How We Got Here – The 2008 Financial Crisis For Dummies

It could never happen again, right?

h/t 2020Crash.blogspot.com

Emails Reveal Lobbyist Had Undisclosed Role In Andrew Cuomo Financial Crisis Investigation

Great reporting from Propublica!

Howard Glaser, a lobbyist and longtime confidant to Andrew Cuomo, previously denied he was involved in the then-attorney general’s investigations. Newly obtained emails show otherwise.

by Justin Elliott
ProPublica, March 11, 2015, 4 a.m.

The Albany Times Union co-published a version of this story.

Previously undisclosed emails by a mortgage industry lobbyist doubling as a consultant for then Attorney General Andrew Cuomo show the lobbyist played a self-described “critical role” in one of Cuomo’s signature financial crisis investigations.

The emails from 2007 and 2008 detail how the lobbyist, longtime Cuomo confidantHoward Glaser, was involved in an investigation of mortgage industry players that included Glaser’s own clients.

In one email, Glaser touted his influence over a Cuomo deal that weakened rules to prevent misdeeds in the mortgage market. That deal, with mortgage giants Fannie Mae and Freddie Mac, reflected Glaser’s “significant, critical, and current input,” he wrote in an email, “a fact to which current [Fannie and Freddie] employees and the NYAG’s office are prepared to attest.” Fannie and Freddie were both Glaser’s clients.

The emails contradict Glaser’s previous account of his involvement in Cuomo’s investigations.

ProPublica and the Albany Times Union reported last year that Glaser was working simultaneously as a consultant for the attorney general’s office and for a bevy of mortgage industry firms. Glaser said at the time that he only gave general advice to Cuomo’s office, that he did not represent clients with the attorney general, and that he was “not involved” in specific mortgage industry cases.

According to the emails, however, Glaser was involved in mortgage industry cases and traveled to Cuomo’s office repeatedly over the course of nearly two years while investigations related to Glaser’s clients unfolded.

“Oy. I Spent the last 48 hrs at the NY AG’s office and am glad to give you an off the record briefing and my observations,” Glaser wrote in a Nov. 7, 2007, email to the federal regulator of Fannie and Freddie. That same day, Cuomo announced subpoenas of the two mortgage giants as part of an investigation into fraudulently inflated home appraisals.

“These emails on their face indicate a serious conflict of interest, a conflict that could very well have influenced enforcement actions by Cuomo, much to the benefit of Glaser’s clients,” said Craig Holman of the government watchdog group Public Citizen.

The new emails also show how Glaser briefed industry players about Cuomo’s investigation while Glaser was involved in it.

Read on.

Dollar mortgage holders urge Russia to end ‘financial slavery’

Very interesting… Russia is dealing with their own financial and housing crisis…

Moscow (AFP) – When Olga Savelyeva took out a $226,000 mortgage to buy a small apartment on the outskirts of Moscow in 2008, she could never have imagined that the ruble would lose more than half its value in a few short years.

But Savelyeva’s $2,090 monthly instalments have skyrocketed in ruble terms due to the Russian currency’s dive against the dollar. The resulting jump in monthly payments from 49,000 to 115,000 rubles now devours most of her family’s income.

The 30-year-old mother of a young daughter and her husband have tried to honour their repayment commitments but despite their best efforts, December’s instalment was $400 short.

“We’re left with 3,000 rubles ($56) this month,” Savelyeva told AFP.

“We won’t be able to make the January payment in full… “We also have other obligations,” she added, referring to her retired mother and cancer-stricken father.

Savelyeva is one of tens of thousands of Russians who took on lower-interest foreign currency-denominated mortgages in the years before the financial crisis and now struggle with repayments as the ruble’s value shrinks.

Russia’s central bank says that as of November 1, foreign exchange mortgage debt totalled 120.5 billion rubles ($2.28 billion).

Read on.

Dave Brat Who Beat Eric Cantor Fudges the ‘Blame Fannie and Freddie’ Narrative

Editor’s note: This post originally appeared in National Mortgage News.

For an economics professor who has made the causes of the housing collapse a central issue in his political campaign, David Brat sure doesn’t sweat the details.

During the run-up to his surprise victory against House Majority Leader Eric Cantor in the Virginia Republican primary, Brat repeatedly blamed the 2008 crisis on Fannie Mae and Freddie Mac. That’s a well-known, if hotly debated, interpretation of history.

But Brat exaggerates the already-disputed data of the American Enterprise Institute purporting to show the government-sponsored enterprises’ culpability for the collapse. He also appears to miss the distinction between lenders that originate mortgages and secondary market participants like Fannie and Freddie.

Brat has claimed many times on the campaign trail that the GSEs were responsible for the overwhelming majority of subprime originations during the housing bubble. He typically makes this assertion using generic terms like “made” or “went through” to describe the GSEs’ role in mortgage lending.

“Fannie and Freddie made two-thirds of all subprime mortgages. That is not a free market institution,” he said in a Fox News interview the evening of the primary election. “That entity, along with the Fed printing too much money back in ’03 and ’04, caused the housing collapse.”

In a campaign speech, Brat suggested that the GSEs had completely disintermediated the banking industry by granting loans directly to borrowers (which would mean that every lender’s nightmare from the late 1990s had come true).

“The recent financial crisis, where did it start? In the housing market. We all know basically, probably the primary cause is located in Fannie and Freddie,” he said. “American Enterprise Institute estimates 70% of all subprime loans went through Fannie and Freddie. Instead of who? Instead of through your banker. So we’re putting bankers out of business. Bankers aren’t doing banking. In the past, bankers actually had to check your credit if you wanted a mortgage. Today, they don’t and Fannie and Freddie, they just say ‘here, here’s a mortgage.'”

Obviously, bankers still check applicants’ credit, even when they plan to sell the mortgage to Fannie or Freddie, which do not originate loans and must acquire them from banks and other lenders.

Brat’s campaign did not respond to requests for comment. But at a March campaign appearance, Brat also discounted banks’ role in the origination process.

“Seventy percent of all subprime loans didn’t go through bankers,” he said. “Bankers, their job is to do risk. Fannie and Freddie, is their job to do risk? Or to put the risk on your back?”

Brat is by no means the first political candidate to misconstrue Fannie and Freddie’s role in the mortgage industry. However, the murky wording of his remarks contrasts with Brat’s claims that he was driven to run for office because of the government’s handling of the financial crisis.

“What motivated the race for me was after the financial crisis, right, we had Fannie and Freddie collapse, the housing market, then the financial sector tanks,” he has said. “And I thought surely our political leaders now — you know, we’re on our knees economically. We’ll learn some lessons and get it right, and they didn’t. We’re still in roughly the same mess.”

http://youtu.be/4OXwFlod0KA

Read on.

Archived Financial Crisis Records Kept in the Dark

Courthouse News:

(CN) – The D.C. Circuit rejected a government watchdog’s request for records created by a commission that issued a report on the causes of the 2010 financial crisis.
President Barack Obama established in 2009the Financial Crisis Inquiry Commission, which reported its conclusions on the “causes, domestic and global, of the current financial and economic crisis in the United States.” Its report was released to the public in January 2011.
The commission disbanded a month later, and its records were deposited with the National Archives.
Cause of Action, a nonprofit dedicated to government accountability, then sought access to the records under the Freedom of Information Act (FOIA).
The D.C. Circuit ruled Friday, however, that the records were not transformed into an agency record subject to the FOIA when they were transferred to the Archives.
As precedent, the court considered a case that asked whether President John F. Kennedy’s autopsy records, transferred to the National Archives, were subject to an FOIA request.
“We held they were not, in part because they were ‘personal presidential materials when they were first created, and therefore at no time were they ever agency records.’ In other words, the depositing of these materials with the Archives did not convert them into ‘agency records’ subject to FOIA,” Judge Arthur Randolph wrote for the three-judge panel.

Here is the court document. Click here.

Financial crisis caused by too many bankers taking cocaine, says former drugs tsar

Financial crisis caused by too many bankers taking cocaine, says former drugs tsar

David Nutt, the former Government drugs tsar sacked after claiming that horse riding was as safe as taking ecstasy, has said that the banking crisis was caused by too many workers taking cocaine.

Prof Nutt said that too many bankers who took the drug were “overconfident” and so “took more risks” and said that not only did it lead to the current crisis in this country, but also the 1995 collapse of Barings bank.

He said cocaine was perfect for their “culture of excitement and drive and more and more and more”, adding: “Bankers use cocaine and got us into this terrible mess. It is a ‘more’ drug.”

Prof Nutt is not a stranger to making controversial claims about drugs. His latest attack is on the Government for “absurd” and “insane” laws dealing with magic mushrooms, ecstasy and cannabis, which he said were hindering medical research because regulations meant one of the ingredients – psilocybin, which is used to treat depression – was so hard to get hold of.

He was sacked as the Government’s most senior drugs advisor in 2009 after publishing a paper saying that there was “not much difference” between the harm caused by riding and ecstasy. Society, he argued, did not always “adequately balance” all of the risks inherent in it.