting to emerge in January, but he still had the board vote on the merger in December. When Merrill’s loss emerged even worse than all sides expected, Lewis forced out Merrill’s chief John Thain for hoodwinking him and shareholders. But, as this testimony makes clear, Lewis wasn’t hoodwinked at all. He was completely aware that Merrill was about to implode before the government forced the merger down his throat.’

‘How bad is this for Ben Bernanke/the administration? A few months ago, Megan predicted that the fallout could seal the deal that Ben Bernanke will not be returning as the chairman of the Federal Reserve. Does Lewis’ testimony reveal what everybody on Capitol Hill already knew and had moved on from, or will the BofA/ML scandal balloon into a meme for the administration in light of recent emails revealing that the government pursued similar strong-arm tactics to force a Chrysler-Fiat merger?’

Don’t give me this, “oh, what was illegal?” crap. The fraud and crimes were staggering in scale and I can pull up the proof all day and night.

Comment by Ben Jones
2015-11-08 03:26:06

I had an extra 30 seconds rental watch, here’s another:

WASHINGTON — Senior executives at Fannie Mae manipulated accounting to collect millions of dollars in undeserved bonuses and to deceive investors, a federal report charged Tuesday. The government-sponsored mortgage company was fined $400 million.

The blistering report by the Office of Federal Housing Enterprise Oversight, the result of an extensive three-year investigation, was issued as Fannie Mae struggled to emerge from an $11 billion accounting scandal. Also Tuesday, the housing oversight agency and the Securities and Exchange Commission announced a $400 million civil penalty against Fannie Mae in a settlement over the alleged accounting manipulation.

Of that amount, the $350 million assessed by the SEC — one of the largest penalties ever in an accounting fraud case — will go to compensate Fannie Mae investors damaged by the alleged violations.

The company also agreed to limit the growth of its multibillion-dollar mortgage holdings, capping them at $727 billion, and to make top-to bottom changes in its corporate culture, accounting procedures and ways of managing risk. Thirty executives and employees at the company as well as others who have left — including Daniel Mudd, the current president and CEO — will be reviewed for possible disciplinary action or termination.

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Comment by Ben Jones
2015-11-08 03:28:42

Another few seconds rental watch:

‘ 1/21/2009
The Second Savings And Loan Scandal

The shocks to America’s banking system came one after another. Among the worst blows in 2008 were the meltdowns of IndyMac Bank and Washington Mutual Savings Bank. WaMu’s fall was the largest bank failure in the nation’s history; IndyMac’s was the fourth largest ever.

There were common threads, though, in both calamities. For one, a surge of high-risk lending put borrowers, shareholders and depositors in harm’s way.

The other is anemic oversight by the federal Office of Thrift Supervision (OTS), the agency responsible for overseeing thrifts–or savings and loan associations–as organizations that handle deposits and issue mortgages were once commonly called.

IndyMac’s and WaMu’s unsafe lending grew under the nose of such a toothless watchdog. OTS did little to stop WaMu, IndyMac and other thrifts from engaging in risky behavior–and then failed to respond aggressively to the crises that inevitably followed.

As a result, five thrifts with assets totaling $354 billion collapsed in 2008. Seven more thrifts, which combined hold an additional $350 million in assets, are currently being sold or have somehow become entangled in their parent companies’ bankruptcies.

By comparison, in 1989–the worst year of the original savings and loan crisis–thrifts that failed had assets totaling $135 billion. Over the entire decade of that scandal, from 1986 to 1995, losses amounted to $519 billion in thrift assets. Even taking inflation into account, it’s clear that, before it’s over, the current S&L meltdown will be at least comparable, if not worse, than the first one.

OTS, an agency created in 1989 to clean up that era’s mess, is now presiding over America’s second savings and loan scandal. This second crisis could not have happened without the pliability of OTS, which stood by as thrifts went on a wild lending spree, giving out loans left and right with little concern about whether borrowers could afford them.

Comment by Ben Jones
2015-11-08 03:32:15

I’m not even going to bother with the links, there’s so much:

Freddie Mac Gets Penalty And Rebuke Over Scandal - The ……/market-place-freddie-mac-gets-…The New York Times
Dec 11, 2003 - The settlement and the report may help Freddie Mac, the nation’s … Mae, to recover from an accounting scandal that surfaced early this year.

SEC Charges Goldman Sachs With Fraud in Structuring and ……/2010-5...
U.S. Securities and Exchange Commission
Apr 16, 2010 - The SEC alleges that Goldman Sachs structured and marketed a … performance of subprime residential mortgage-backed securities (RMBS).
The Goldman Abacus Deal - Goldman Sachs CDO - Seven …
This case study on financial ethics discusses the Goldman Abacus deal and The SEC vs. … Goldman Sachs case were comprised of subprime mortgages.
Goldman Sachs charged with $1 bn fraud over toxic sub-prime › Business › Goldman Sachs
The Guardian
Apr 16, 2010 - Securities and exchange commission charges Goldman Sachs with conflict of interest in sub-prime mortgage asset sales. … Tourre, the Frenchman allegedly at the centre of the scandal, was educated at the elite École …

Comment by Ben Jones
2015-11-08 03:45:46

The housing appraisers warned us about the crisis but we ……/housing-appraisers-warnings-fraud...
Jul 11, 2013 - The appraisers’ petition began in 2000 and was public. … external auditors, the credit rating agencies, the SEC, Congress, and President Bush.
Why did the Fed Refuse to Heed the Appraisers ……/why-did-the-fed-refuse-to-heed-the-ap…
Jul 15, 2013 - explained the effort by a very large number of appraisers to combat the … According to the petition, lenders were ‘blacklisting honest appraisers’ and … on mortgage abuses that Congress mandated the Fed to conduct is that …
Appraisers and the Pressure to Inflate Valuations - NYTimes ……/appraisers-and-the-pressure-t...
The New York Times
Sep 2, 2001 - More than 6000 appraisers have signed a petition demanding a ban on … the subject of Congressional hearings and conferences attended by …
[PDF]Appraisers Petition Against “Make The Deal” -
Feb 12, 2001 - Appraisers Petition Against “Make The Deal”. “Its time to protect … “The Appraisal Institute has called for congressional hearings on the lending.
Appraisal fraud - CNN Money…/appraisalfraud/
Jun 2, 2005 - But, as the Appraisal Institute recently testified to Congress, appraisers … have signed a petition asking the federal government to take action.

Comment by Ben Jones
2015-11-08 03:48:27

Mortgage-Backed Securities Fraud - CheatingCulture
Mortgage-Backed Securities Fraud. To outline all the steps involved in how a mortgage becomes a mortgage-backed security and then becomes a source of …
Barclays Investors Seek Class Cert. In MBS Fraud Suit ……/barclays-investors-seek-class-cert-in-mbs-fr...
Barclays Investors Seek Class Cert. In MBS Fraud Suit. By Michael Mello. Law360, Los Angeles (March 10, 2015, 2:55 PM ET) — Stockholders who claim …

US accuses Bank of America of mortgage-backed … - Reuters…/us-bofa-justice-idUSBRE9750ZU20130806
Aug 6, 2013 - The U.S. government on Tuesday filed two civil lawsuits against Bank of America that accuse the bank of investor fraud in its sale of $850 …
$13B MBS Fraud Settlement Between JPMorgan and the … › Financial Firms
Feb 10, 2014 - B MBS Fraud Settlement Between JPMorgan and the US is Under Dispute in New Securities Lawsuit :: Institutional Investor Securities Blog.
B of A Must Face SEC, DOJ Suits Over MBS Fraud | National ……/b-of-a-must...
National Mortgage News
Jun 20, 2014 - Bank of America failed to win dismissal of two government lawsuits in which it s accused of misleading investors about the quality of loans tied…’

NY Sues JPMorgan Chase over Alleged MBS Fraud … › ANO
Appraisal Institute
NY Sues JPMorgan Chase over Alleged MBS Fraud, ‘Astounding’ Losses. New York Attorney General Eric Schneiderman filed a civil lawsuit against JPMorgan …
Allstate Insurance Files Suit Against Goldman For MBS Fraud
Shepherd Smith Edwards & Kantas LTD LLP - Delaware Stockbroker Fraud Attorney - San Jose Securities Fraud Lawyer.
Very quietly, Countrywide, BofA settle 5 investors’ MBS fraud ……/7931-very-quietly-countrywide-bofa-settle-5-investors…
Earlier this month, Countrywide and Bank of America very, very quietly settled securities fraud suits brought by five major investors in mortgage-backed …’

Comment by Ben Jones
2015-11-08 03:52:13

Here It Comes: Defaults Set to Spike as Interest-Only Loans ……/here-it-comes-defaults-set-to-spike-as-interest-only-…
Dec 2, 2014 - Increased Defaults as Interest-Only Loans Recast -Fitch … adjustable interest rates (ARMs), loans that have had interest only … I was a victim of Mortgage Fraud in the early “90’s” & had to walk away from my home & business.
125% Mortgage, Negative Amortization and Interest Only …
Mortgage News Daily
Oct 18, 2004 - A continuation of our series covering Mortgage Fraud and Predatory Lending Practices. 5. Lending More Than a Borrower Can Afford. You’ve ..

Claims of high-pressure sales, fraud at odds with Quicken ……/claims-high-pressu...
Center for Public Integrity
Feb 4, 2011 - Claims of high-pressure sales, fraud at odds with Quicken Loans’ …. These included “interest-only” loans and “negative amortization” loans, …
Interest-only mortgages: They’re baaack ……/interest-only-mortgages-theyre-baaac...
Jul 20, 2015 - It does sound like the parameters around these new interest only loans are pretty … This together with the other massive fraud makes the banks …

Comment by Ben Jones
2015-11-08 03:56:31

How the Bear Stearns Fraud Case Unfolded : NPR › News › Business
Jun 26, 2008 - The FBI showed up on the doorstep of Bear Stearns executive Matthew Tannin on a Friday night early last fall. Agents wanted to talk to him …
Mortgage Fraud: Former Bear Stearns Mortgage Executives ……bear-stearns…on…/5345126
Aug 5, 2013 - Mortgage Fraud: Former Bear Stearns Mortgage Executives Have Plum Jobs on Wall Street. The executives in charge of mortgage securities at …
S.E.C. Reaches Settlement in Bear Stearns Fraud Case ……/s-e-c-reaches-settlement-i…

Suit Charges 3 Credit Ratings Agencies With Fraud in Bear ……/suit-charges-3-credit-rati…

Wall Street Law Blog: Bear Stearns Fraud
Jul 11, 2013 - The collapse of investment bank Bear Stearns in March 2008 was a consequence of a fraudulent scheme that was both appalling in scale and …

SEC Charges Two Former Bear Stearns ……/2008-1...
U.S. Securities and Exchange Commission
Jun 19, 2008 - SEC Charges Two Former Bear Stearns Hedge Fund Managers With Fraud.

Justice Department Investigating Moody’s Investors Service…/justice-department-investigating...
The Wall Street Journal
Feb 1, 2015 - The U.S. Justice Department is investigating Moody’s Investors Service for … targeted S&P nearly two years ago in a $5 billion fraud lawsuit.
Moody’s, S&P And Fitch Accused Of Fraud In Run-Up To ……/moodys-sp-fitch-sued-...
The Huffington Post
Nov 11, 2013 - Some of the same emails were cited in a civil fraud lawsuit brought by the Justice Department against S&P earlier this year. Fitch and Moody’s …
Suit Charges 3 Credit Ratings Agencies With Fraud in Bear ……/suit-charges-3-credit-rati…
The New York Times
Nov 11, 2013 - The action, filed in a New York State court, accuses Standard & Poor’s, Fitch Ratings and Moody’s Investors Service of assigning artificially high …

Moody’s Fraud
A former senior analyst at Moody’s has gone public with his story of how one of the country’s most important rating agencies is corrupted to the core. The analyst, William J. Harrington, worked for Moody’s for 11 years, from 1999 until his resign… (more)
Moody’s, S&P Must Face Fraud Claims in Subprime Suit ……/moody-s-s-p-must-face-fraud-cl...
Bloomberg L.P.
Aug 20, 2012 - Moody’s Corp. and Standard & Poor’s lost a bid for dismissal of fraud claims in a suit by investors claiming the companies falsely assigned …

Comment by Ben Jones
2015-11-08 03:58:56

Lurid Subprime Scams Unveiled in Long-Running Fraud Trial…/lurid-subprime-scams-unveiled-i...
Rolling Stone
Dec 12, 2013 - Lost amid the hoopla over JP Morgan Chase’s record-setting $13 billion settlement this fall was news of another monster court resolution – a …
FBI — Mortgage Fraud…/mortgage-fraud
Federal Bureau of Investigation
These scams hit us right where we live. From foreclosure frauds to subprime shenanigans, mortgage fraud is a growing crime threat that is hurting homeowners, …
SEC Enforcement Actions Related to the Financial Crisis…/enf-actions-fc...
U.S. Securities and Exchange Commission
American Home Mortgage - SEC charged executives with accounting fraud and … company’s deteriorating financial condition as the subprime crisis emerged.

Comment by Ben Jones
2015-11-08 04:07:33

Case Study: The Collapse of Lehman Brothers - Investopedia…/09/lehman-brothers-collapse.asp
On September 15, 2008, Lehman Brothers filed for bankruptcy. With $639 billion in assets and $619 billion in debt, Lehman’s bankruptcy filing was the largest in …
‎What is a subprime mortgage? - ‎2007-08 Financial Crisis - ‎Who Is To Blame For The
The Dearth of Ethics and the Death of Lehman Brothers…/the-dearth-of-ethics-and-the-death-of-lehman-…
Not only was the Lehman Brothers bankruptcy the largest bankruptcy case in United States history, but it also came after repeated assurances from the …
The case against Lehman Brothers - CBS News…/the-case-against-lehman-brothers-19-08...
CBS News
Aug 19, 2012 - Steve Kroft investigates the collapse of Lehman Brothers, which triggered a chain reaction that produced the worst financial crisis and economic downturn in 70 years. … (CBS News) It’s hard to overstate the enormity of the 2008 collapse of Lehman Brothers. … Steve Kroft investigates …
Bankruptcy of Lehman Brothers - Wikipedia, the free …
Financial services firm Lehman Brothers filed for Chapter 11 bankruptcy protection on September 15, 2008. The filing remains the largest bankruptcy filing in …
‎Background - ‎Bankruptcy filing - ‎Impact of bankruptcy filing - ‎Neuberger Berman
Lehman Brothers Accounting Scandal - Huffington Post…/lehman-brothers-accou...
The Huffington Post
Read More: Lehman Brothers Accounting Scandal, Lehman Brothers Repo 105, Banking … Lehman Brothers Exploited Fault in Global System to Hide Millions.
The Death Of Lehman Brothers: What Went Wrong, Who Paid
International Business Times
Sep 13, 2013 - Five years after excessively risky behavior brought Lehman Brothers down, the company survives as a ghost of its former self.

Comment by Ben Jones
2015-11-08 04:11:16

Staggering Loss of Black Wealth Due to Subprime Scandal ……/staggering-loss-black-wealth-due-…
The American Prospect
Oct 13, 2014 - And despite promises of help by President Barack Obama and lawmakers, seven years after the housing bubble burst, the county’s foreclosure …
Liar Loans Pop up in Canada’s Magnificent Housing Bubble ……/canadas-highly-touted-conservative-mortgage-standard…
Jul 30, 2015 - For a long time, the conservative mortgage lending standards in Canada, including a slew of new ones since 2008, have been touted as one of …
Hey, Barney Frank: The Government Did Cause the ……the…housing…/249903/
The Atlantic
Dec 13, 2011 - This continued through the 1990s and 2000s until the housing bubble–created by all this government-backed spending–collapsed in 2007.
7 Things You Need to Know About Fannie Mae and Freddie ……/housi...
Center for American Progress
Sep 6, 2012 - Starting in 2006 and 2007—just as the housing bubble was reaching its peak—Fannie and Freddie increased their leverage and began …
Freddie Mac: What it did, what went wrong - Jan. 24, 2012
Jan 24, 2012 - Did the two firms create the housing bubble that caused the financial … “What killed Fannie and Freddie is the housing market went to hell and …
Officials Cover Up Housing Bubble’s Scummy Residue - The ……/officials-cover-housing-bubbles-scummy-resi...
Sep 14, 2015 - This foreclosure fraud scandal was exposed in 2010, and acquired a … Like many homeowner loans purchased during the housing bubble, …

Comment by Ben Jones
2015-11-08 04:18:59

Alan Greenspan owes America an apology | Dean Baker … › Opinion › Alan Greenspan
The Guardian
Oct 28, 2013 - Alan Greenspan will go down in history as the person most responsible for the enormous economic damage caused by the housing bubble and …
Greenspan Says Fed Didn’t Cause Housing Bubble
Apr 8, 2008 - Former Federal Chairman Alan Greenspan told CNBC he had little to do with the housing bubble or credit crisis despite criticism the Fed kept …
Bernanke: There’s No Housing Bubble to Go Bust › … › Federal Reserve
The Washington Post
Oct 27, 2005 - Bernanke: There’s No Housing Bubble to Go Bust … challenge to whoever succeeds Fed Chairman Alan Greenspan after he steps down Jan.
Krugman’s Call for a Housing Bubble | Mises Daily…/krugmans-call-housing-bu...
Ludwig von Mises Institute
Feb 21, 2013 - Paul Krugman in 2002: “Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

Comment by Ben Jones
2015-11-08 04:20:49

Is L.A. in another real estate bubble? - LA Times…/la-oe-0818-yu-la-housing-bubbl...
Los Angeles Times
Aug 20, 2015 - As home prices rise ever higher in Los Angeles, some are beginning to wonder if the region is in another housing bubble, one that’s ready to burst. … Along with some short-term fluctuations, we can see four major housing price cycles in Los Angeles since 1975: … Bear market (1980 Q4 to …
Is There A Housing Bubble Ready to Burst? 9 Economists ……real-estate/economists-weigh-in-on-the-housi...
Aug 17, 2015 - Real estate has exploded recently, with strong cash flow and low interest rates producing record high prices all over the world. The housing …
Soaring home prices not a ‘bubble’: Realtors -…/soaring-home-prices-not-a-bubble-realtors.html
Jun 22, 2015 - Near their highest levels ever, median home prices are still not reflecting a “bubble.” A housing economist explains why.
This Isn’t a Housing Bubble: Here’s Why | Realtor Magazine › News & Commentary › Daily News
Sep 16, 2015 - Home prices are rising rapidly, but economists are deflating concerns that another “housing bubble” is brewing. A recent report from CoreLogic …
No Housing Bubble in Sight | Realtor Magazine › News & Commentary › Economy
Statistically speaking, housing is on a roll. Year-to-date home sales are up 6.3 percent and prices in May were 7.9 percent higher than a year earlier. The trends …
The Housing Bubble Blog
The Housing Bubble Blog
Ben Jones examines the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole. Entries typically cover a …

I’ll leave it at that.

Comment by ProxyServer
2015-11-08 06:49:42


There, now when anyone in the future needs to find an awesome chronology of the fraudulent meltdown all they need to do is Google housingbubbleblog and supercalifragalisticexpialidocious.

Bonus that it was Rental Fraud spanking that inspired it.

Comment by Prime_Is_Contained
2015-11-08 10:27:37

Wow, Ben—quite a tour de force.

Comment by Karen
2015-11-08 11:00:21

Wow, and there it is. I especially like the links to the stories about the appraisers’ petition to stop the fraud. Notice the date on which they started this petition: the year 2000. If enouh appraisers got together on a petition like that, it means this had already been going on for a loooooooong time. The housing bubble started way further back than most are willing to admit. Decades ago. A lot of people think banking is at the center of the fraud, and certainly none of this could have happened without the Federal Reserve, but real estate is at the heart of it. It’s all about the land, just like in one of my favorite movies, Chinatown.

Comment by Professor Bear
2015-11-08 04:30:59

Thanks to RW for inspiring Ben to make some awesome posts documenting the recent Wall Street crime spree!

Comment by Mafia Blocks
2015-11-08 04:45:43


All that crime….. and then there’s Rental_Fraaaaaaaaud :mrgreen:

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Comment by ProxyServer
2015-11-08 06:53:04

By the way, you can also blame some of the no prosecutions on the war on terror. White collar fraud squads were decimated after 9/11 in the ever elusive search for hidden terrorists in this country (so elusive they started making their own).

I say, some, not all because they did establish this big Enron like task force in DC but nothing ever came of it.

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Comment by Neuromance
2015-11-08 10:41:28

William K. Black chronicles this stuff. He wrote, “The Best Way To Rob A Bank Is To Own One.” Here’s his Twitter feed:

The issue is complex, and it is that complexity that hides the wrongdoing. This is not an accident. As time goes on, when someone says, “What exactly wrong was done?”, few people have quick answers off the top of their heads. I think it would be worthwhile to have a few of the more egregious examples available as a response.

For a historical look, here are some documentaries:

1) The Inside Job.

2) PBS Frontline’s The Untouchables

Here’s an interesting link off of Black’s Twitter:

Comment by Patrick
2015-11-08 18:06:11

Rental Watch

Wall St sold consolidated products. Each product was sold by the same broker more than once. That is where the extreme profits came from for the broker and the bank.

The broker misrepresented the product, several times, and it is easy to prove.

It was a Ponzi scheme that failed as soon as the Montreal Exchange failed.

Comment by Ben Jones
2015-11-07 11:26:39

I found this on the internet:

‘justice is not the same as revenge. it should be to make sure that no crime goes unpunished in the hopes that the crime will not be committed again.’

It’s incorrect though. In the US the system is biased in favor of the accused so that the chances of an innocent being wrongly convicted is minimized. If crimes were committed, these people didn’t face an unfair consideration of the facts. Let’s not forget what Holder said; he was concerned the financial system couldn’t withstand the prosecutions. That Mr Holder, is not your choice to make.

Comment by Blue Skye
2015-11-07 12:44:25

His job was to uphold the law, not save the status quo.

A country based on laws is not saved by breaking the laws.

Comment by Raymond K Hessel
2015-11-08 08:52:11

The .1% are not subject to the same laws as the 99%. Much like any other kleptocracy, in America you get the justice you pay for.

Comment by Justme
2015-11-07 12:29:03

The study is flawed. Only a small subset of Wall-streeters that bought houses were also in the specialized business of MBS (mortgage-backed securities).

Also, what Ben said. That wall streeters lost more money is irrelevant What matters is CRIMES committed.

Further: wealthy people always lose more money (in absolute dollar/person terms) when markets go down. Yet antger problem with the “study”.

Comment by Mafia Blocks
2015-11-07 12:40:19

And it also leaves out the fact that millions lied on mortgage applications.

Comment by taxpayers
2015-11-08 05:19:43

I blame the borrowers
They’re still lying and getting bailed
The next “crisis” is forcing taxpayers to pay for kids la college degrees

Comment by Professor Bear
2015-11-07 12:36:42

“For six years, while brilliantly disguised as the attorney general of the United States, he was actually working deep undercover, DiCaprio in The Departed-style, as the best defense lawyer Wall Street ever had.”

And he brilliantly covered it up by stirring up racial unrest and anti-law enforcement sentiment in places like Ferguson…

How utterly despicable!

Comment by Professor Bear
2015-11-07 12:43:29

US | Fri Oct 23, 2015 6:26pm EDT
Related: U.S.
‘Chill wind’ in policing fueling national murder spike: FBI head
CHICAGO | By Fiona Ortiz

Murder rates are soaring this year in many U.S. cities partly because police are holding back from aggressive tactics, fearful of being taped on smartphones and accused of brutality, FBI Director James Comey said on Friday.

“Something deeply disturbing is happening in places across America. Far more people are being killed in many American cities, many of them people of color, and it’s not the cops doing the killing,” Comey told a group of students at the University of Chicago Law School.

He said the spike in murders across the country, in cities from Sacramento, California to Chicago to Washington, D.C., comes after homicides fell to historic lows in 2014.

“Part of the explanation is a chill wind that has blown through law enforcement over the last year and that wind is surely changing behavior,” Comey said. “In today’s YouTube world, are officers reluctant to get out of their cars and do the work that controls violent crime?”

Comment by scdave
2015-11-08 07:56:28

fearful of being taped on smartphones and accused of brutality, FBI Director James Comey said on Friday ??

Whats to fear if you are not doing anything wrong ?? Thats BS….

Comment by Raymond K Hessel
2015-11-08 08:50:29

I would like to see the DoJ and FBI address legitimate citizen fears of being victimized by thugs with badges.

Comment by Jingle Male
2015-11-07 12:47:26

I wouldn’t give Holder too much credit. He didn’t do anything all the other US Attorneys General didn’t do before him…..

Comment by Ben Jones
2015-11-07 13:15:05

‘Arendt’s subtitle famously introduced the phrase “the banality of evil,” which also serves as the final words of the book. In part, at least, the phrase refers to Eichmann’s deportment at the trial as the man displayed neither guilt for his actions nor hatred for those trying him, claiming he bore no responsibility because he was simply “doing his job” (”He did his duty…; he not only obeyed orders, he also obeyed the law.”

Comment by Raymond K Hessel
2015-11-08 08:55:43

95% of the American electorate sanctioned crony capitalism and exempting the .1% from any kind of consequences for their crimes and frauds with their votes in ‘08 and ‘12. This is mobocracy in action, and shows how debased our population has become.

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Comment by Professor Bear
2015-11-07 12:39:36

Did Holder’s War on Police have any undesirable effects?

Comment by Professor Bear
2015-11-07 12:40:36

Post Nation
DEA chief joins FBI chief in giving credence to ‘Ferguson effect’

By Todd C. Frankel November 4
Chuck Rosenberg, pictured in 2007. (Getty Images)

Chuck Rosenberg, head of the U.S. Drug Enforcement Agency, said Wednesday that he agrees with FBI Director James Comey that police officers are reluctant to aggressively enforce laws in the post-Ferguson era of capturing police activity on smartphones and YouTube.

“I think there’s something to it,” Rosenberg said during a press briefing on drug statistics at DEA headquarters in Arlington. “I think he’s spot on. I’ve heard the same thing.”

The comments offer more support for the theory that, faced with increased scrutiny, the nation’s police officers are pulling back. That theory has been advanced by Comey, but disputed by President Obama, former attorney general Eric Holder and the National Fraternal Order of Police — all of whom have said it is offensive to suggest that police officers aren’t doing their jobs.

Like Comey, Rosenberg cautioned that it’s too early to prove that the “Ferguson effect” is at work in spikes in crime and homicides seen in some U.S. cities. But the DEA administrator said he’s heard from many in law enforcement who think the chilling effect is real, and he called for more study of the issue.

Comment by Professor Bear
2015-11-07 12:44:42

“…it is offensive to suggest…”

Ergo it can’t be happening?

Comment by taxpayers
2015-11-08 05:23:21

Add neutered police x2

Comment by AmazingRuss
2015-11-08 18:52:18

If there were a god, this wouldn’t be happening.

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Comment by Mafia Blocks
2015-11-08 19:06:14

You’re disillusioned Lib.

Comment by scdave
2015-11-08 07:59:53

all of whom have said it is offensive to suggest that police officers aren’t doing their jobs ??

Tell it to the 6 year old boy…..

Comment by Raymond K Hessel
Comment by FL_Skeptic
2015-11-07 13:11:57

The lack of prosecution has resulted in the repetition of the criminal behaviors. There is criminal mentality at work in the way we are being overly financialized. Now that they have had some practice on blowing a bubble to failure, they know better how to protect themselves from liability.

When it all start unraveling, what is it going to take to start putting these guys in jail?

Comment by Blue Skye
2015-11-07 19:16:32

The problem is that the guys in the club see the financialization as the good. Traditional morals don’t enter into their thinking. At some point a revolution is required.

Comment by FL_Skeptic
2015-11-08 09:40:19

The problem is systemic and goes back to NAFTA and the loss of productive manufacturing jobs. We were supposed to keep IT and Finance because they were some of the best paying jobs. Now it is the main way smart, hard working people make money. All that hard work going into making a monstrous system of wealth acquisition from the productive. The NWO is a nightmare. Central banking is a failure. Now we have Obozo and the TPP that was just noticed to Congress. More horrors to come for the populous.

Comment by Mafia Blocks
2015-11-07 13:12:53


Keep in mind all the fraudulent housing transactions and appraiser fraud from 2009-2015 that has yet to be acknowledged and uncovered.

Comment by azdude
2015-11-07 17:08:05

if you have a willing seller and a willing buyer that is market value.

Comment by Senior Housing Analyst
2015-11-07 17:19:09


MT Pockets aren’t willing buyers.

Comment by Senior Housing Analyst
2015-11-07 13:29:49

Rocklin, CA Housing Craters; Prices Fall 5% YoY

Comment by Ben Jones
2015-11-07 17:35:34

‘New home sales were off sharply in September, with the number of new home closings falling 27 percent from 2014, a monthly report from housing research firm Metrostudy shows. The data is based on a survey of 23 homebuilders, which account for about 65 percent of the new single-family housing activity in the Houston market according to third-quarter starts activity.’

‘To adjust to the softer demand, builders constructed 15 percent fewer spec homes in September on a year-over-year basis. The inventory of finished, vacant homes was up “a shocking” 38 percent over last year, Metrostudy said.’

‘Another indication of the slower market is that fewer Houstonians are out shopping for new homes. Buyer traffic declined 12 percent in September, compared with the same month a year ago, Metrostudy said.’

Comment by Senior Housing Analyst
2015-11-08 04:59:25

North Dallas, TX Housing In Tailspin; Prices Collapse 30% YoY

Comment by Ben Jones
2015-11-08 05:26:57

Priddis, Alberta Luxury Homes Sell For Less Than Half Of Asking Price At Auction

Comment by taxpayers
2015-11-08 05:54:07

Zillow avoiding neighborhood results in oil patch.
My hood clipper a half
% after being raised 3% last month. This part makes sense w morts going up.
The 3% increased prediction never made sense.

Comment by Mafia Blocks
2015-11-08 06:14:33

TX, FL, CA are cratering.

Comment by FL_Skeptic
2015-11-08 09:31:48

I am definitely seeing more and more evidence that we are topped out here in Palm Beach County, Fl. The info on sales volumes and prices for November is still coming in, but one good tell is the rental prices on craigslist. There are a lot of brokers manipulating the high end, so I look for 2 bdr apartments under $1000/mo. And even though this is the start of the snowbird season, there are a lot more good deals this weekend. Check this out. Boca Raton is about 60 miles north of Miami:

Comment by Ben Jones
2015-11-08 09:56:03

cats are OK - purrr
dogs are OK - wooof
no smoking
wheelchair accessible

Nice yard. I’ll add “painted while blind drunk”.

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Comment by Senior Housing Analyst
2015-11-08 05:57:47

36,091 nearby properties found Houston, TX Real Estate and Homes for Sale

10,518 nearby properties found Houston, TX Price Reduced Homes for Sale

29% of Houston sellers lowered their price at least once

Comment by taxpayers
2015-11-08 06:43:24

30 year now over 4%
Decline to accelerate?

Comment by taxpayers
2015-11-08 06:51:48

30 year now over 4%
Decline to accelerate?
Counties making big tax grabs as they see the end of the ‘re tax gravy train.

Comment by Mafia Blocks
2015-11-08 07:30:54

“My city is infested with corrupt realtors. How can I prosecute them for their white collar crimes?”–how-can-2094626.html

Comment by Karen
2015-11-08 11:24:09

Best question ever. True everywhere.

Comment by Raymond K Hessel
2015-11-08 08:46:09

The central bankers who give us the tech and housing bubbles are still up to their usual mischief.

Comment by Ben Jones
2015-11-08 09:30:29

‘Maybe it’s my sense of humor, but this recent comment by Richard Cordray, director of the Consumer Financial Protection Bureau, made me chuckle: “Despite strong protections that have been put in place to protect homeowners, this month’s complaint report shows consumers are still having problems when dealing with their mortgages.”

I’d like to think that all the federal government has to do is snap its collective fingers and all our problems will go away, but I wasn’t born yesterday. Housing finance is a $10 trillion business and, after covering real estate since my first planning commission meeting in fall 1967, I get the feeling that it has a mind of its own.’

‘As of Sept. 1, the bureau had handled 192,500 mortgage-related complaints. A familiar one regards continued problems experienced by homeowners trying to prevent foreclosure. More than 50 percent of mortgage complaints have to do with the problems that consumers face when they are unable to make their payments.’

‘Consumers report experiencing confusion and frustration about where to make their payments when their loans are transferred. And when the loan transfers occur, consumers complain that their payments often increase unexpectedly. They also say that they do not feel properly informed about their loans being transferred.’

‘Having trouble making payments is another biggie. Nearly one-third of mortgage complaints came from consumers saying that they have trouble making the proper payments on their loans. They describe mortgage companies not accepting payments of anything less than the full balance owed, or finding that their payments were not properly applied despite their instructions.

Comment by Ben Jones
2015-11-08 13:29:41

‘An attorney for the former president of a real estate development firm that collapsed in the wake of an investigation by The Virginian-Pilot asked a federal judge Monday for leniency regarding a $2.5 million fraud. It didn’t work. Cary M. McEntee, 58, of Virginia Beach received the maximum sentence - five years in federal prison - when he was sentenced Monday in U.S. District Court in Grand Rapids, Mich.’

‘McEntee - who also was ordered to pay full restitution - pleaded guilty earlier this year to one count of bank fraud. According to court documents, the charge stemmed from McEntee’s time heading CM Development. The company and its investors owned more than 250 properties across Hampton Roads at its height in 2007.’

‘A Pilot investigation at the time revealed that roughly half of the properties were vacant and rotting while McEntee continued to resell them to a group of investors who signed for ever-larger bank loans. The scam helped McEntee finance a million-dollar house in Virginia Beach and several luxury cars.’

‘Following the newspaper’s report, the FBI launched an investigation, and McEntee and his company filed for bankruptcy. The $9 million case ended in 2010 with investors and creditors receiving less than a penny for every dollar owed.’

‘Criminal charges were filed in April. The case was prosecuted in the Western District of Michigan, where one of McEntee’s co-conspirators lived and worked. Court documents said McEntee manipulated the banking industry between 2005 and 2007 to secure the loans. For a fee, straw buyers pretended they were buying the properties and signed mortgage paperwork. The loan proceeds were used to pay members of the conspiracy, documents said.’

‘The scheme was repeated at least 35 times, with lenders issuing almost $4.2 million in loans. Documents put the final loss at about $2.5 million.’

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