Countrywide??

Are they next?

Subprime Quote of the Week

I would like to thank Barry Ritholtz from The Big Picture blog for digging this quote up from the archives.

This is from Alan "The Putz" Greenspan discussing Subprime, Interest Only and other Exotic mortgages.

We were overdue for a housing related post, and this quote is simply Astonishing:

"Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants. . . . With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers. . . .

Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending . . . fostering constructive innovation that is both responsive to market demand and beneficial to consumers." (emphasis added)

-Remarks by Chairman Alan Greenspan on Consumer Finance
At the Federal Reserve System’s Fourth Annual Community Affairs Research Conference, Washington, D.C. April 8, 2005

There's nothing I can add to his own words that are more damning then, well, his own words. What a moron!

Accredited Home Lenders Holding Co.

The Unfortunate Reality of The Fed

Instead of taking a hit in 2002, Greenspan and Bernanke made matters worse by creating the mother of all housing bubbles. Instead of allowing people to go bankrupt, we passed laws making it harder, and those laws have already started to backfire. Instead of stopping subprime lending earlier, institutions repeatedly dropped lending standards to meet growth requirements. Instead of taking writeoffs now, lenders are refusing to admit mistakes hoping on a wing and a prayer that these bad home loans will cure themselves. Those loans will not be paid off either. We are following in the footsteps of Japan except that our consumer debt loads will make it worse. The Fed has learned nothing every step of the way.

Mike Shedlock

Fremont General Corp.

New Century Financial Corporation

Ladies and Gentlemen, welcome to Anatomy of a Collapse week.

Sponsored by the Subprime Mortgage Industry.

Songs included on the soundtrack:
Jane's Addiction: "Coming Down the Mountain!"
Tom Petty: "Free Falling"
Freddy Mercury: "Another One Bites the Dust"

An Anatomy of a Collapse

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