Feds ignore Countrywide but chase subprime small fry

So, former Countrywide Financial CEO Angelo Mozilo is off the hook for floating tens of thousands of subprime mortgages, including thousands of "liar's loans."

But, TAKE OUT a liar's loan, and, as Joe Nocera details, the feds spare no effort in convicting you and sending you to the federal pokey.

That said, beyond that, the person the feds put away? They had a weak case, Nocera said.

Now, isn't that what was claimed with Nocera? With Dick Fuld of Lehman?

Oh, the final "irony? Charlie Engle "lied" (it's arguable he didn't) ... to Countrywide.

A decade of bubble burst in Vegas

As of the end of last year, Las Vegas housing prices were below those in January 2000.

To be fair, Cleveland and Detroit are in the same boat. But, neither's in the Sun Belt, the new economy, etc.

The Vegas numbers probably should be of concern for Phoenix and California's Central Valley, though. Add in cutting back on discretionary spending, though, and Vegas has its own unique problems. The gaming/casino industry will probably take the better part of a decade to fully rebound. So, some parts of America will have a Lost Decade, like Japan.

Why real estate is even worse than claimed, especially in Big D

Many repoed houses that are resold? The official sale price ain't anywhere near being true. Oh, and shock me that this type of sales lying may have its ground zero in Dallas.

That's why Gov. Helmethair's claims about the strength of the Texas economy are bullshit. Unemployment is still going up in most major metropolitan areas, the heavy local reliance on property taxes looks shaky (especially with those fake resale Z prices, eh?)

And, I totally agree that this is part of the issue, too:

Compounding the problem is the seemingly endless prairie that stretches in every direction. Residential real estate in Dallas is all about what’s new, fresh, clean and contemporary, and beyond last year’s farthest-flung suburban outpost there is always more prairie, another slice of raw land on which to build this year’s model of the luxe domestic dream.

And, no, per the quote at the end of the story, nothing will change. Cheap gas prices will lead to more sprawl, not just suburban but exurban sprawl, while inner-ring suburbs on the north and east of Dallas, not just the south, will age ever less gracefully and ever more quickly.

I lived in suburban Dallas just about all of the last decade. Trust me on this one. I told residents of a Dallas suburb, back in late 2006, to vote against a new school bond issue in part because default and foreclosure numbers were already rising.

So, state Sen. Steve Ogden's plan to push more of school funding on a statewide property tax may not work so well, either. Especially if it caps appraisal rises not at 10 percent, but at even less than that.

Real estate bubble hits churches too

In the past decade, many of them overbuilt and overbought as much as many of their parishioners, and on as bad of mortgages. They're now paying the price. Especially for churches who preached the prosperity gospel, this is a definite moment of schadenfreude. And, interestingly, it's non-denominational congregations that are taking the biggest hit.

Ten percent of California mortgages in default

Wow. And, if the problem is spreading to commercial real estate as well, as the story says, recovery is far away from the Leaden State. With unemployment so high there, homeowners have no money to refinance, and there’s no new buyers on the market, so plenty of defaults.

Roubini sez re-appoint Bernanke; ugh

Well, Nouriel Roubini has been right about a lot of things related to the current recession, but not this one.

Sure, he possibly may have kept this recession from being worse; even then, was his solution the best? And, as Roubini notes, he helped get us here in the first place. In fact, he got enough wrong in 2006-08, what’s to say he won’t fuck up more if reappointed?

Of course, inside the “bipartisan economic policy establishment” that we have today, maybe you can’t find a better person to run the Fed than Ben Bernanke. Of course, that’s an indictment of the bipartisan economic policy establishment.

Like a Phoenix from the ashes or Bubble 2.0

I guess there’s a sucker born every minute indeed, or else one who moves to the Valley of the Sun that often. A mix of Phoenicians, smaller-level spec buyers and professional real estate investment groups think Phoenix can best overcome its massive housing bubble through spec buying of houses. (Four of 10 buyers are absentee.)

Call me crazy, but, this is indeed fighting fire with fire, in a state that will probably dry up in 20 years anyway.

Major bankruptcy may be headed to Vegas

If Dubai World, as threatened, pulls out of a partnership with MGM Mirage on Vegas’ City Center, it could have a domino effect on the whole Strip.

With other construction projects there on hold or shuttered, and Vegas near ground zero of the subprime bubble, this could be the last straw for Sin City.

Which, in a sense, is fine by me.

I have no problems with gambling.

But, there’s already too damned many people in that spot in the Mohave Desert, and the Colorado River’s about to run dry in its lower stretches.

Vegas could stand to lose about half a million people. At a minimum. Probably an even million population loss wouldn't be too off the mark.

How Moody’s contributed to the subprime crunch

When you have a better operating margin than ExxonMobil and your CEO is trying to improve it, you’re probably going to be a soft touch for creative new financing vehicles.

Even though the standards at many lenders declined precipitously during the boom, rating agencies did not take that into account. The agencies maintained that it was not their responsibility to assess the quality of each and every mortgage loan tossed into a pool.

Then what the hell were you rating? Or why were you in this business?

The full story, which focuses on Moody’s in the last decade, probably could apply to Fitch’s and S&P about as well.

Flippers, not poor, caused subprime collapse

As Steven Malanga notes (and yes, he's from a hard-right think tank), contrary to myths of both Democrats about poor first-time homeowners AND Republican talking points blaming Fannie, Freddie and the Community reinvestment act, it was, in essence, speculative homebuyers who caused the problem.

Malanga focuses on "flippers." He could have included second-home "investment" buyers, and "apartment renter"-buyers, who treated 2/28s and similar mortgages like leases, but, flippers were certainly the primary portion of the speculative homebuyers.

Read the full story. Even the Manhattan Institute can find an acorn on occasion.

Yes, Houston, and Dallas, we have a subprime problem

No, no Jim Lovell or Tom Hanks to announce it, but it’s there.

Contra to spinners like Gov. Rick Perry, take a look at this MSNBC interactive map, specifically the April 2008 stats, the latest ones.

See the I-35 corridor in purple?

In the Metroplex, see Kaufman, Ellis and Hood counties in red?

Also look at metro Houston, with Fort Bend County in red.

Yes, the Desert Southwest, Florida and metro Atlanta are worse. So are other metro areas.

But, places like Albuquerque, Kansas City, Oklahoma City, Charlotte, N.C., Pittsburgh and Philadelphia are better off.

HUD a bipartisan clusterfuck on subprime crisis

Congressional Democrats so anxious to find GOP scalps to nail to the wall over the Department of Housing and Urban Development’s throwing gas on the flames of the subprime crisis should look in the mirror.

First, in 1995, the Slicker’s HUD agreed to let Fannie Mae and Freddie Mac buy up more subprime loans.

Second, both parties in general have kissed the giant buttocks of the National Association of Realtors and its peddling of the myth of the “American dream of homeownership.”

Third, the bipartisan push in the late 1990s that eventually overthrew Glass-Steagall lay behind the lax oversight from both parties, though it did get worse in the Bush Administration.

That said, I’m sure a Gore Administration would have gone along for the same ride.

Subprime fallout hits Lehman Brothers

The nation’s fourth-largest investment bank had its first quarterly loss since being spun off in 1994. Why?

Revenue during the quarter suffered from “negative mark to market adjustments and principal trading losses.”

In other words, it had a bunch of mortgage crap on its books, not priced to reality.

Speaking of that, in what is certainly ironic, Moody’s, which contributed to all these problems in the first place, lowered its rating of Lehman’s to negative.

Texas homeowners in default? Blame Phil Gramm

Former Sen. Phil Gramm, looking as smarmy as ever in this picture, bears chief responsibility for the deregulation of CDOs, CDSs, SIVs and related subprime mortgage-driven investment “vehicles,” says David Corn.

The story of how this same bit of 2000 legislative legerdemain benefited Enron has already been told. But, unknown to anybody else in Congress at the time, it would also benefit the Bear Sterns of the world, as well as Gramm’s current employer, Swiss über-bank UBS.

Can you really imagine the idea of economics wingnut as the next Secretary of the Treasury?

Read the whole story for more on his shenanigans and a thumbnail sketch of how the process worked for investment banks.

Barack Obama should directly ask Gramm if he feels any guilt over Enron’s actions and his abetting of them.

Then, ask if Gramm feels any guilt over the subprime bubble.

Texas Observer has more on this issue.

University of Texas economist James Galbraith says Gramm is “not against government at all. His career has been finding ways to make money for his friends. It’s a predator relationship. (Government) is his food supply.”

And Hilzoy has a good roundup of the life and times of Phil Gramm.

That said, let me once again state one other thing.

For Democrats to pile on Gramm about the Gramm-Leach-Bliley Act of 1999 is hypocritical. A majority of Democrats in both House and Senate voted for the bill. President Clinton was behind it from the start.

And, as the Observer story notes, Clinton Treasury Secretary Robert Rubin was a strong supporter of the Commodity Futures Modernization Act’s provisions.

That said, for loyal Texas GOP voters in default, there is a bit of schadenfreude in all this, if not more than a bit.