Friday, February 26, 2010

Is LEED certification meaningful?

From Witold Rybczynski:

... LEED (Leadership in Energy and Environmental Design), which has become the standard in the United States, award points based on a checklist—daylighting, water recycling, solar panels, bicycle racks, and so on.

... Yet a checklist approach has drawbacks. It tends to focus attention on unusual features, such as green roofs. Growing grass on a roof is definitely photogenic, but it is not as energy- and cost-efficient as simply painting the roof white (see “The California Experiment,” page 66). And checklists—even weighted checklists—may produce misleading results. Both a suburban office campus and an urban high-rise office building, for example, can receive a high rating. As David Owen points out in his forthcoming Green Metropolis: Why Living Smaller, Living Closer, and Driving Less Are the Keys to Sustainability, in the office campus, people work in sprawling buildings and drive between them; in the high-rise, people work in a compact building, use elevators (which are inherently energy-efficient, since they are counterweighted), and walk to lunch.

... The problem in the sustainability campaign is that a basic truth has been lost, or at least concealed. Rather than trying to change behavior to actually reduce carbon emissions, politicians and entrepreneurs have sold greening to the public as a kind of accessorizing. Keep doing what you’re doing, goes the message. Just add a solar panel, a wind turbine, a hybrid engine, whatever. But a solar-heated house in the burbs is still a house in the burbs, and if you have to drive to it, even in a Prius, it’s hardly green.

Yet urban density itself can't be all of it. Think Bangkok or New Delhi with air-conditioners running 24/7 and cars jammed in the streets. The city itself has to be dense as well.

Thursday, February 25, 2010

At what level do condo fees make sense?

According to the Consumer Expenditure Survey in 2008, the average urban consumer spends:
1. $1,100 per year on maintenance, repairs and other expenses (or as high as $1,700 per year for homeowners)
2. $1,000 per year on household operations (I'm a little unclear as to what this means - it excludes utilities, etc. however)

According to the American Time Use Survey in 2008, the average person spends:
1. 0.19 hours per day on lawn and garden care
2. 0.06 hours per day on exterior maintenance

For the average person who actually participates in the activities the time is:
1. 2.00 hours per day on lawn and garden care
2. 2.04 hours per day on exterior maintenance

Assuming that I value my time at $10 per hour and also assuming that I'm neither the average nor the person who participates in the activities (4 hours per day on these activities is way high for me!), and that I spend 2 hours per day on both these activities then this leads to 2x365 = 730 hours per year. At $10 per hour that would be $7,300 per year.

Roughly, I should then expect to spend $9,000 - $12,000 per year on household maintenance, repairs, etc. This means that I should expect to reasonably pay $700-$1,000 per month on condo fees. If I value my time more than $10 per hour then I should expect to pay more.

Also, many condo buildings have a gym or a pool and I would need to factor in the annual cost of membership to these facilities as well. The CEX does not have a line item for this unfortunately. The closest line item is approximately $600 per year on personal care products and services which I'm assuming includes things like hair cuts and the like.

Tuesday, February 23, 2010

Healthcare competition

The Atlantic magazine ran an article by David Goldhill who gives an impassioned plea for more competition in health care to address the problem of the lack of price shopping on the part of consumers of health care. I'm more sanguine on the ability of the free market to completely solve this problem.

1. Goldhill claims that more price shopping on the part of consumers will drive down health care costs. This may work but then again, (on the other hand) it may not. I would characterize the market for college education as being pretty competitive yet this had failed to stem the rising costs of tuition.

2. Competition will lead to transparency in prices of medical procedures thus making price comparison possible. Again, on the other hand, it might not. An example where there is a lot of competition is the trades i.e. plumbing, home repairs, electrical etc. Yet prices are hardly transparent. Getting a quote on making repairs necessitates soliciting bids - a time consuming process. Trades people whom I've dealth with never give a quote over the phone (unless it's an hourly rate). Making major renovations or repairs requires the consumer to provide detailed specifications on such things as fixture brands etc. in order to compare bids. Cost over runs are a common occurence despite "competitive bidding".

Now imagine this situation in health care. If a contractor is unwilling to give a quote over the phone because the cost of a renovation or repair is complicated by particular situations of the homeowner, imagine the position the surgeon or doctor is in. What if he quotes a price on a routine appendectomy and then some complications occur?

To be fair, I would definitely like to see a laundry list of prices for all procedures (with no complications) but I would find this difficult to compile. As in the construction industry, the "average" cost of a home remodeling project can vary a lot and thus so can health care. My sense is that the best we can hope for is to use such a list as a yard stick and nothing more. This does not prevent health care providers from "padding" the "estimate" with additional recommended items such as after-surgery care, or even some thing such as an extended warranty. True, most of these costs will fall on the consumer and thus make him more price conscious but health care is not a true consumer good.

It lacks the characteristics of some consumer goods such as repeat purchase - if we don't like something from one merchant we move on to another. But we can only have one appendectomy. Likewise we also lack the requisite knowledge to make an informed purchase. Even with the power of the Internet the dispersion of opinions in the quality of a certain procedure will reflect the dispersion in the prices.

The article cites a good example of Lasik which is not covered by insurance and hence consumers tend to shop around when opting for this surgery. If only all medical care were like Lasik.

Sunday, February 21, 2010


From CN Traveler, an article about Cairo that was more fascinating than I had expected:

Cairo's strata are psychological as well as physical, as exhausting as they are inspiring. Merely to cross the crowded streets requires patience, daring, and a sense of humor. For Egyptians, the trials of daily life are complicated by the need to create a personal identity from the crumbling past and half-constructed present amid centrifugal forces of secularism and religion, tradition and modernity, and the challenge of integrating a six-thousand-year-old culture with twenty-first-century technology. "We Egyptians are masters of compromise, which has always been the source of stability and tolerance," says the writer Alaa Al Aswany. But the increasing mood is of pessimism, claustrophobia, and economic frustration, which is chipping away at civility, friendliness, and family relations.

...West of the airport, near Ain Shams University, Zaytoun is far from the city center and the tourist trail. I took the Cairo Metro, a miracle of efficiency that circumvents the city's horrendous traffic, to see St. Virgin Mary's Church, whose central dome features a huge portrait of the Blessed Mother smiling soothingly down on pews of worshippers. From there, I walked to a covered market where Muslim fruit vendors and Christian fishmongers work side by side under hand-painted murals of buxom women while cassette players broadcast tinny recordings of Koranic recitation; the market is one of Cairo's most convivial, an example of the city's famous but now diminishing miracle of tolerance.

... The religious and the secular intersect in the sexy underwear souk that for years ran along Sharia Muski and continued on Sharia Al-Mu'izz Li-Din Allah, between the Madrassa of the Mamluk Sultan Al-Ghuri and the sabil-kuttab of Muhammad Ali. At first I found it shocking to see abaya-clad women fingering fire engine–red teddies with nipple cutouts near two of the holiest sites in Cairo—the mosques of Al-Azhar and Sayidna Hussein. Islam condones tender sexual pleasure between man and wife, however, and the market is patronized by brides shopping for trousseaux, though as one pushcart seller told me with a wink, "Not everyone who says she is a bride really is one."

... Cairo's rich and poor have always lived in proximity, and one of the capital's defining characteristics is fear of the mob. For all its famed stability, Cairo is spectacularly combustible. Just after Ramadan in 2006, after a movie theater unexpectedly canceled its regular Friday-afternoon showing, crowds of young men rampaged downtown, breaking shopwindows and chasing women to rip off their clothes and head scarves. The violent expression of boredom and sexual frustration shocked the nation, underscoring a generational shift—from people who had been teens in the first promise of Egypt's 1952 revolution, who view downtown with wistful pride, to restless youngsters who graduate with useless university degrees at the rate of two million per year and remain at home into their thirties, lacking jobs and the finances to get married. Political commentators lambasted the inability or unwillingness of the Cairo police to protect women from male harassment. Alaa Al Aswany complained in a newspaper editorial that Egyptian security focused too much on guarding political leaders and recommended that rather than shout, "Help," the most efficient way for a woman to get the attention of a policeman would be "to insult the president."

Monday, February 15, 2010

Lehman failure redux

My original thoughts are here and they haven't shifted much despite comments by Economics of Contempt who was responding to John Cochrane's analysis of the Lehman failure.

Nothing technical in the Lehman bankruptcy caused a panic. The usual "systemic" bankruptcy stories did not happen: We did not see a secondary wave of creditors forced into bankruptcy by Lehman losses. Most of Lehman's operations were up and running in days under new owners. Lehman credit default swaps (CDSs) paid off. Sure, there was some mess — repos in the United Kingdom got stuck in bankruptcy court, some money market funds "broke the buck" and had to borrow from the Fed — but those issues are easy to fix and they do not explain why Lehman's failure would cause a widespread panic. What is more, Lehman's failure did not carry any news about asset values; it was obvious already that those assets were not worth much and illiquid anyway.

Let's start with Cochrane's claim that there wasn't a secondary wave of failures after Lehman's bankrtupcy. First of all, that's not even true. Plenty of hedge funds failed as a result of Lehman-related losses. However, since they were generally structured as LLPs, they went into pre-defined liquidation procedures rather than filing for bankruptcy. But that doesn't make those failures any less real. Second, Cochrane, like Taylor, inexplicably ignores the fact that Lehman's biggest counterparties — the other dealers — were virtually all bailed out by their governments

Next, let's take Cochrane's bizarre attempt to minimize the importance of the obvious knock-on effects from Lehman's bankruptcy — namely, the problems at Lehman's European broker-dealer (LBIE), and the run on the money markets. Contrary to Cochrane's assertion, it wasn't just "repos in the United Kingdom" that were affected by LBIE's failure. In addition to the 140,000 failed trades, over $40bn in prime brokerage client funds and assets were frozen by LBIE's administrator. That's $40bn that was suddenly and unexpectedly unavailable to hedge funds — and when you consider that hedge funds use their prime brokers to lever up, that end result is that LBIE's failure caused hundreds of billions in liquidity to suddenly vanish from the markets. It also caused other hedge funds to pull their money out of their prime brokerage accounts at Morgan Stanley and Goldman (the two biggest prime brokers), since they were now scared that they wouldn't be able to access their funds if either of the prime brokers failed. Investment banks used clients' prime brokerage accounts for funding (which is why prime brokerage account are called "free credits"), so when hedge funds started pulling their prime brokerage accounts, that was the equivalent of having counterparties stop lending to them.

My own view is that the Lehman failure caused great uncertainty which resulted in an unforeseen freeze-up in the commercial paper market. So, yes I believe the Lehman failure had a large effect but not for the reasons outlined above - so in a sense I do agree with Cochrane and disagree with EOC on the impact of the ripple of bankruptcies that followed.

EOC later says (which I am in agreement):
And there was absolutely nothing minor about the run on the money markets. One of the biggest money market mutual funds, the Reserve Primary Fund, "broke the buck" because of losses on Lehman commercial paper. This caused a massive run on money market mutual funds, with redemptions totaling over $100bn. So the run on the money markets was directly attributable to Lehman's bankruptcy. As to why the run on the money markets would cause people to stop lending to banks like Citigroup, there are several reasons. The biggest reason the run on the money markets affected Citi's (and other banks') wholesale funding was that to meet the massive redemptions, money funds all drew down their backup lines of credit with banks at the same time. Institutional investors knew this, and started to pull back aggressively from the big banks in the wholesale funding markets. And then there were all the asset firesales by money funds...

From Business Insider:

One of the most virulently defended propositions coming from the Lehman Orthodoxy crowd is that the government's failure to rescue Lehman brothers caused a disaster in the commercial paper market. The evidence for this proposition is that in the two days following Lehman's bankruptcy, the market for commercial paper issued by banks collapsed. Within a week, $500 billion of short-term funding was removed from the market place.

However, they hold the opposing view and argue (not very convincingly in my mind):
So doesn't this mean that letting Lehman go into bankruptcy without government support was a huge error? At the very least, doesn't this chart show that not rescuing Lehman had dire consequences for the short-term funding of banks?

The answer to both questions is "Nope."

Although the disaster in the commercial paper market immediately followed Lehman's bankruptcy, it does not follow that this was triggered by the government's refusal to rescue Lehman. It seems far more likely that the panic in commercial paper was the result of the scales falling from the eyes of financial professionals. The collapse of Lehman and Merrill Lynch, which had fled into the arms of Bank of America, revealed the terrible state of the financial sector.

This revelation of the widespread weakness of banks would not have been avoided by having the government rescue Lehman, unless the terms of the rescue were somehow kept secret and the public deceived about the firm's terminal state.

We should note that, in a boring sense, the commercial paper market was diminished by Lehman's collapse because Lehman was a major supplier of commercial paper. But, if not for the widespread financial fear triggered by the new information entering the market, that role would easily have been filled by other banks. (As, indeed, it has been since.)
.... What actually restored liquidity was the decision by the Federal Reserve to directly step into the market, offering to buy commercial paper through a special purpose vehicle. This might not have relieved all the pressure on borrowers, especially those whose solvency is in doubt, but it did allow borrowers with healthy collateral to borrow. That is, it provides liquidity to healthy businesses without propping up unhealthy companies.

The problem with most of the arguments for the Lehman Orthodoxy is that they rest on the unstated assumption that the market would not have panicked if Lehman had been rescued by the government. But viewed in the context of what happened in the markets after the government did announce a broad financial rescue package, that assumption seems unwarranted.

The crucial "what if" here is: Would the commercial paper had locked-up even if Lehman had been rescued? I'm convinced (with no evidence whatsoever that the answer is "No - at least not by as much", but without good solid analysis we could argue with one another until we're blue in the face as Cochrane-Taylor and DeLong are apparently willing to do. After all, healthy disagreements among economists tend to generate more grants to study the crisis for the next decade.

Sunday, February 14, 2010

DC condo fees

In a previous post on average condo fees, Washington DC ranked second with an average of $484 and a maximum (top coded) value of $1731 per month. The data was based on 2008 PUMS data from

Using 2007 data from the metropolitan American Housing Survey the average condo fee for the metropolitan Washington DC metro area is $353 and a maximum (top coded) value of $2565. The Washington DC metro area does not equal Washington DC so if the data were subset to just Washington DC, the numbers come out to be $312 and a maximum/top coded value of $895.

However, there are only 146 records for the Washington DC metro area and 11 records for Washington DC proper.

It's hard to choose which data to believe. I would tend to go with the AHS data since the survey was designed to be representative of housing units in the U.S. whereas the IPUMS is a sample of representative persons in the U.S. However, the small sample size for the Washington metro area and Washington DC in particular gives me pause.

On the uselessness of financial intermediation or regulation?

In the NYT:

Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts.

... The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards.

It had worked before. In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

1. The free market response to financial innovation might go something like this: If there is a demand for the product we should let the market decide whether the product survives instead of trying to regulate the product.

2. The free market response to regulation (of deficits) might be: Even governments evade regulations, so given free choice any attempt to even regulate regulators would have regulators evading regulations so transparency and market forces are the key to self-policing.

What a tangled web we weave, when we first practise to deceive!

If an alcoholic demands more liquor do we let market forces decide?

Wednesday, February 10, 2010

Solar panels, snow and dust

I've been thinking of solar panels for a while now and now I'm getting a little turned off on them. I had read that dust and bird droppings on the panels can decrease the output of these panels and with all the snow we've been getting I wondered how they performed in the winter. Turns out - not so good according to CNET.

In general, solar photovoltaic panels don't need a whole lot of maintenance as there are no moving parts. They usually have warranties good for 20 or 25 years. Cleaning off built-up dust and pollen in the spring or summer is a good idea because that film cuts out a little bit of light from hitting panels, reducing the amount of electricity they make.

But snow is a completely different story. A thick blanket of snow--and we've seen many of those this winter--can all but eliminate electricity production. Sure, some light can penetrate through but the panels produce just a fraction compared to their potential.

Solution? Gotta get a roof rake.


We got a new dryer delivered last week ahead of the snow storms. We had been without one for almost 2 weeks only because Sears was unable to deliver it earlier. It turned out better than I had expected mainly because I did feel like I had to do the wash, dry and fold all at once. Plus, I did smaller loads over the course of the week instead of putting it all in one day. Fortunately, we were not doing towels or anything heavy so that was the main reason why it worked out.

More snow!

Near whiteout conditions today and it's been nice to be able to just watch it snow. The news about collapsed roofs and power outages has only made me anxious and it would have been better not knowing and just enjoy.

CWG reports that we are close to breaking the all-time record for snowiest winter (and this is even before the March storms that we sometimes get). The last snowiest winter was 2002-2003 and I remember thinking that I should have gotten a snow blower. But I'm just not into tending mechanical things which in a way is a pity. I really should know more of these things. But I have not found myself wishing for a snow blower this season. Perhaps its because it's okay now to relax and take it easy and not have to hurry and hustle to shovel so that I can get to work by 9 am.

Justine Picardie had some lovely photos of snow in Scotland when Europe was getting walloped back during the New Year.

Tuesday, February 9, 2010

Prius recall

Via Yahoo (AP) Toyota has announced a Prius recall (so far the 2010 models only). Our experiences with it so far has been noted here and here. I was not too impressed with its in-town mileage and have experienced the so-called sudden acceleration on our 2007 model. It's not so much an acceleration but whenever I go over potholes (and not always) I feel a sudden flutter or a jerk forward and notice that the ABS light goes on. It's happened while accelerating or decelerating and even while trying to park. It even happened on a test drive which the salesman waved off as my driving "style".

My feeling is that this more than just an accelerator problem but a real design problem. It is also possible that it is my driving style. I have been more used to a stick and have noted that the gas pedal on automatic cars in general seem not to be as responsive. In any case, our next car will not be a Toyota nor will it be a hybrid. I have a feeling that this problem is pervasive across all hybrids as well and not just Toyota.

Update: MR reminds me of the sudden acceleration incidents with Audi which resulted in a finding of driver error. My recollection of those incidents was that NHTSA was not as vocal in their criticism of Audi as they are currently with Toyota. Perhaps this is just a sign of the current administration's stance on regulation per se and not of Toyota specifically but it's hard to tell.

On the uselessness of Twitterati

There was a celebration of the use of Twitter to organize a 2000 person snowball fight on Dupont Circle. This utter uselessness of Twitter never ceases to amaze me yet the generation that uses it is enthralled by it and swears by its ability yet at the same time the same generation complains and whines about uncleared sidewalks. I'll be impressed by the power of Twitter when it is actually used to do good.

Let it snow

First there was Snowpocalypse then there was Snowmageddon which we are still recovering from and next up is Snoverkill. This time I did not shovel the sidewalk until well past the snow storm except now the next snow will undo all of that work.

The one thing that I dislike most about the snow is the fact that I spend way too much time shoveling and not enough time just enjoying it. I imagine myself curled up with a hot cup of tea reading. Maybe now that I'm nursing a cold I can do that.

We also got some mini snow last weekend which closed school on Monday (which seemed highly unnecessary because the roads were cleared by then) and before Snowmageddon the school had planned to dismiss early on Friday which I thought was a good plan. Unfortunately, it employed a trigger strategy of following Arlington County schools which decided on a highly unnecessary pre-emptive closure. From the looks of it the kids are going to be out of school all week this week so there were some lost school time that could have been avoided.

I'd have to think that school authorities are being risk averse since the 24-hour forecast has been very accurate this winter in terms of getting a good timeline down.

On another note, all the snow-packed roads reminded me of New England and Rochester where driving on this less than ideal condition was the norm for the winter. I'm not looking forward to the melt either.

Yesterday we watched as two bulldozers danced and pirouetted their way down our street systematically picking up snow and dumping them on our lawns.

Now another storm and more shoveling to look forward to. Yay!

Tuesday, February 2, 2010

Jerking my knee

I had a knee jerk reaction when I saw this link on MR which was listed as Which country showed the most spending restraint during the financial meltdown?

It showed bailout money as a percent of GDP and that the U.S. was the largest while France was the smallest. The link to it was titled When Sh*t Hit The Fan, France Stuck To Its Ideals While The U.S. And U.K. Became Socialist Monsters.

My knee jerk reaction was duh! The graphic shows nothing. A country like France with larger government spending the either the U.S. or U.K. would be more constrained in being able to spend more. Duh!
On more careful reflection my reaction is the same. Only this time, a more careful examination resulted.
1. Bailout/stimulus spending really should be as a percent of GDP as already depicted but also government spending should be a percent of GDP and also be depicted and thus a more instructive graphic could be ratio of total government spending (including bailout/stimulus) to GDP.
2. Some googling brought me to the following link which tabulates government spending as a percentage of GDP. France is 7th at 61.1 while U.S. and U.K are 19.9 and 50.0 respectively(ranked at 50th and 37th). So the hypothesis that France is more constrained bears out.
3. More googling lead me to believe that perhaps the numbers above aren't correct. This link has U.S. government spending at 46 percent. Another MR link also has U.S. spending at roughly 40 percent. Calculations using FRED data series FGCEA and GDP is roughly 9 percent (1,200/14,000). The CBO numbers seem to be in accord with #2 however, while here NIPA numbers show it to be around 35%. So perhaps it's all a matter of definition.
4. Which leads back to the graphic which isn't clear at all as to what constitutes stimulus and bailout spending. Do I really believe that Nigeria tracks bailout and stimulus spending separately?

On the contradictions of banking

Their tension is built into their business: they are looking after other people's savings, yet they make their profits from lending them out, which must entail risks. "If we don't take risks, then we're not real bankers," says Tom Clausen, who ran Bank of America before he took over the World Bank. Bankers often stress that they are merely reacting to external events: like women in Victorian times, they are not required to take initiatives, only to say yes or no. "I'm just trying to deal with a succession of accidents," says Walter Wriston. "It's like surfing," says a partner of Barings, "just waiting for the next wave, and trying to keep upright." Yet the more they compete, the more aggressively the seek to lend. "This bank, " says Harold Cleveland, historian of Citibank, "has a tradition of being very conservative and very aggressive"; and other banks claim the same combination. It sounds contradictory, but it is the bankers' dilemma. A small customer who trusts a bank with his savings may be shocked to learn that his money has been lent aggressively across the world; or that what a bank calls its assets are in fact its loans. But bankers ever since Shylock have been accustomed to being reviled; their long suffering style assumes that their true value will never be appreciated. (pg. 21)

This is from The Money Lenders by Anthony Sampson, an interesting diversion through the history of banking until the late 1970s.

Quotes on bankers

Bankers are just like anyone else, except richer.
- Ogden Nash-

Banks have done more injury to religion, morality, tranquility, prosperity and even wealth of the nation than they can have done or ever will do good.
- John Adams, 1819 -

A "sound" banker, alas! is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him.
- J.M. Keynes -

Imprudent banks are supposed to be punished by the marketplace, by going out of business. But the banks were so interdependent that an imprudent bank could cause the collapse of the system.
- "Adam Smith" in Paper Money, 1981

Never before in the history of banking has so much been owed by so few to so few.
- The Economist, June 10, 1978 -

If you see a Swiss banker jump out of the window, jump after him, there's bound to be money in it.
- Voltaire -

If I owe a million dollars, then I am lost. But if I owe fifty billions, the bankers are lost.
- Celso Ming, Brazilian economist, 1980 -

Some unattributed ones I read somewhere and have forgotten, so they may not be correctly worded:

You don't have to make a lot of money to be rich. You just have to convince the banks to give you the money.

On the bailout:
Never has so much been owed by so few to so many.

Securitization removes incentives to monitor

I never really bought this as a reason for the crisis.

In fact, for many Wall Street firms, it wasn't enough merely to be able to package mortgage backed securities. They wanted in on the whole process, from origination to packaging to selling and even to the exacting business of collecting people's mortgage payments and distributing them to MBS holders (known as servicing).
Lehman Brothers was the first Wall Street firm to really embrace all aspects of the mortgage business. Bill Dallas remembers:

What was Lehman's model? "We wanna originate it. So we're
gonna buy originators and we're gonna buy a servicer." And they were pretty
successful at it. They bought BNC Mortgage. They bought Finance America. They
bought their own service, called Aurora. Well, Wall Street firms are pretty much
lemmings. If Lehman's doing it and they're successful at it, then Bear Stearns
will go and Merrill will go and Goldman will go. They'll all go at it. And they
all did.

(pg. 73)

This is from And Then the Roof Caved In by David Faber which was better than I had expected. One aspect that of the financial crisis that I did not realize was that the earnings smoothing scandal at Fannie Mae and Freddie Mac in 2003-2004 forced these GSEs to slow down their buying of MBS and created a vacuum for Wall Street firms to fill. Of course when the GSEs were let off the hook they stepped back in with a vengeance.

Also interesting was how seemingly easy it was to become a subprime lender. The book profiled Daniel Sadek who went from car salesman (Mercedes-Benz though) to subprime lender earning $5 million a month! And who was financing his operation? Wall Street.