In this interview Warren Buffett repeatedly cites the financial crisis as beginning in September of 2008 and gaining momentum in 2009. Framing the great financial crisis in this period ignores the root cause of the great financial crisis. The root cause of the financial crisis was the collapse of the housing bubble. Single family home prices and the mortgages backing home financing began a rapid and fairly constant decline in March of 2006. The significant loss of value in these two major (related) asset classes - single family homes and mortgages - translated, by September 2008, into the broader banking disaster due to the foreclosure crisis and because banks had been trading financial derivatives and interest rate swaps which were based on single family home values and mortgage values.
Any discussion of the great financial crisis should begin with the root cause of the crisis. That is, such discussions should include information about how cheap-and-easy single family home financing arrangements fueled demand for homes, which fueled rapidly escalating home prices, which led to the ill-fated single family home price bubble.
A podcast interview of David Dayan author of
the book Chain of Title (26:31):
Odd Lots:How Three Self-Taught Activists Fought the Giant American Foreclosure
Machine with Joe Weisenthal and Tracy Alloway - pub. Bloomberg -June 13,
December 15, 2010 U.S. House of Representatives Justice Committee hearing
witnesses gave testimony on issues relating to "Mortgage Servicing and Foreclosure
Practices". A critical focus of the discussion was apparent problems with
the recordation of land title and note ownership. Witnesses claim that the
Mortgage Electronic Registration System (MERS) has failed to reliably record
changes in title and note ownership. The accompanying video-clip is a segment
from the C-SPAN hearing video (see, C-SPAN Video Library).
The History of
the Mortgage Electronic Registration System (MERS)
some internet searches I performed at the beginning of the controversy about
the Mortgage Electronic Registration System (MERS), I learned MERS was first
proposed by representatives of Fannie Mae at a Mortgage Bankers' Annual
Convention in the early 1990's. Some of the materials I saw on-line at that
time said that mortgage bankers showed interest in the concept Fannie Mae
presented, so Fannie Mae and Freddie Mac each contributed 2 million dollars (4
million total) to develop MERS.
articles I saw on-line said Fannie and Freddie hired a large D.C. law firm
(Covington & Burling) to design and program MERS. And, these articles
claimed that, once the design and programming was complete Fannie and Freddie
incorporated MERSCorp. and hired Electronic Data Systems (EDS) as ‘facilities
manager’ for MERSCorp. Then Fannie and
Freddie sold MERSCorp to a consortium of large mortgage industry participants
(mortgage banker securitizers, and mortgages servicers).
was also noted that as MERS was in development Fannie and Freddie modified some
of their mortgage qualification requirements and documentation standards to
favor MERS recordings. And, it was noted that without Fannie and Freddie’s
interest and support for MERS, MERS probably would not have been a ‘successful’
thought this history of MERS was interesting. I’ve also found it interesting
that, as the controversy around MERS, and the controversy around the GSE's has
brewed over the last few years, the documentation for the history of the
creation of MERS and MERSCorp seems to have become more-and-more obscure.