by Anonymous on 10/01/2007 05:06:00 PM

So there I was, minding my own business, when a press release with the title "MBA Study Examines Fraud Committed Against Mortgage Lenders" shows up in my inbox. How very interesting, right?

Well, the MBA is lucky that the terms "study" and "examine" aren't defined in any law I know of, or I'd be tempted to sue. It's no less than a 20-page lobbying effort that could have been a three-pager, given the redundancies, repetitions, white space and giant margins. Its burden of wisdom is that mortgage fraud is on the rise, mortgage lenders are victims, not perpetrators, of mortgage fraud (insider fraud being a case of "a lending institution [being] deliberately deceived by . . . one of its own employees"), that fraud is clearly conceptually and practically distinct from predatory lending, and that no new legislation battling mortgage fraud is necessary, as current laws are more than sufficient. Its recommendation for action: to increase enforcement and information-sharing, all at the taxpayer's expense.

There is no "examination" of fraud--how it happens, how it goes undetected, what industry practices might enable it. There is, therefore, no examination of what the industry could do, on its own dime, to prevent fraud. Even better, the "study" keeps hammering the point that fraud and predatory lending are separate, for the purpose of making sure that no new anti-fraud legislation that also includes anti-predation components gets passed. That's the whole agenda in this little piece of special pleading, which uses the term "so-called predatory lending" several times:

[S. 1222] inappropriately conflates mortgage fraud with predatory lending. Indeed, several of the provisions have little, if anything, to do with mortgage fraud as that term is understood by law enforcement officials and the mortgage industry. For example, S. 1222 would:

• Impose heightened foreclosure requirements on subprime loans containing a variety of terms;
• Create assignee liability in vague and undefined cases of “deceptive practices” — a term that, in context, appears to mean something different than “fraud”; and
• Require the provision of housing counseling services to borrowers regarding “any other activities or practices that… are likely to increase the risk of foreclosure by such individuals” without providing any guidance as to what such “other activities or practices” may be.54

Whether one believes such provisions have merit as a matter of public policy, they are not directly related to mortgage fraud. Instead, these provisions clearly are intended to address concerns related to “predatory” lending.

Mortgage fraud and predatory lending differ in many important respects in terms of the actions, methods and targets involved. As discussed above, mortgage fraud, as the term is understood by federal law enforcement officials and the mortgage industry, is the intentional enticement of a financial entity to make, buy or insure a mortgage loan when it would not otherwise have done so, had it possessed correct information. In contrast, predatory lending is an undefined term that generally describes negative practices that are harmful to consumers. Clear definitional boundaries around the term predatory lending have yet to be drawn. Because the actions and targets of mortgage fraud and predatory lending differ, actions taken to remedy one rarely, if ever, will remedy the other. Conflating the two creates the danger that solutions appropriate only to one will be applied to both. While there are actions federal law makers can take to address each, the numerous and essential differences between them make their conflation, as well as their simultaneous treatment, inappropriate.

In other words, the MBA wants you to believe that fraud is only a matter of the industry being defrauded, that mortgage fraud is conceptually, practically, and legally distinguishable from predation, and that no bill that tries to clamp down on both things at the same time is acceptable. You get the impression that the industry is so frightened by anti-predation laws that it simply will not accept them even if they provide for more penalties or easier enforcement of fraud against lenders.

There's a lot of hand-wringing over "unintended consequences" of legislation in here--which you may or may not find compelling. There is no attempt to address the opposite problem, of refusing to regulate at all because regulation might not be perfect. What's truly amazing is that the MBA argues that mortgage fraud is actually on the rise--not just reports of fraud, and not, apparently, just proportionally to the increase in mortgages originated in recent years--but then argues that existing laws are sufficient, requiring only more taxpayer dollars poured into the Justice Department for task forces and databases. There isn't even a perfunctory recognition that industry practices, like "no docs," third-party originations, appraisal ordering practices, stripped-down internal controls, could have anything to do with any of this.

That might have something to do with the fact that the "study" keeps insisting that there is no widely-agreed definition of predatory lending, and that predation has nothing to do with fraud. I have argued before that during the bubble, lenders were happy to accept fraud as the "cost of doing business" with practices that were reckless but that threw off tons of money, like no-doc no-down loans, brokered and outsourced processes, skimpy due diligence, and incestuous and conflict-riddled "affiliated business arrangements." In fact, I gather from this MBA effort that the industry is still happy to pay the fraud toll; what has it worried is that anti-predation legislation will chip away at those money-spinners.

The MBA quotes the FBI as estimating that industry-wide fraud costs for 2006 ranged from $946 million to $4.2 billion. That's quite a range, and I frankly am deeply suspcious of those numbers. For one thing, they are based on Suspicious Activity Reports (SARS), which have the problem of multiple-counting (several categories of suspicious activity can be reported for a single loan application) and also that the dollar amount reported is generally the transaction amount, not an actual, after-the-investigation-trial-and-conviction assessment of the actual fraud loss. But even taking that $4.2 billion number seriously means that fraud costs for 2006 were a whopping 18 bps on 2006 gross mortgage production (~2.37 trillion). Could it be that the MBA doesn't want to define predatory lending because it doesn't want to address how revenues on grossly overpriced mortgage loans and reliance on fly-by-night brokers might function to offset fraud costs?

Shorter MBA: We're willing to invite fraudulent behavior and pay for it as long as you let us continue to prey. But we'll help out by asking the taxpayers to fund some "task forces" if you need us to appear to be doing something about it.

by Calculated Risk on 10/01/2007 03:56:00 PM

From Mathew Padilla at the O.C. Register: O.C. office rents, vacancies spike

A surge in office construction combined with sweeping layoffs at mortgage companies lead to both higher office vacancy and higher rents in O.C. in the third quarter ...

The county's office vacancy rate hit 10.53 percent at the end of last month, the highest in nearly three years ... its previous peak was 17.2 percent in March 2002, amid the last construction wave.

In all, developers have finished work on 3.5 million square feet of offices so far this year with another 1 million coming in Q4 ...
...
As for mortgage companies, they occupy about 4 million square feet of office space in the county, or roughly 4 percent of larger buildings. The total is down 30 percent from 6 million in mid 2005 ...

Orange County is home to many of the mortgage companies that have closed (like New Century). So the rising vacancy rate is no surprise. However I also expect to see rising vacancy rates nationwide, especially for office and retail space.

by Calculated Risk on 10/01/2007 11:40:00 AM

Homebuilders are once again seeing rising cancellation rates. KB Home reported Thursday:

The company posted a cancellation rate of 50 percent during the most recent quarter, down from 60 percent in the year-ago quarter but well above the 34 percent rate in the second quarter of this year.

This is well above the normal range. According to D.R. Horton, the normal range for cancellations (for Horton) is between 16% and 20%. For those trying to analyze the housing market, this means that the inventory levels reported by the Census Bureau are probably too low right now.

The Census Bureau, during periods of rising cancellation rates, overstates New Home sales and understates the increase in inventory. Conversely, during periods of declining cancellation rates, the Census Bureau understates sales. Here is discussion from the the Census Bureau on cancellations. Note: this shouldn't be confused with revisions that are unrelated to cancellations.

Using cancellation rates from several of the publicly traded home builders, we can estimate the actual new home inventory (as opposed to the inventory reported by the Census Bureau). Note: The Census Bureau breaks down the inventory as Completed, Under Construction, and Not Started. The following chart show the reported and cancellation adjusted inventory levels for the hard inventory (excluding the "Not Started" category).

Click on graph for larger image.

At the end of Q2, this analysis shows the Census Bureau is currently understating the hard inventory of new home sales by about 77,000 units. Even though the Census Bureau has shown a slight decline in new home inventory in the third quarter (through August), I expect the adjusted inventory to increase because of rising cancellation rates.

This will be important to follow later in the housing cycle. However, it isn't just the inventory of new homes for sale that will impact the homebuilders. Existing homes are a competing product for new homes, and the record inventory of existing homes for sale will also pressure home-building activity.


This graph shows the year end inventory levels since 1982 for new and existing homes. (2007 numbers are for August).

Inventory levels are at an all time record of 5.1 million units.

The third graph shows the total inventory normalized by the number of owner occupied units (this adjusts inventory for increases in population and household size).


Total inventory is currently 6.8% of the total owner occupied units in the U.S. This is far above the previous peak of 4.7% in the early '80s.

Finally, it's not just the level of inventory that matters, but also the level of distressed inventory. We are already seeing record levels of foreclosures in some states, and IMO it is about to get much worse. I spoke with one of the top agents in San Diego this weekend, and she was analyzing one neighborhood for a client in the $375K to $450K price range. There were 70 listings (very high for that neighborhood and price range), but she was shocked to find that approximately 75% of the listings were short sales, and a similar percentage were vacant. This suggests a flood of REOs in the coming months.

by Calculated Risk on 10/01/2007 10:16:00 AM

From MarketWatch: Big write-downs to slash Citi's quarterly net 60% (hat tip Lyle)

Citigroup Inc said Monday it expects ... huge write-downs for unsold debt it issued to finance corporate takeovers and for big losses on the value of subprime mortgage-backed securities.
...
The decline "was driven primarily by weak performance in fixed-income credit-market activities, write-downs in leveraged loan commitments, and increases in consumer-credit costs," Chairman and Chief Executive Charles Prince said in a statement.

Earlier Monday, Swiss banking giant UBS said it will take a hit of 4 billion Swiss francs ($3.4 billion) in the third quarter from its subprime mortgage exposure and plans sweeping management changes and job cuts at its investment-banking division.

Citi sees a write-down of $1.4 billion pretax, net of underwriting fees, on funded and unfunded loans for clients doing leveraged buyouts.
...
Citi also cut the value of its mortgage-related positions, as rival Wall Street investment banks did last month.

It said it expects losses of $1.3 billion pretax, net of hedges, on the value of subprime mortgage-backed securities warehoused for certain securitizations, and $600 million pretax in fixed-income credit trading due to significant market volatility and the disruption of historical pricing relationships.

I guess the music has stopped.

“As long as the music is playing, you’ve got to get up and dance. When the music stops, in terms of liquidity, things will be complicated.”
Chairman and Chief Executive Charles Prince, July 2007

by Anonymous on 10/01/2007 10:08:00 AM

From the NYT, "The Foreclosure Pickings Are Plentiful but Not Easy," comes this classic quote from an "investor" in foreclosed properties:

“I’ve been good on picking up properties, but I haven’t been good on an exit strategy,” said Mr. Vela, who paid cash. “I’ve had to hold them longer than I originally liked. That’s O.K. That’s part of the game. It’s affected my holding times but not my profit.”

I apparently understand "profit" as little as I understand "loss." No wonder I'm just a blogger.

by Anonymous on 10/01/2007 09:52:00 AM

I thought we'd take a moment for philosophical reflection on this bright sunny Monday morning. What is "a loss"? If an accountant bangs her head against the desk in a deserted office, does anyone hear the sound?

Our text today is "Owners face selling at a loss now that the housing bubble has burst." The owners in question are currently marketing their home for $868,000, even though--alas!--it was valued by a real estate broker 18 months ago at $930,000. Another distressing story of borrowers upside down on their mortgage, forced into the horrors of the short sale? Well, not quite.

The Bellomos' house is sited on the edge of the wetlands. The large picture window on the second story overlooks acres of wetlands filled with egrets and other wildlife. Barker said his firm has put a value of $40,000 to $50,000 on the view but said he couldn't value the home because he's unfamiliar with it.

When the Bellomos bought their house on Wetlands Edge Drive in 2002, the market was so hot that they took time off from work to drive up from the Peninsula on a Friday morning. They nabbed one of the last houses in the development with a view of the wetlands. They paid $424,000. Because they had no children, the Bellomos bought the 3,300 square-foot, four-bedroom, 41/2-bath home for themselves, their cats Felicia and Felix, and for the many family members who visit often.

From the outside, the home is similar to many on the block: a large, nondescript house on a smallish lot. But inside, the house is large and stately. The Bellomos put considerable work and money into making it that way. They upgraded cabinets and added granite in the kitchen, placed an inlay in the foyer's hardwood floor and added marble and granite slabs in the bathrooms.

Saverio Bellomo got his dream library-study with built-in cabinets and the couple added expensive Venetian plaster to many of the walls in the house. The same high-end cabinets and granite countertops used in the kitchen were installed in the laundry room. Every closet got a built-in closet organizer. New built-up baseboard and crown moulding was installed throughout the house.

The trouble is, upgrades for one family are renovations waiting to happen for another family, Barker said. For instance, the Napa Valley school district is a huge draw for many home buyers in American Canyon. But the Bellomos have converted two rooms to an office and a library, respectively - with built-in cabinets. For many potential buyers these would be kids' bedrooms.

The Bellomos declined to say how much they paid to make the renovations but admitted that even if the house fetches full price they won't break even.

These people put more than $444,000 in luxury "improvements" into the home over five years? That's some serious granite.

Fortunately, the Bellomos are taking this well:

They braced themselves for the financial loss. But they are also looking at it positively. "We're trying to be Zen about it," Robinson Bellomo said. "This is the market we have here. Hopefully, the market in Albuquerque will be the same and the real estate gods will be good to us, too. In the meantime, the home buyer is going to get an incredible value."

You crazy Californians.

by Calculated Risk on 9/30/2007 04:46:00 PM

From the WSJ: UBS Is Expected to Report Large Loss From Fixed-Income Unit

...UBS ... is projecting a third-quarter loss of ... ($510 million to $600 million) based on a writedown of 3 billion to 4 billion Swiss francs for fixed-income assets ...
...
Its losses resulted from applying sharply lower market values to asset-backed bonds ... Many banks had serious troubles with securities-tied to mortgages when liquidity dried up in the last quarter.

The confessional is now open.

by Anonymous on 9/30/2007 11:50:00 AM

I don't know how many posts I've written on Gretchen Morgenson's terrible reporting. I guess I'm going to have to start keeping score. "Can These Mortgages Be Saved?" Can this "reporter" be saved?

Her latest attempt to go after Countrywide, for sins real and imagined, contains the following "reportage":

But on the billions of dollars worth of mortgage loans that have been sold to investors in the last few years, it is not the banks or lenders like Countrywide that are hit with big losses when homes go into foreclosure. It is the sea of faceless investors who own pieces of these trusts. Also, under the trusts’ pooling and servicing agreements, Countrywide and other servicers typically recoup any costs they cover in the foreclosure process, such as legal and appraisal fees.

Borrower advocates fear that fees imposed during periods of delinquency and even foreclosure can offset losses that lenders and servicers incur. Few borrowers know, for example, that when they make only partial payments on their mortgages, servicers do not credit those payments against the principal or interest on their loan. Instead, the partial payments are deposited into a so-called suspense account. Servicers can dip into these funds and make use of them as interest-free loans, although the funds have to be accessible when the borrower becomes current on payments. In the meantime, borrowers — whether or not they know it — are still zapped with fees and charges for delinquent mortgage payments.

“The foreclosure process is a profit opportunity for servicers and lenders, but there is very little oversight of the fees imposed,” said Michael D. Calhoun, president of the Center for Responsible Lending. “There are a lot of folks trying to squeeze distressed borrowers.”

I cannnot, literally, think of a better way to stir up sympathy for Countrywide than printing crap like this.

1. Servicers recoup foreclosure expenses because servicers are servicers. Investors are investors. Investors buy the credit risk; they therefore cover foreclosure costs. This is a perfectly normal arrangement. If you think there's a problem with it, can you explain how being reimbursed for an out-of-pocket expense, like a fee paid to a lawyer or an appraiser, is "making a profit"? Are you saying there's a markup in there? Do you have evidence for that?

2. Servicers are not now and have never been required to accept partial payments. Mortgage loans are not free-form Option ARMs where the borrower gets to decide how much principal or interest to pay this month; all of them, even the real OAs, have "minimum payments." If a distressed borrower talks a servicer into accepting a period of partial payments, to be made up later, that is called a payment plan or forbearance arrangement or some other "workout," and it takes the servicer's consent.

3. Putting partial payments in "suspense" means they don't get posted to the customer's account. It does not mean that the money goes into the servicer's own account. Those funds go into custodial accounts to which servicers cannot "dip in." Servicers do receive float income on those accounts, but of course in most cases they are also obligated to advance the full payment to the investor, out of their own funds, until it is collected from the borrower. So advances do offset the float. This entire paragraph is such an egregious mismash that it's unbelievable.

4. Foreclosure is a profit opportunity? What does that mean? That mortgage loan servicing--which unfortunately does include having to foreclose loans when they default--is a profitable business? Well, yes. That's why people engage in it. Is the claim here that an unfair or excessive profit is being made off of foreclosures (but not off of performing loan servicing)? How? Specifically? The "examples" in these three paragraphs don't make any sense.

And I cannot begin to make sense of the "Connor" loan example. With the hashed-up timeline and limited information given it's impossible to figure out. All I can say is bang-up job of reporting.

Ms. Morgenson, if you want to keep up on your mission to portray Countrywide in the worst possible light, you are going to have to get an education from a reliable source at some point about how the mortgage industry works.

by Anonymous on 9/29/2007 06:10:00 PM

I had pretty much decided that I had said all I have to say about stated income loans with this post, but now that, per Chevy Chase, IT'S BACK!, I'm going to say one more thing. Then I'm done.

Apologists for stated income always bring us back to this so-called "classic" loan involving a self-employed borrower who "needs" a stated income loan because income is hard to verify or, you know, the tax returns don't "show the whole picture." This is never, really, actually, an argument about why stating rather than verifying income is necessary, although it pretends to be. It's really about why people with volatile income or a preference for not paying taxes on their income should get the "benefit" of financing on the same terms as wage-slaves and people who don't cheat on their taxes. That argument will end just before the sun freezes, so I'm not at all interested in participating in it.

My big problem with stated income lending has never really been about the wisdom or importance or lack thereof of making mortgage loans to the self-employed. My problem has to do with elemental safety and soundness of lenders, in a way that may not be obvious, so I'm going to hammer it for a bit.

Let us take the "classic" stated income hypothetical loan: the borrower is self-employed, has been for years and years, is buying a house, and has some trouble verifying income. Imagine that everything else about the loan is just groovy: high FICO, big down payment, lots of cash reserves after closing, scout badges out the wazoo. I'm not "stacking the deck" here. This looks like a super loan in all respects, except that question about whether there is sufficient current income to service the borrower's debts, or reason to believe that current income will last long enough to get past payment three or so.

We can make this loan in one of two ways:

1. We go "stated income." The borrower provides no tax returns, and just happens to state income sufficient to produce a debt-to-income ratio of 36%, which just so happens to be the maximum traditional cut-off for "acceptable risk."

2. We go "full doc," and the underwriter does a complete income analysis. In writing, on the sacred 1008 (the Underwriting Transmittal in the file), the underwriter fully discusses the business and its cash flow, noting that a 24-month averaging of income is producing a DTI of 68%. However, the underwriter believes that cash flow trend is positive, that there are documented reasons to believe it will continue, that the borrower has sufficient personal cash assets not needed for the business to supplement income for debt service, and hence this high DTI is justified. The 1008 of course is countersigned by a senior credit officer, because it is an exception to normal lending rules--the DTI is too high--and also because we are doing our required Fair Lending monitoring, making sure that the exceptions we make are made fairly, not just to rich white folks or folks in certain zip codes, but to anyone who qualifies for them.

Either way, it's the same loan, but Number 1 was more "efficient." Same risk, right?

Wrong. The default risk of the individual loan is only one risk. There's another huge looming risk created in Number 1 that we keep ignoring.

What happens if the loan performs just fine for a while? Well, if it's held by a financial institution, that institution will be subject to periodic safety and soundness and regulatory compliance examinations. One major point of those exams is to make sure the institution is holding sufficient reserves and capital against its loan portfolio. Among other things, an examiner might look at some reports of loan activity. And on reports, Number 1 looks like a low-risk loan with a 36% DTI. Number 2 catches someone's attention.

But, you say, wouldn't an examiner's attention be caught by the fact that Number 1's "doc type code" is stated, making it the kind of apparent higher risk worth a look at the loan file? Well, not if we started this whole thing by having assumed that there's no additional risk in stated income if other loan characteristics are good enough. The whole circular argument--stated is OK for OK loans--means that this will be considered one of those "not high risk" stated income loans, because all the other data points (FICO, DTI, LTV, etc.) look good.

The odds, therefore, that Number 2 would get further review are high, because it stands out as an exception loan with a high DTI. The odds that Number 1 would get further review are no better or worse than random.

And for any other purpose, such as counterparty due diligence, investor approval, um, servicer ratings, etc., that relies on aggregated data, Number 1 isn't going to make the institution's average DTI look worse, while Number 2 will. It matters if you write enough of those loans.

And what does the institution risk by having an auditor or examiner take a look at the file for Number 2? Why, the risk is that the auditor or examiner will not agree with that analysis, or will find the documentation unconvincing, or will be troubled by an apparent over-willingness to make exceptions or something. This is how the game is played: the loan shows up on some examination problem report, management is forced to respond with a memo defending its underwriting practices, and possibly even more loans get reviewed as the examiners seek potential evidence that whatever they don't like about that file is part of a pattern. Any stray skeletons you might have in your loan file closet (and everyone has a few loans they rather wish they hadn't made, or had handled better when they made them) get dragged out onto the conference room table.

Number 1, in other words, doesn't attract scrutiny. And what happens if it actually goes bad?

Well, with Number 1, it's "clearly" the borrower's fault. He or she lied, and we can pursue a deficiency judgment or other measures with a clear conscience, because we were defrauded here. We can show the examiners and auditors how it's just not our fault. The big bonus, if it's a brokered or correspondent loan, is that we can put it back to someone else, even if we actually made the underwriting determination. No rep and warranty relief from fraud, you know.

With Number 2? There is no way the lender can say it did not know the loan carried higher risk. Of course, higher-risk loans do fail from time to time, and no one has to engage in excessive brow-beating over it, if you believed that what you did when you originally made the loan was legit. If you're thinking better of it now, at least with Number 2 you have an opportunity to see where your underwriting practice or assumptions about small business analysis went wrong.

For anyone using loan servicing databases to research risk factors, of course, Number 1 might cause the conclusion to be drawn that stated income is a risk independent of other loan features. Number 2 might cause the conclusion to be drawn that 68% DTIs just don't work out well on the whole. You could, of course, go back and update the system with Number 1, after it fails and your QC people get around to finding the true income numbers, so that the database will show the true ratio of 68%, but that gets you to the catching-examiner-attention problem above.

And what about Fair Lending compliance? Insofar as a lot of stated income lending is just a way around having to make a formal exception to your lending policies, it's a good way of hiding certain patterns in terms of who you let get away with what. We do ourselves no good by thinking that the current environment--in which any marginal risk can get a stated loan--is the permanent environment. Structural ways to avoid showing your exception patterns invite abuse.

I have said before that stated income is a way of letting borrowers be underwriters, instead of making lenders be underwriters. When I say make lenders be lenders, I don't mean let's not regulate them. I have no problem with regulatory examinations; far from it. I am someone whose signature (usually, in fact, as that second sign-off) has appeared on exactly these kinds of loans, and whose butt has been on the line for them. We all face having loans we approved go bad; the world works that way. What the stated income lenders are doing is getting themselves off the hook by encouraging borrowers to make misrepresentations. That is, they're taking risky loans, but instead of doing so with eyes open and docs on the table, they're putting their customers at risk of prosecution while producing aggregate data that appears to show that there is minimal risk in what they're doing. This practice is not only unsafe and unsound, it's contemptible.

We use the term "bagholder" all the time, and it seems to me we've forgotten where that metaphor comes from. It didn't used to be considered acceptable to find some naive rube you could manipulate into holding the bag when the cops showed up, while the seasoned robbers scarpered. I'm really amazed by all these self-employed folks who keep popping up in our comments to defend stated income lending. It is a way for you to get a loan on terms that mean you potentially face prosecution if something goes wrong. Your enthusiasm for taking this risk is making a lot of marginal lenders happy, because you're helping them hide the true risk in their loan portfolios from auditors, examiners, and counterparties. You aren't getting those stated income loans because lenders like to do business with entrepreneurs, "the backbone of America." You're not getting an "exception" from a lender who puts it in writing and takes the responsibility for its own decision. You're getting stated income loans because you're willing to be the bagholder.

And no, this doesn't particularly do much for my assessment of your business acumen. Frankly, I'd rather see your tax returns and your P&L and hear your story about how investments in the business you have made, with the intent to grow it wisely, have limited your income or made it highly variable, than to see you volunteer to risk prosecution for fraud because, you know, you really need to buy a house. Do you do business with people like that all the time? Are you typically attracted to deals that are claimed to be perfectly legitimate, except that it's important not to fully disclose certain facts to certain parties? Does that maybe explain some of your accounts receivable problems and your pathetic cash flow? It certainly seems to be explaining some lenders' cash-flow problems at the moment.

This isn't just an issue for regulated depositories. All those claims by securities issuers and raters about how we had no idea that gambling was going on in this joint are directly comparable. The tough news for the self-employed "respectable" borrower is that I don't care if you're individually willing to play bagholder: you can't afford to underwrite that collective risk. We have a major credit crisis that's proving that.

by Anonymous on 9/29/2007 07:58:00 AM

Because Nehemiah was a bullfrog, but it croaked! Wake up from the AmeriDream! Help us celebrate the Death of the the DAP by liberating your inner 70s dork. Don't go telling me you read an economics and finance blog on Saturday morning but you're too cool for this number--I think I see a few of you in the audience shots.