Tucker Eskew

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staying on topic

I think this should be deleted as it isn't specific to subprime issues: Gerald P. O'Driscoll former vice president at the Federal Reserve Bank of Dallas stated that Fannie Mae and Freddie Mac had become classic examples of crony capitalism. Government backing let Fannie and Freddie dominate the mortgage-underwriting. "The politicians created the mortgage giants, which then returned some of the profits to the pols - sometimes directly, as campaign funds; sometimes as "contributions" to favored constituents."

On April 18, 2006 home loan giant Freddie Mac was fined $3.8 million, by far the largest amount ever assessed by the Federal Election Commission, as a result of illegal campaign contributions. Much of the illegal fund raising benefited members of the House Financial Services Committee, a panel whose decisions can affect Freddie Mac. [1]

BoE govenors warning last June

This may be worth putting in somewhere - Mervyn King June 2007 - "The development of complex financial instruments and the spate of loan arrangements without traditional covenants suggest another maxim: be cautious about how much you lend, especially when you know rather little about the activities of the borrower.

It may say champagne - AAA - on the label of an increasing number of structured credit instruments.

But by the time investors get to what's left in the bottle, it could taste rather flat. Be cautious about how much you borrow is not a bad maxim for each and every one of us here tonight."

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/03/ccom103.xml

TED Spread graphic

I like the TED spread chart. But I am curious where the data comes from. Is the data source cited? If so, I guess I missed it. If not, can the contributor add a citation? Bond Head (talk) 11:47, 3 October 2008 (UTC)

support - You are right that graph is unsourced, unless a source is added that graph will be removed. EconomistBR 15:22, 3 October 2008 (UTC)

I added one that is sourced.Farcaster (talk) 03:52, 8 October 2008 (UTC)

OpEd or another Inconvenient Account of the Truth?

HAHA touche, Brutus! Shall we destroy Pliny's accounts of the destruction emanating from Vesuvius as well? Do not belittle the power of primary sources. I have not yet begun to write. This is now listed as current event. "He who controls the present controls the past and he who controls the past controls the future." - George Orwell. I look forward to going through all of the Financial Times articles I have saved up since November. The Truth about this despicable Leveraged Buyout of the American Public will manifest itself over the next few months. It will be documented and digitized for everyone's edification. Best Regards. DavidMSA (talk) 20:09, 19 March 2008 (UTC)

A guy on Bloomberg who advises Senator McCain said too much regulation caused this whole mess. I thought I heard it all until I heard that one. He's from AEI, which is an anti-regulation think tank in need of some horsepower. Got a good chuckle from that. You're at least a well-read guy. If you have a series of sources that develop an alternate hypothesis on how this came about, perhaps write it as a separate article. We can then add a paragraph to this article and link it in. Traffic on this article is extremely high based on the number of edits recently, so it will get some visibility without distorting this article, which is approaching 200 sources now. This is one of the best articles for starting to research this topic and hence its #1 Google search position on the topic. Further, there is a related timeline article that could use an update. We could use your help on that if you want to contribute.Farcaster (talk) 23:28, 19 March 2008 (UTC)

Thank you my friend. It is interesting that you bring up a McCain adviser, since McCain was prevalent in the Keating Five scandal which was instrumental in 'opening the floodgates' for the S&L scandal to come rushing through in the late 80s. I am working on a book which will draw parallels between both scandals and demonstrate that the problems derive from the way banks securitized the debt as well as the weakness in the housing market. It is interesting to note that states which had a ton of regulation for issuing mortgages did not see such a destructive 'bubble' effect in their real estate markets. When I worked at Countrywide we were discouraged from doing loans in Texas due to the restrictive underwriting guidelines for the state. The no income/no documentation loans were super easy to get in places like Florida and California. Furthermore the role of home appraisers in this whole mess is completely overlooked and I will have some sources to cite on that, since I have no professional experience in that field. I will start some other topics after Easter and then we can work on tying them all into this master article. What will be interesting is if/when the debt which was securitized from prime loans starts to get hit, or if there is a serious problem with the Credit Default Swap market. I will post some interesting information from the CBOT website on this talk page for everyone can take a gander at, I need to edumacate myself on my Wiki technique. For now I recommend checking out this list:

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1048+50088,00.html

Then reference that list against this one:

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1048+55035,00.html

I'm not a CPA, just a peon futures trader but these lists are showing everyone who was CDS exposure. I predict that the non-FOMC entities with CDS exposure are going to experience 'liquidity' issues (like Bear Sterns) and get snapped up by the FOMC-member entities at super low prices. This happened with JPM buying Bear Sterns on the US taxpayers' dime. Now I need to do more research but I bet that these 14 or 15 companies that are being 'investigated' (like Lehman) are either going to run into 'liquidity' issues or be scandalized to the point that they get super cheap and then the FOMC-member banks can buy their assets below market value, thus gaining assets that will help to offset the CDS exposure for all the firms involved.

If the CDS future were trading more freely (I'm pretty well-connected at the CBOT and no one will talk to me about this) then the yahoos in Chicago would have too much control over such a big debt market, which is not what the folks in NYC and the FOMC want to see happen. A la prossima =) DavidMSA (talk) 17:07, 20 March 2008 (UTC)

Rationale for deleting the write-down table

Bloomberg posted a complete table containing all subprime related write-downs and losses. http://www.bloomberg.com/apps/news?pid=20601087&sid=aK4Z6C2kXs3A&refer=home Because of Bloomberg's table we now had 2 options:

1. -Quote Bloomberg's write-down number and delete our table since it is now redundant and incorrect?
2. -Copy, which is illegal, Bloomberg's table since it's far more complete and has the correct write-down numbers? Our numbers are in most cases summations which if kept would constitute original research.

I am in favor on Option 1. Get Bloomberg's write-down number and delete our table since:

• Our table is around $80 billion below Bloomberg's number.
• Our table occupies too much space and distorts the text format.
• Our table has become a source citation hell with over 70 source citations, making the article heavier.
• The table is hard to keep up to date and it is, unfortunately, incomplete.
• Our table has number disparities that are very hard to explain. For example, Bloomberg's table doesn't include AIG's $11 billion write-down.

Deleting the entire table is kinda sad since I worked hard into keeping it updated since November 2007, at that time the write-downs totaled just $20 billion. Basically all that time was wasted now ouch.... but it has to be done, the time has come to let go of it so I deleted it.

I many ways I am glad though, having to visit Google News every other day to check for news was a real pain and now I can move on. ⇨ EconomistBR ⇦ Talk 07:02, 20 May 2008 (UTC)

FOR FUTURE REFERENCE - HERE IS THE LAST PAGE REVISION CONTAINING THE OLD WRITEDOWN TABLE:[2]

EconomistBR, I wanted to keep it in view for two reasons. One is that Bloomberg's table is unsourced, whereas yours documented sources for the individual figures. Also, Bloomberg's own figures will eventually become obsolete. Mporter (talk) 09:40, 9 June 2008 (UTC)

I have little doubt that Bloomberg's table are sourced on the actual bank reports rather than on News articles since Bloomberg has very easy access to information. Our table is sadly no longer the best estimation available.

Another thing, Bloomberg updates that table every few months or so, we should expect an updated version of that table in a few months.⇨ EconomistBR ⇦ Talk 20:01, 17 June 2008 (UTC)

In fact, I would consider recreating it as a separate page, e.g. 'List of writedowns in 2007 credit crunch'. Bloomberg's table can be just another source of figures. If it disagrees with the Wikipedia figure, that can be noted, but again, all the Wikipedia numbers are sourced, all the Bloomberg numbers are unsourced. Mporter (talk) 09:44, 9 June 2008 (UTC)

As I said, most of our numbers are simply summations of 3Q/07, 4Q/07 and 1Q/08 writedown numbers, they are not sourced on anything. I kept them because they were the best estimation available until the Bloomber table came along.⇨ EconomistBR ⇦ Talk 20:01, 17 June 2008 (UTC)

I appreciate your selflessness and integrity EconomistBR, but have you considered that Bloomberg copied your table, then made a couple of changes to claim it as their own ? ;-) -- John (Daytona2 · Talk · Contribs) 09:48, 9 June 2008 (UTC)

Thanks for the compliment. Bloomberg would never do that, they have instant access to whatever information they may need, just imagine their database. Also their list is way more complete, it has information on banks that I've never heard of. ⇨ EconomistBR ⇦ Talk 20:01, 17 June 2008 (UTC)

I've restored it as a new page, List of writedowns due to subprime crisis, and linked to it from "Effects". It's a valuable resource for researchers, because, as I said, the numbers are individually sourced. Better to keep it around, and update it when someone has the energy to do so. Mporter (talk) 10:15, 9 June 2008 (UTC)

Ok, I just want to warn that the table is incomplete and the table's numbers are very unreliable since they are a product of summations which were themselves based on numbers quoted from News articles, and those numbers may vary significantly from News source to News source. This fact means that those numbers are basically unsourced.

I only kept them because they were the best estimation available at the time. Neither CNNMoney, nor BBC nor the NYTimes produced lists as complete as ours, had any of them produced a more complete list I would have taken this same decision months ago.

I completely vouched for that table's accuracy until the Bloomberg's table came along.

I do not vouch anymore for those numbers since they are no longer the best estimation available. ⇨ EconomistBR ⇦ Talk 20:01, 17 June 2008 (UTC)

Delete Countrywide loan section?

Does the section on the Countrywide loan scandal really belong in this article? It's not really about the downturn in subprime mortgages, except the tenuous connection that some of the politicians that got Countrywide loans have some authority over financial markets policy. Its inclusion also tends to sensationalize the article and appears politically motivated. At the very least, some facts need to be corrected, which I will do. Bond Head (talk) 16:46, 1 July 2008 (UTC)

Countrywide is widely used as the exemplar of what went wrong in the sub-prime market, so it's quite reasonable that it's included in the article. And, so long as it doesn't dominate the article, a bit on the politics around policies seems very appropriate to me. (The section would make A LOT more sense if it didn't stand alone--if there was some stuff about Countrywide itself to give it context.) Cretog8 (talk) 17:11, 1 July 2008 (UTC)

Countrywide is an exemplar of the subprime crisis only to the extent that they made and securitized lots of subprime loans and lost a lot of money in that business, not as a result of making favored loans to Chris Dodd or Jim Johnson. The connection between the subprime downturn and the favored loans is tenuous at best. If Countrywide belongs in the article, somebody should write about their former subprime business, not about loans to politicians. Bond Head (talk) 17:33, 1 July 2008 (UTC)

I'm mixed on this. My feeling is that the section providing a piece of political context is very valid. BUT, if it stands alone without the context on why we should care about Countrywide in the first place, then it's WP:POV via WP:UNDUE and general non sequitur. Cretog8 (talk) 17:44, 1 July 2008 (UTC)

I think this is an important part of the subprime crisis and should stay in. The loans are to politicians in positions related to the subprime mortgage crisis. The United States Senate Committee on Banking has jurisdiction over matters related to banks and banking. Chris Dodd is the chairman of that committee. This is a banking related crisis. Jim Johnson was in charge of Fannie Mae. The government sponsored enterprise that make mortgage loans and loan guarantees and is important in securitization of mortgage-backed security bonds. Also related. Sure the section can be improved, but it shoud stay. (Halgin (talk) 00:54, 2 July 2008 (UTC))

I think this section should definitely be deleted. The FOA loans are appropriately discussed in the articles on Countrywide Financial and Angelo Mozilo. There is no evidence that the VIP loans to politicians have any relationship to the subprime mortgage crisis. Malatinszky (talk) 21:39, 26 July 2008 (UTC)

That was my thinking. There are plenty of politicians that didn't get loans from Countrywide, like Barney Frank and Paul Kanjorski, who have lots of influence over hosing and capital markets policy. It's a long stretch to say that the loans from Countrywide to Chris Dodd ot Jim Johnson had a significant influence on housing or capital markets legislation related to the crisis. Bond Head (talk) 20:19, 29 July 2008 (UTC)

Congressional ethics panel is examining allegations related to Chris Dodd and Kent Conrad. Halgin (talk) 02:28, 30 July 2008 (UTC)

Continuing effects on equity markets

There needs to be an elaboration of the effect on global stock markets as a result of this crisis. Someone reading this article, when reading the section entitled "Effect on stock markets," would be led to believe that equity markets sold off from July 17, 2007 until August 15, 2007 and then that was it, when in fact equities have continued to sell off since the summer of 2007 as a result of, among other things, the blowup in subprime mortgages and the myriad of credit problems it has caused. Commodities, especially oil, have continued to rally strongly as well for the same reasons. Clinevol98 (talk) 06:44, 4 July 2008 (UTC)

I agree that section is problematic, I think the best solution is to get a "financial institutions index" and compare it before and after the crisis. We could also do the same thing to a "house contruction index".

The recent downturn on the stock market got contaminated by the oil prices, this will make the task of assessing the impact of the subprime crisis even harder. That's why i think we should focus on the "financial institutions index".

⇨ EconomistBR ⇦ Talk 17:08, 10 July 2008 (UTC)

We can state that the stock markets continued to sell off since the summer of 2007 and that the subprime was one reason and high commodities prices was another. I agree with EconomistBR a little information on the financial institutions and house construction indexes would be good. May be a good place for a chart. Halgin (talk) 13:18, 12 July 2008 (UTC)

Effect on global economy??

Let's get real here, there has been equity contagion and some financial contagion by this crisis, but for the most part it is a United States financial crisis. Where has been this global effect on economic growth?? Yes Europe is slowing down but Asia and Latin America have not even seen as much as a blip from the Subprime Crisis. So is it really accurate to state that "the crisis quickly spread throughout the world" ?? In fact it is exports of US goods to growing world economies in Asia, LatAm and Middle East, and to Europe and Japan which have stronger currencies that has helped the US from falling into a deep recession. "It has yet to be seen if the US's stimulus plan will be enough to help the global economy too"... The global economy actually is helping the US, not the other way around. That sub-section should be edited. The dugout (talk) 15:30, 20 July 2008 (UTC)

Agreed that its essentially a US crisis, but it has affected many other economies in Europe & Asia. 'throughout the world' is a bit dramatic - I agree on editing this to make it more 'global' in point of view than a US-centric piece. wildT (talk) 06:53, 1 August 2008 (UTC)

HOPE for Homeowners Act of 2008

I'm somewhat surprised that there's not even an article about this, let alone mention here. This really isn't my area of expertise, but I'll try to add some text tonight. Simesa (talk) 02:39, 4 August 2008 (UTC)

Found the Act - it's in Housing and Economic Recovery Act of 2008 and I'll make a re-direct to that article. Simesa (talk) 02:49, 4 August 2008 (UTC)

WTF???

Why is Barney Frank or Chris Dodd either mentioned in this entire article? Or the rest of the democrats that fought legislation to regulate Fannie and Freddie back in 2003? Why is the only tid bit about pushing legislation to reform this companies reflect Ron Paul?

I suggest a complete re-write leaning blame towards Barney Frank, Chris Dodd, and other key democratic players, along with Republican Roy Blunt. 68.143.88.2 (talk) 18:48, 9 October 2008 (UTC)

Oh, but luckily that Obama campaign had enough sense to "let go" of their VP Selection Committee Chairman, Jim Johnson, since he was the VP of the largest. http://articles.latimes.com/2008/jun/12/nation/na-johnson12 68.143.88.2 (talk) 19:13, 9 October 2008 (UTC)

I always enjoy chatting with Republicans, who love to make up garbage, like tax cuts increase government revenues (total B.S.) Have any facts? Like Fannie and Freddie only bought "conforming" loans, of a higher credit quality? Or that over 98% of their assets were paying on time (vs. a 35% default rate for subprime loans industry wide?) Or that investment banks were deregulated by the SEC (executive branch=President Bush) in 2004, so that they could leverage up like crazy on this garbage and pawn it off across the entire banking system? Blame the Republican cronies in the investment banks first before you go there. Fannie and Freddie are maybe 20% of this problem--an important part, but not THE part.Farcaster (talk) 19:31, 9 October 2008 (UTC)

Mortgage Insurance Requirements

Can anyone help me understand why Private Mortgage Insurance (PMI) was apparently not in place to protect lenders when borrowers could not make a downpayment of at least 20%? Did the requirements for PMI change at some point in time? —Preceding unsigned comment added by 75.185.66.119 (talk) 02:41, 10 October 2008 (UTC)

Rename to 2008 financial crisis?

Shouldn't this page be named 2008 financial crisis? As this crisis unfolds, it seems that the sub-prime mortgage meltdown is only a part of the problem. Securitization and other derivatives seem to be as big a part of the story, and contagion is spreading distress throughout the financial system. BTW, you all seem to have covered all the bases. Nice job. LK (talk) 04:25, 10 October 2008 (UTC)

This is definitely the best of the articles on this general subject but the title is limiting.--JohnnyB256 (talk) 20:20, 12 October 2008 (UTC)

Global world map [[Image:

We/the article need a global world map, with the countries which has been get the financial crisis. (Green color to the countries with big crisis like USA. --CikkBővítő (talk) 17:38, 10 October 2008 (UTC)

"Effect on municipal bonds" section is missing

I was reading the wikipedia article on municipal bonds which has a section that linked to Subprime mortgage crisis#Effect on municipal bond "monoline" insurers. This section which used to be part of either the Municipal Bonds or Subprime mortgage crisis articles is now deleted from both articles. I would like to know more about this subject. Thank you. 71.171.118.196 (talk) 00:29, 11 October 2008 (UTC)

I moved it to Subprime mortgage crisis - other economic effects some time ago when that issue faded from the headlines. It's still there along with some headlines. You might also check out credit default swap. Lots going on with that related to the Lehman Bankruptcy.Farcaster (talk) 04:28, 11 October 2008 (UTC)

events

seems like several spin-off referring and generalizing the same current events covered many times, and using various arbitrary names and dates such /Economic_crisis_of_2008 or Financial crisis of 2007–2008.....Rodrigue (talk) 13:15, 12 October 2008 (UTC)

Yes, lots of spinoffs. I guess imitation is the sincerest form of flattery. But serious, this main article is about the causes, impacts, and responses. It should be more thematic and summarized, with just enough examples to illustrate the particular element or point. Daily type events and daily he said/she said should be put into subordinate articles. My thought is that this article is the umbrella with other articles for deep-dives on particular issues.Farcaster (talk) 17:05, 12 October 2008 (UTC)

name with United States

Since 98% or so of the article is about the United States, and it is the United States that made all these subprime loans, why shouldn't the name of of the article include 'United States'? Hmains (talk) 00:06, 13 October 2008 (UTC)

Krugman

It seems like this might belong to document the opinion of an expert on fannie and freddie, since much talk has come from this:

http://www.nytimes.com/2008/07/14/opinion/14krugman.html

Brusegadi (talk) 07:56, 13 October 2008 (UTC)

Could I get a tl;dr version?

If someone could summarize what happened in like, a paragraph, it'd be awesome. thx