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Matching entries from Houston's Clear Thinkers
Thinking about financial regulation
Peter Wallison and Steve Randy Waldman have each written a thought-provoking and important analysis of the effect of regulation on the recent financial crisis. First Wallison: What caused the financial crisis? The widely accepted narrative, prominent in the media...
Refusing to throw in the towel is not a crime
Thank goodness. Despite the government's sordid expansion of crimes against business people over the past decade, at least it's not a crime to decline to throw in the towel on a business venture simply because there are signs that...
The latest Enron book
Harvard Business School issued this press release and interview yesterday of Malcolm S. Salter, the Harvard professor who has written the latest book -- Innovation Corrupted: The Origins and Legacy of Enron's Collapse (Harvard University Press) -- in what...
Criminalizing Failure
As Larry Ribstein reports, the Enron prosecutorial veterans are already picking up the usual suspects in regard to the Bear Stearns meltdown. Meanwhile, John Carney wonders whether any investors really feel safer as a result of these criminal probes?...
The cost of Spitzerism
On Friday, February 11, 2005, shares of American International Group closed at $73.12 per share. Last Friday, after Eliot Spitzer and the meltdown in the subprime mortgage markets, AIG's shares closed at $39.34 per share. James Freeman of the Wall...
Look at what Mary Flood has been reading
Chronicle legal reporter Mary Flood covered many of the Enron-related criminal trials, so it was only natural for her to pick up a copy of former Enron Task Force prosecutor, law professor and current Oregon attorney general candidate John...
The subprime mortgage criminal lottery
Well, well, well. Look who is resurfacing in connection with the creation of the Justice Department's latest criminal Task Force to investigate whether crimes were committed when the subprime-mortgage market collapsed (just what we need -- another corporate crime...
Thinking about Bear Stearns
Michael Lewis -- author of Moneyball and The Blind Side: Evolution of a Game (previous post here) provides this particularly lucid Bloomberg.com op-ed regarding the implications of the Bear Stearns affair to investors generally: All of this raises an...
The power of myths
A common topic on this blog has been the power of anti-business myths within American society. Take Enron, for example. We all know how the myth played out. Enron, which was one of the largest publicly-owned companies in the U.S.,...
Subprime sense
Cato Institute's Alan Reynolds passes along some interesting observations regarding his review of subprime mortgages (see previous posts here). Among them are the following: Most current foreclosures are on prime mortgages, not subprime. Half of subprime mortgages are fixed, not...
How to correct what went wrong in subprime
Clear Thinkers favorite James Hamilton provides this interesting post on Princeton professor Alan Blinder's NY Times Sunday op-ed in which Blinder makes the common sense observation that we first have to figure out what went wrong in the subprime mortgage...
Why is Ben Stein a business columnist?
Answer: To give bloggers an opportunity to point out that he apparently does not know what he is writing about. Inasmuch as I've taken Stein to task on several earlier columns (see here, here and here), I was getting ready...
Making subprime sense
The New York Times continues to do a reasonably thorough job of reporting on the downturn in the subprime mortgage business and its impact on the recent crunch in the credit markets (see here and here), although it's not at...
The risk of demagoguery
Democratic presidential candidate John Edwards' demagoguery has been a frequent topic on this blog, so I read with interest this Larry Ribstein post that analyzes Edwards' latest hypocrisy -- lambasting the actions of subprime lenders on the campaign trail while...
Regulating dangerous financial products
Harvard Law professor Elizabeth Warren wants to establish a federal commission to regulate subprime mortgages and other "dangerous" financial products that are foisted on unsuspecting consumers. For a number of reasons, that's a bit like using a sledgehammer on a...
Capitalism Rorschach Test
In this clever and insightful post, Warren Meyer provides a handy Rorschach Test for how Americans view capitalism and markets by using the competing views toward the adjustment that has been taking place in subprime mortgage markets over the past...
Making sense of the subprime markets
In this WSJ ($) op-ed, American Enterprise Institute fellow Ted Frank provides a particularly lucid explanation of the many benefits of the markets relating to subprime mortgages and the absurd nature of the attempt by some plaintiffs' firms to extract...
This is a meltdown?
What was that about a meltdown in the subprime mortgage market? This Bloomberg article reports that Fremont General has agreed to sell $2.9 billion of subprime mortgages at a net loss of $100 million. That deal comes on top of...
Barney Frank is a credit snob
Remember awhile back when Barney Frank was actually making some sense in regard to a business matter? Well, as that post noted, that didn't last long. Rep. Frank is now advocating that investors in mortgage-backed securities should be liable for...
What was that crisis again, Ms. Morgenson?
Gretchen Morgenson may be a credit snob, but U of Chicago economist Austan Goolsbee isn't: . . . When Senator Christopher J. Dodd, Democrat of Connecticut, gave his opening statement last week at the hearings lambasting the rise of “risky...
The Credit Snobs redefine "loan shark"
Circling back to the topic of subprime mortgages, Marginal Revolution's Alex Tabarrok cleverly notes that credit snobs such as the NY Times' Gretchen Morgenson and the Houston Chronicle's Loren Steffy have redefined the definition of loan shark: Old definition: A...
Credit snobs
These earlier posts touched on what is often ignored among the handwringers in regard to the current downturn in the subprime mortgage market -- that is, the beneficial risk-taking that resulted from innovation in the securitization of subprime mortgages. That...
A beneficial choice
The New York Times (see here and here) is not the only major metropolitan newspaper that employs a business columnist who doesn't appreciate the benefits of a robust market in mortgage financing. Channeling the Times' Gretchen Morgenson, the Chronicle's Loren...
Morgenson's mortgage myths
Over the past weekend, the New York Times business columnist Gretchen Morgenson continued her "sky is falling" bit with the regard to the subprime mortgage market (see prior post here). Larry Ribstein, who used to disassemble Morgenson's columns on a...
What's that point again, Ms. Morgenson?
The NY Times' Gretchen Morgenson's column ($) this past Sunday is entitled "Will Other Mortgage Dominoes Fall?", in which Morgenson explores the current downturn in the subprime mortgage market. As a result of the increasing default rate in subprime mortgages,...
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