The Financial Crisis in One Sentence

You should use the dead parrot analogy whne you testify to congress. You're more likely to get their attention if you give them a colourful soundbite they can parrot (hehe) to the press.

I don't see CDS going away, at least not for plain vanilla debt anyway. If all the securitized product disappears, certainly those CDS will go away; but why would all CDS disappear?

Regards,
TDL

The CRA is a minor deal compared to George W. Bush's 2002-2004 jihad against down payments, which he repeatedly denounced as the primary barrier that must be overcome to achieve his goal of adding 5.5 million minority homeowners by 2010. Google "White House Conference on Minority Homeownership" for all the gory details of what Bush and Rove were up to in trying to convert Hispanics to Republicans by helping them become homeowners.

Arnold,

Perhaps you haven't read Stan Liebowitz's Anatomy of a Train Wreck.

Defenses of "mortgage innovation" and the CRA, such as Kroszner's, typically focus on redefining the problem as an infinitesimal set of mortgages, then arguing that this set is infinitesimal. A common way to do this is to define the subset of mortgages affected by the jihad against down payments according to the narrowest provisions of a single law, such as the CRA, perhaps with some bogus Boston-Fed type data thrown in.

No one who has read Liebowitz, Husock, etc, can remain under this illusion. Mortgage innovation was not a single law. It was an industry-wide vortex of graft. (And Austan Goolsbee must wish he could have the TimesSelect memory hole back.)

Chairman Blair,

At least your Office is trying to serve consumers instead of only providers (Financial Industry). As a consumer who is a good customer and who pays a mortgage that has an off the wall loss of value of property in Florida and who wants to re-finance at a sane current appraisal. The FDIC is trying to avoid more mortgage based problems for the good and surviving consumers. Give it a try, forebearance works with students post graduation!

Arnold,

Could you please link me to your explanation of why you reject blaming Fed cheap-money policy and the regulatory mandates for riskier mortgages? (By the way, I don't place much emphasis on the CRA as such, so I have no trouble accepting Kroszner's evidence that it directly accounts for no more than 8% of the subprime mortgages. I put more emphasis on Fannie and Freddie.)