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March 19, 2008

Closing Bell: Architect of Subprime Crisis Dies

Roland E. Arnall, the founder of the Ameriquest Mortgage Company, died earlier this week. Arnall, whose personal fortune was pegged at $1.5 billion by Forbes last year, was a top donor to the Republican party and was named the U.S. Ambassador to the Netherlands in '06. Ameriquest, which went out of business last August, was one of the largest subprime lenders in the country and was the target of dozens of lawsuits over its allegedly deceptive lending practices. Arnall was 68.
Roland Arnall, Mortgage Innovator, Dies at 68 [NY Times]

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Comments

talk about timing in real estate.

Posted by: guest at March 19, 2008 4:37 PM

HAHA!! Well played.

Fuck'em.

Posted by: guest at March 19, 2008 4:57 PM

total scum.

Posted by: guest at March 19, 2008 5:27 PM

now, if he's the architect, what is Greenspan's title?

Posted by: guest at March 19, 2008 5:35 PM

"now, if he's the architect, what is Greenspan's title?"

Owner.

Posted by: guest at March 19, 2008 7:09 PM

so how is it that greenspan is reponsible for deceptive lending practices?

seriously, i'd love to hear you step through that logic for me.

Posted by: BrooklynLove at March 19, 2008 7:56 PM

BrooklynLove: Greenspan was told repeatedly that sub-prime lending was an issue that the Fed should investigate and regulate (or at the very least raise a red flag of awareness). This was years ago. He ignored the recommendations of his own direct reports on this issue and let the crisis bubble to a "froth" and then boil over. He still claims to not know this was an issue, which is a lie. Greenspan is as bad as the lenders themselves on this issue.

Posted by: guest at March 19, 2008 8:22 PM

Don't blame Greenspan. Blame wallstreet. The entire subprime market was funded and created by wallstreet. When wallstreet knew that the exotic mortgages (in various forms), especially, the "so-called" stated income mortgages were heading towards their balloon payment point, all at the same time, without the hope of a re-fi at a reasonable rate -- they pulled the plug on or about January 2007. By pulling the plug -- without a gradually withdrawal of funding -- wallstreet created the crisis. With no chance of a re-fi, due to bad credit, the buyers defaulted - mortgage backed (packaged) securities thus became worthless and b-firms took the losses. BTW - this was all anticipated by wall street when the first subprime mortgage was written. It was inevitable, and those at the top were prepared to take their golden parachutes and cashing out. The question is -- what investment vehicle is next to restart the cycle. Greenspan's control over monetary policy couldn't control wallstreet, wallstreet controls monetary policy.

Posted by: guest at March 19, 2008 8:45 PM

8:22 - that's the monday morning quarterback explanation. i want to hear how he caused subprime lending, not how he failed to stop it b/c i can point to many others in capable positions who failed to stop it. and if you're answer is going to be low interest rates, then explain how else he should have addressed the sharp downturn in the economy at that time.

8:45 - that's the retarded blame wall street explanation, actually your inclusion of the pull the plug piece makes it retarded+. question for you - if i'm willing to pay you a lot for sony flat-screens, is it my fault if you strip panasonics and re-brand them? from your comment, it's obvious that you have no idea how the mortgage securitization market works or how deceptive lending infected the diligence process. anyway, your golden parachute comment makes it pretty obvious that you're just trying to hate corporate america. how do you think alan schwartz is making out in the bear collapse? the answer would be not well. and many of bear's employees are getting crushed, so get a clue and shut your ignorant hole.

Posted by: BrooklynLove at March 19, 2008 10:46 PM

BrooklynLove Greensprem encouraged interest only mortgage in 2004. Just Google it. I know BrooklynLove you are seeing you "asset" slip away. Thats why you post stupid fucking shit. The FED looked the other way and predatory lending took off. 65%% of the people who got mortgages last year cannot get one today! You know why assfuck? The math doesn't add up!!! BrooklynLove please kill yourself if you need help call me.

The What

Someday this war is gonna end....

Posted by: guest at March 19, 2008 11:30 PM

Roland E. Arnall: a true American patriot

Posted by: guest at March 19, 2008 11:55 PM

The What is like a crackhead Kevorkian.

Posted by: guest at March 20, 2008 12:10 AM

Brooklyn is like Manhattan's mildly retarded sister who gives everyone hand jobs.

Posted by: guest at March 20, 2008 2:38 AM

What - if your position is that greenspan is to blame for predatory lending then i think you're lost. fraudulent originators are to blame. by your logic the nra would be responsible if someone breaks down your door today and puts a cap in your ass.

Posted by: BrooklynLove at March 20, 2008 8:11 AM

I think that Greenspan got caught up in the celebrity of himself that this society is so expert at creating. He was so revered as the genius of our time and did act brilliantly and boldly with rate cuts at the right time; however, a slight blip and rates are cut and money is flowing. The Fed directly oversees lending practices of banks including sources and uses of funds and predatory lending. The size of this debt and overall contribution to the supposed "growth" was a clear red flag. Where will the growth come from now(watch out for the commodities scams). The fees and other income being generated was too overwhelming to question yet was so overwhelming and therefore should have been questioned. Why does it have to come to the point where it is so catastrophic - why is the notion of flat growth so unacceptable.
I looked at houses in CH/CG/BH in the late 90s. They were selling for about 500-700K. How can one possibly explain 400% + appreciation in less than 5 years. I bought one and can still admit this.

Posted by: guest at March 20, 2008 10:20 AM

brooklynlove -- 8:45pm responding to your rant. Explain who funded Countrywide and the others - if not wallstreet. Without the funding the (subprime) market tanked and all of the loan applications that were in the pipe around January 2007 were pulled and those with bad credit and the flippers were doomed because they couldn't go conventional. BTW - the entire flipping industry was built on the subprime market - over the last 10 years. If fact ask someone in the (predatory) mortgage business -- if they are honest - they will tell you exactly when the "good times" ended -- it was when wallstreet pulled the funding and stopped the cycle.

On a few side points, I am part of corporate america - so I don't hate it - I just understand it -- no funding - no subprime market -- period. Also, I question how deceptive the lending really was -- of course many were confused by the numbers and didn't hire lawyers to conduct their closings and simply relied on the bank attorneys to explain the details, but, equally, many knew "the game" and were aware they wouldn't be able to afford the mortgages once they "adjusted". Also, because money was so "free" several "sub-primers" purchased multiple properties and are now taking advantage of the system and trying to get out by way of the "short sale" vehicle. Nothing wrong there. I have no response to your Bear Stean comment - other than the warnings were present for several months and wall street was not surprised.

Posted by: guest at March 20, 2008 10:25 AM

Many did not know the game. I don't think that you appreciate how truly financially ignorant the vast majority of people are.

They might have known that their cash flow in 1.5 to 2 years from now would be too much for their income but they assumed then they could refinance again and that their house would be worth more. They didn't care if fees were being tacked onto their principal as long as they could stay out of the hole and they certainly had no clue that this was like a roulette wheel and the losers would be the investors chasing yield where they thought the risk was managed through diversification and the common folk.

Bear's management was in too deep - their business lines were apparently not diversified enough. Even if they did forsee this - as a major market maker, originator, financier to hedge funds they couldn't bail on the industry.

Posted by: guest at March 20, 2008 10:43 AM

I can't believe I am saying this, but I agree with the What.

Posted by: guest at March 20, 2008 11:54 AM

3.20 10:25 - you're making no sense. the fact that investment banks were buying and securitizing pools of loans doesn't make them responsible for (a) lenders who chose to delude borrowers or doctor apps in order to pump out loans in return for $ or (b) borrowers who chose to game the mortgage system and housing market unsuccessfully. a hungry mbs market can be blamed for low conforming fixed rate mortgage rates if you need to blame something on wall street. your logic makes no sense at all. and i have no idea where you're going with this whole pulling out angle. wall street stopped buying up loans when the secondary mbs market seized and it was impossible to do a trade. what should they have done at that point in your opinion? once spreads narrow, that market will pick up again. re bear, your comment is simply stupid - if there was no surprise by a death run on bear then it would've never happened in the first place b/c the fed would've made their window available to ibanks before that happened instead of after that was no longer possible for bear.

Posted by: BrooklynLove at March 20, 2008 5:07 PM

BrooklynLove... nobody said Greenspan was responsible for deceptive lending practices. Go back and read the words. But he certainly was an enabler. His Mr. Magoo act was a fraud - he knew the deal, and knew that people stupid enough to buy into bad loans would get screwed eventually. He bears some responsibility.

Posted by: guest at March 20, 2008 9:25 PM

3.20 9:25pm - i don't know what blog you're reading b/c that's exactly what the posts above started out saying. if you want to come off that and call him a facilitator/enabler/whatever that's fine but it's still a silly proposition. see nra analogy at 3.20 8:11am. if you want to live in an economy where the govt completely deprives its citizens of the freedom to take financial risk (and reap financial reward) you've picked the wrong country.

Posted by: BrooklynLove at March 21, 2008 8:19 AM

BrooklynDouche

Posted by: guest at March 21, 2008 9:30 AM

intelligent response. hopefully the investment in your home is yielding better returns than the investment in your education.

Posted by: BrooklynLove at March 22, 2008 9:01 AM

How do you define financial risk vs. system wide fraud that built nothing except the general population's appetite for buying things (many useless) that they don't need.

Here's how I define proper alignment of financial risk with rewards. Promote investment in medical research and technologies. Promote green policies and reward those individuals and companies that risk their capital for such.

Selling high yield securities backed by questionable to non-existant cash flows does nothing except reward the pillagers with profits. It degrades our valuations, morals and misallocates resources.

Posted by: guest at March 22, 2008 9:42 AM