The Housing Bubble and the Community Reinvestment Act

2011-10-31

Ed Bradford

"low income lending" != {Black,Hispanic,any_particular_minority} lending

Low income lending is exactly that.

If you had $200,000 in your IRA and wanted to increase it

by investment, would you invest in the precinct in the city

with the lowest incomes or the precinct with the highest incomes?

The Community Reinvestment Act was passed into law under

President Jimmy Carter's administration. It lay dormant until

President Clinton came to office [proving the dangers in allowing

laws to lie dormant].

CRA created the Federal Government desire (a desire

without Constitutional justification) that more people (a greater

percentage of Americans) should own homes. Government was not

actively interfering in the housing market before the CRA. All

admit the housing market was running just fine before the

Government entered the fray [some red-lining examples excepted].

Presidents Clinton and George W. Bush made it a mission

to increase home ownership under the CRA banner. Both believed

(erroneously) it was the Federal Government's job to 'increase

home ownership'. For that to happen, there had to be more

money available and underwriting standards would have to be

lowered so more people would qualify for a loan.

Our old friend "fractional reserve" banking and the Fed

helped create the additional money. [I can explain how,

but in the interest of brevity, I will await a request.]

Once that was created a small sector of the Financial world

created new interesting loans (Ninja, Alt-A, no downpayment, ARMs,

interest only, ...). However, to create more money

a company like CountryWide would have to get rid of the

loans it had on its books (sell them) so it could use

the proceeds from that sale to make more loans. To CountryWide,

Ameriquest, and other subprime lenders it was about the fees,

not the mortgage service. The mortgage brokers sold their subprime

mortgages as fast as they could. They warehoused them until

they had enough to sell to a Lehman, Bear, Fannie or Freddie, ...

To buy those loans, investment banks (Lehman, Bear, Fannie,

Freddie and others) needed to also 'lay them off' bookmaker style.

For that, Quantitative Finance created a bunch of derivative options

(CDO, CDO-squared, credit default swaps, synthetic CDO, and

more). "Lay them off" means 'get rid of risk' to the bankers.

Banks needed to reduce the risk of owning a bucket of 5000 SUBPRIME

mortgages. Thus, the bundling of mortgages into buckets became

an industry in itself and the laying off of risk, a 'science'.

Enter the ratings agencies - the NRSRO's (Moody's, S&P, Fitch).

Mortgage originators collected 5000 mortgages and sold them to

financial services organizations or investment banks.

Those organizations (Fannie, Lehman, Bear, Freddie,BofA,...) declared

the entire bucket of mortgages to be a Collateralized Debt

Obligation (CDO) - something they could sell(!?). However, to

have a good market for the sale, the "CDO" (a bond) would

have to be rated by one or two of the NRSRO's (Moody's, S&P,

Fitch) because to sell that 'bond' the seller

needs to appeal to Banks, retirement funds, mutual funds

and state government investment funds. Those funds require

'AAA' ratings from NRSRO's [your federal government required

those fund managers to invest only in "investment grade"

securities rated by NRSRO's]. The Bond contains only subprime

mortgages.

How would you rate such a bond?

The NRSRO's decided that:

+ since housing prices always go up (they were wrong)

+ they didn't understand the risk models being

used by the big banks and didn't have the resources to dispute them in

any case.

[they accepted the analysis of the CDO originating organization when

they should have walked away from the fees].

+ the Federal Government required "safe" investments to be

rated 'investment grade' by NRSRO's

NRSRO's were the bottleneck for money.

NRSRO's accepted their client's "risk analysis"

as accurate and freely gave the "AAA" rating. They did not have

the resources to dispute.

IMO: Fed Gov screwed up by requiring underfunded free enterprise

companies to guess at ratings.

SOLUTION: Remove Fed Gov requirement for any and all

NRSRO ratings.

SUMMARY: "NO RATING" IS BETTER THAN AN "IGNORANT RATING".

+ interest rates were very low (Fed Reserve) and a lot

more money was made available by Federal Reserve at

VERY LOW INTEREST rates. IMO, Fed (Greenspan & Bernake screwed up!)

they would rate most of the 5000 subprime mortgage bond AAA.

(Read the the next paragraph with the following in mind:

All CDO's I talk about consist of subprime mortgages. "Subprime"

refers to those who just barely qualify for a mortgage during economic

'economic growth', will struggle "big time" during 'economic stagnation' and

fail quickly during 'economic decline').

The NRSRO's could do that because the bond originator (Lehman,

Fannie,...) sold the bond in 'layers' = 'tranches'.

Tranche:

Imagine 5000 mortgages in a bucket -- all subprime and

indistinguishable. Then, slice them, so 10% of investors invest

in the returns, but are last to suffer. Next 70% get returns, but

suffer before the top 10% tier. Last, the lowest 20% get returns but

suffer first. A-High; B-Mezzanine; C-Low

Tranches (layers):

C gets highest ROI if no defaults!

B gets 2nd highest ROI if no defaults

A gets lowest ROI if no defaults

Assume also, "Housing prices ALWAYS go up!"

That, my friends, is the model.

The top tranche survived the bankruptcy of all tranches below. It was so

well respected that it was called "Super Senior" and some thought it was

more valuable than Treasuries. The top tranche consisted of the top

10% of the mortgages in the CDO (I think "10%" is representative).

The middle (mezzanine - maybe the next 60-70%) tranche survived the

bankruptcy of the lowest tranche and yielded a higher return than

the top tranche. The lowest tranche was the first to lose all in

a bankruptcy but provided the highest returns. It was assumed by

the CDO creators that the 'bond' would fail randomly according to

past mortgage market history. Very few applied the 1932 housing

market dynamics to the CDO. No one considered what would happen

if unemployment went up to 10%.

Remember, all assumed "Housing Prices Always Go Up".

90+% of quants, bank CEO's, risk managers,

federal government regulators, Treasury Secretaries, Federal Reserve

economists, hedge funds, banks operated

with the following as GOSPEL:

1. House prices ALWAYS go up

2. Interest rates are low, so sell while the opportunity exists

3. 70+% of a bucket of subprime mortgages can, as a unit, be rated

an AAA or investment grade investment, justified by 'quantitative

finance' risk models - understood and accepted by commercial

banks, investment banks, mortgage brokers, Fannie, Freddie, the

SEC, the Fed, OCC, OTS, FDIC, HUD, DOJ, ... and most importantly,

NRSRO's. But wrong, as events have proven!!

[As an aside, I am a Ph.D in Physics. Many Quants were too. I think

they used Mathematics to create their own wealth. They abandoned

real science because they were not competitive in physics. They

convinced "finance people" they knew more than finance people.

Finance people were bamboozled! I was not competitive in physics,

but I knew it. Quants did not. They screwed America!]

4. Safe investments must be rated "investment grade" - a rule enforced

by the Federal Government. Fed Gov required rating by NRSRO's!

[IMO: dumb!]

5. NRSRO 'AAA' ratings are as safe (or more so) as Treasuries

6. Cats always act like cats. Wall Street will find a legal profit

in anything the Federal Government regulates!

Now then, imagine 5000 subprime mortgages with unknown

owners (CountryWide, Ameriquest, ... sold your mortgage) and individual

human beings as borrowers. Imagine all of the subprime borrowers

would not have qualified for a loan 25 years ago by the 1986

underwriting standards. Imagine that, for some reason, you magically

qualified and now 'own' a home. Are you nervous?

Readers - ask yourself - What if the economy has a down turn? What

if unemployment goes from 4.5% to 9.8%? What percentage of the

5000 SUBPRIME loans in that CDO bucket might be in danger of

default? Is there a top 10%? If a neighborhood has 15% of the

houses for sale because of foreclosure, what is the value of the

remaining 10% of subprime mortgages whose borrowers are still

working?

Here is my list of contributors to the subprime crisis

in NO PARTICULAR ORDER:

1 Community Reinvestment Act - Carter,Clinton+Gingrich,Bush

CRA created a Federal Government motivation to increase

home ownership. Participating Fed agencies include:

HUD

DoJ

OCC (Comptroller of Currency)

OTS

Board of Governors of Fed Reserve

FDIC

FHFB - Fed Housing Finance Board

FTC

NCUA - National Credit Union Administration

OFHEO

[ see: http://www.ots.treas.gov/_files/25022.pdf ]

Federal Government has no such responsibility according

the the United States Constitution. Find it, if you disagree.

2 Repeal of Glass Steagall

Happened under Clinton, but as far as I can tell had

NOTHING to contribute to housing bubble.

3 Fed low interests (Greenspan/Bernanke)

Using low interest rates, produced the fantastic amounts of money

required to inflatethe housing bubble. What was Greenspan thinking?

Fed should stick to inflation control or cease to exist, IMO.

4 Quantitative Finance (David X. Li, and a bunch of others)

Risk models NO ONE understood were accepted by everyone -

ALL fed agencies, Investment banks, Commercial Banks, Mortgage

Brokers, NRSRO's and most academics.

How could that happen? We now know the meaning of 'bubble'.

5 Goldman Sachs,AIG,Lehman, ... - eagerness to sell securities that

could not be analyzed for risk.

Goldman also shorted mortgages while selling them to their

customers. Others did that also. Goldman did it better than

their competitors.

Wall Street cannot be faulted for doing what Wall Street does --

Make money. They did it legally because there have been no

successful criminal charges prosecuted. Morally, they failed, IMO.

6 Fannie Mae/Freddie Mac - The source of funds for the housing bubble.

Today, F&F own 90+% of USA mortgages. They lowered their underwriting

standards so they could (Jim Johnson and Franklin Raines) get into

the huge profits associated with fees. At the time, F&F owned less

than 50% of all mortgages in America.

7 People who took out a loan based on:

Liar loans - "Alt-A" loans

NINJA - No Income, No Job, No Assets

ARM's - Adjustable Rate Mortgages

Interest Only loans

These folks include the 'flippers' ("Flip This House") and those

who were bamboozled. While they should have been smarter, they

are not the cause or even primary culprits. However, they are

not totally innocent, either. They are victims, IMO.

8 Mortgage brokers who falsified mortgage applications for the fees.

All should be prosecuted and put in jail for a while. Lies during

legal negotiations are unacceptable and must be criminally

prosecuted. Withholding facts during legal negotiations should

be a major misdemeanor and should prevent the perpetrator from ever

participating in any manner associated with finance in the future.

Here, licensing at the state level [where states are 100%

communicative with other states about loss of licenses] can solve.

A simple website posting all discredited

Doctors

Financial people

Lawyers

with URLS pointing to the factual reasons would be SOOO helpful

to America.

9 Ratings agencies (Moody’s,S&P,Fitch) who gave AAA ratings to

CDO's they didn't understand;

NRSRO's [Moody's, S&P and Fitch] should have walked away.

The NRSRO's are directly responsible for the size of the problem.

Without their AAA ratings, banks (investment and commercial),

retirement funds, hedge funds and a lot more would not have

bought the Collateralized Debt Obligations that could not be

accurately rated for risk. [IMO, Fed Gov should dis-enfranchise

NRSRO's now! They screwed America. "No rating" is SOOOOOO much

better than "AAA". Think about it!]

10 NRSRO's: Ratings agencies who must be paid by the person who wants

the rating [NRSRO's have a conflict of interest. A CDO creator pays

Moody's to rate it. The CDO Creator tells Moody's "We need

an AAA rating, how much will that cost?"]

11 Ratings agencies who get involved in politics (Georgia's Fair Lending

Act 2002)

CEO's of NRSRO's should be sued in civil courts for all they

have and all they ever will have. They should be transformed into

poor people immediately for negligence.

12 Fannie & Freddie political donations

The record of lobbying by Fannie (Jim Johnson and Franklin Raines)

is disgusting. Both should be sued in Criminal Courts for $100 billion

each [i.e. all they have and all they ever will have]. They should be transformed

into poor people immediately. Morality, they lack in spades!

13 Fannie & Freddie perq's from being a GSE

Government Sponsored Enterprises (GSE's) are assumed by all to

be backed by the Federal Government. That belief has proven true.

F&F lowered underwriting standards to 'win in the marketplace' of

subprime mortgages. Starting in late 2005, F&F doubled or tripled

their subprime liability by increasing their 'assets' by more than

$1 Trillion.

14 Federal regulators (FDIC,Fed,SEC,...) who didn't see a problem

Federal 'regulation' has proven over the past 112 years (since

the creation of the ICC) to not be up to the task. Is it time to

figure out a better way to fix social problems?

15 Community Reinvestment Act - CRA - A law passed in President

Carter's administration addressing "red-lining". President Clinton

embraced it, deciding it was his job and responsibility to help

Americans own a home. He believed the Federal Government had that

responsibility (it does not! If I am wrong, show me in US

Constitution where that mission is upheld, please). He created

policies

http://www.ots.treas.gov/_files/25022.pdf

that would encourage lenders to lend to those who could not

make the payments. GWB perpetuated those policies. "Encourage"

means

HUD

DoJ

OCC (Comptroller of Currency)

OTS

Board of Governors of Fed Reserve

FDIC

FHFB - Fed Housing Finance Board

FTC

NCUA - National Credit Union Administration

OFHEO

were VERY INTERESTED in whether or not blacks, hispanics, 'the poor'

and any other victims in America could get a loan, irrespective or

their means to pay for it. Should any of those organizations be dissatisfied

with the performance of a bank, they could and did make life uncomfortable

for that bank.

I do not believe CRA was primary cause of housing bubble. But to say

it did not contribute would be denying the obvious.

Ed's #1 best possible federal law within the

limits of the United States Constitutional:

IF YOU ENGAGE IN COMMERCE BETWEEN THE MANY STATES

OR BETWEEN THE STATES AND THE ABORIGINAL TRIBES OR

BETWEEN ONE OR MORE STATES AND ONE OR MORE FOREIGN

COUNTRIES, THERE IS NO LIMITED LIABILITY, STATE LAW

NOTWITHSTANDING.

This can be done with a law. No Constitutional Amendment is required.

Ed

PS:

Billy Ray Valentine:

Yeah. You know, it occurs to me that the best way

you hurt rich people is by turning them into poor people.

"Changing Places" Eddie Murphy

ScribeFire - a free plug-in for FireFox browser

Extremely simple to add to FireFox
Extremely simple to use.
Publishing this to my old blog that I haven't used in 2 years.

Type using WordPad/TextEdit like editor;
re-read for accuracy;
fix red-underlined spelling errors;
select which blogs to publish to;
push "Publish" button.

Danged simple.

Social Security the OBAMA way.

President Obama wants to address long term solvency of Social Security but his own party is seeking delays [http://www.nytimes.com/2009/02/23/us/politics/23social.html?hp].

The implication is that there are only enough resources to deal with one war at a time. This is probably an accurate description of the two houses of government currently in power. However, this is a new age. The Internet offers unforeseen opportunities for collaboration to design a proposal that will address solvency in the Social Security program. In the same fashion as standards are created in the computer/Internet world, working committees of people can focus on the "PROBLEMS" of Social security. In the past proposals seem to embrace current solutions and mechanisms and only adjust this or that option. An example is raising the maximum income limit for FICA tax. That solution only hides the problem for some years.

What it does not do is put Social Security on a firm foundation. I suggest a "Social Security Standards" committee whose mission is to define Social Security goals and to recommend solutions yielding permanent solvency. Like other standards committee's, all discussions would be visible in forums and anyone could join to listen and contribute to the forums. Such open government would proceed outside the purview of the politicians and lobbyists. Each, however, could contribute.

Would anyone in the White House consider such a course of events? What is needed is
a succinct statement of the Social Security problem. I suggest going back to FDR's original mission and starting with that as a problem statement. If it needs to be updated, then that also should be done. Without a succinct statement of the problem, all kinds of irrelevant solutions will be injected into the discussion.

Solve the Social Security funding problem using 21-st century techniques. Try it. It costs nothing and if congress does not want to waste time and political capital on this subject now, the people do. I, for one, would gladly participate.

Ed Bradford

Social Security, Part II

To read this, I suggest reading my proposal for funding Social Security
which precedes this in the BLOG. (egb)


This is a followup to the original posting. I have heard many times
that if someone had invested in the stockmarket he would have done much
better than the Social Security interest rate of 1.23%. I heard
something to the effect that "no 10 year period ever did worse than
1.23%. It's hard to propose an alternative to the current scheme based
on hearsay so I searched around and found daily Dow Jones records for
all trading days between Oct 1, 1928 and Oct 1, 2008.

I wrote a program that created three accounts: a cash account that
simply accumulated what was deposited without interest; a Social
Security (SS) account that accumuates deposits and grows at the SS
rate of 1.23%; and a dollar cost averaging account that grows
and shrinks at the rate of the Dow Jones averages.

The program is nothing more than you could do with pencil and paper,
but it is a lot faster. Assuming 'A' is the amount deposited in
each account per month:

          DJ   CASH       INTR                DCA
  DATE   CLOSE ACCT        ACCT               ACCT
               (x)        (y)                (z)

  month 1  w1  x = A     y = A                z = A
  month 2  w2  x = x+A   y = 1.0123 * y + A   z = (w2/w1) * z + A
  month 3  w3  x = x+A   y = 1.0123 * y + A   z = (w3/w2) * z + A
  ...

The program shows that there is no 30 year period where dollar cost
averaging did not do better than SS. Here are the results of analyzing
all dates using periods of from 1 to 60 years:

  YEARS INTR DCA
   1     341 609
   2     296 641
   3     262 663
   4     228 686
   5     199 703
   6     167 723
   7     159 719
   8     144 721
   9     135 719
  10     121 721
  11     118 712
  12     117 701
  13     105 700
  14      94 699
  15      88 694
  16      79 691
  17      76 682
  18      69 677
  19      63 670
  20      60 661
  21      52 658
  22      50 648
  23      42 644
  24      33 641
  25      23 638
  26      13 637
  27       9 629
  28       6 620
  29       3 611
  30       0 601
  31       0 589
  32       0 578
  33       0 566
  34       0 554
  35       0 542
  36       0 529
  37       0 518
  38       0 506
  39       0 494
  40       0 482
  41       0 469
  42       0 457
  43       0 446
  44       0 434
  45       0 422
  46       0 410
  47       0 397
  48       0 385
  49       0 374
  50       0 362
  51       0 350
  52       0 338
  53       0 325
  54       0 314
  55       0 302
  56       0 290
  57       0 278
  58       0 265
  59       0 253
  60       0 242

To read this table, the first column represents the total length
of time for the investment. The second column ("INTR") is the SS
Interest account accruing at 1.23% per year. The third column
is the Dollar Cost averaging account that follows the Dow Jones average.

Any line can be read as follows (choose 22, for example):

  Of all of the 22 year spans within Oct 1, 1928 and Oct 1,2008,
  50 of them would have shown a greater gain for a SS account
  than Dollar Cost Averaging, and 648 would have shown a greater
  gain for Dollar Cost Averaging than SS. There are a total of

  50 + 648 = 698 22-year spans each starting at the beginning
  of a month.

The results suggest that the risk of this plan is very low over a
30 year investment plan.

Using the example in the Heritage paper of a person starting out at age
21 and collecting at 67 (46 years) my program shows that the
worst 4 periods that person could have started investing in the time
from 1928 to 1962 [1962 + 46 = 2008 <- the present] are:   CASH = cash account, no interest   INT = interest account   DCA = dollar cost average of DJ close value. START    PERIOD   DJ
YEAR     (yrs)   CLOSE  CASH     INT       DCA    Difference
                (END)  (0.0%)   (1.23%)
------------------------------------------------------------------
1936/07/01 46    803.27 55300.00 74356.11 142633.01 68276.90
1936/06/01 46    814.97 55300.00 74356.11 145142.28 70786.18
1936/08/03 46    822.11 55300.00 74356.11 145559.27 71203.16
1936/03/02 46    828.39 55300.00 74356.11 148855.72 74499.61

and the best 4 periods are:

1953/06/01 46  10596.26 55300.00 74356.11 635346.00 560989.89
1953/12/01 46  10998.39 55300.00 74356.11 635604.09 561247.98
1953/09/01 46  10937.88 55300.00 74356.11 644034.34 569678.23
1954/01/04 46  11357.51 55300.00 74356.11 652417.48 578061.38
1953/07/01 46 11066.42 55300.00 74356.11 659513.43 585157.32


The program also showed that if an interest rate of 3.64% were
yielded in Social Security, then an Interest account would have equaled
the worst starting period (1936/07/01). That indicates that the worst
the DJ has done in ANY 46 year period since October 1928 was 3.64%
annally. All of these calculations are done without adjusting for
inflation. The results are what an investor would see, not what
he could buy.

Ed

Social Security - A Way Forward

Social Security - Classic versus Plan B

There seems to be some concern that as time moves forward, the number of
people supporting a retiree will diminish. Since Social Security is a
bucket of money, payout will depend on the bucket not running out of money.
If everyone lives longer, the money in the bucket can only be invested
at a 1.23%

[http://www.heritage.org/Research/SocialSecurity/CDA98-01.cfm]

interest rate and fewer people are contributing to the bucket
compared to the number withdrawing, one might guess there are dark
clouds on the horizon.

I've spoken to people that do not think any form of privatization of
Social Security is a good idea. The problem is those people don't have
any convincing arguments why SS will remain solvent.

However, there is one form of privatization no one has mentioned.

We would allow anyone to immediately choose between the current SS
investment plan yielding 1.23% annually [called affectionately SS Classic]
or Plan B. Plan B is

A) A portfolio of US Goverment securities (Treasury Bills)
or
B) A 50% mixture of US Government securities and high quality equities

Those who object to Plan B mention most frequently cite the "safety net"
idea where when all else fails, the U.S. Government and Social Security
will take care of you in your old age. If people invest in the stock market,
how could the government guarantee a safety net? Well, that's the issue.

Plan B is not only the ability to invest in something better than the
1.23% interest, but also the law that creates Plan B also says the
U.S. Government does not abandon the safety net at all. In fact,
the U.S. Government says the following to each citizen:

You choose either SS Classic or Plan B. In either case,
the U.S. Government guarantees you a minimum of 1.23% payout on the
same terms as the current Social Security. The U.S. Government stands
behind the concept of the safety net. If you choose Classic, when
you die, your benefits cease. If you chose Plan B, your keep the
investments.

Well that would seem to solve the problem except for the bucket. It
would now be drained at the same rate but would have fewer contributors
than ever and the fund will be bankrupt in no time. Or will it. The law
implementing Plan B has in it the following required condition:

a) All returns in the Plan B accounts beyond the 1.23% will be
taxed on a yearly basis. The rate will initially be as much as
50% of the return over and above the 1.23% of SS Classic.
Thus, if your account earns 4%, then the US Government
might take 50% of the difference between 4% and 1.23% or it
might take as much as 1.385%.

The money taken is earmarked by law for SS Classic payout.
The tax is further earmarked by law to shrink as the need
for it disappears when no people remain on Social Security
Classic. When a surplus is collected in one year, the tax is
by law reduced in the following year. No additional legislation
is needed.

If the average earnings of those who enter Plan B is just

1.23 + 1.23 + 1.23 = 3.69%

then 50% of the excess above 1.23 is magically 1.23 and the amount of
contribution into the SS Classic fund (into the bucket) is identical
to that now. All who particpate in Plan B always receive a better
return on the SS investment that those in SS Classic. [Treasury
Bills yield 3% today.] Because of the better return and the
ownership of the investment account, SS Classic will rapidly
disappear on its own.

There is one other issue that is seldom mentioned that leads legislators
to oppose privatization: the U. S. Government can borrow
money from the bucket at the rate of -- 1.23% or there abouts.
SS Classic provides our legislators with low cost money to spend on
many things. This source of funds would eventually dry up and the U.S.
Government would have to pay competitive interest rates to get money to
run government. The reduction in available money to the government
seems like a good idea to me.

Here are some observations.

1. The private account would have to be as remote as the SS Classic
account in terms of early cash out.

2. There would have to be publicly visible and verifiable rules for
investments. Trading and options and short selling should be illegal,
in my opinion. [Taxing to fill the existing Classic bucket
would have the effect of lowering the interest rate of the
investments which is what we are trying to raise.] Each account
holder must be able to verify that his or her account is following
proper investment rules.

SUMMARY:
1. Choose SS Classic - current scheme or SS Plan B private account.
2. U.S. Government guarantees all 1.23% and SS Classic terms.
3. U.S. Government taxes private proceeds in excess of 1.23% to cover
shortfall for those who remain in SS Classic.
4. SS Classic withers and dies because no one chooses it leaving
SS Plan B as the surviving partner.
5. U.S. Legislators improvise, adapt and overcome.

2008-10-03
Ed Bradford

What does it all mean?

Financial Crises Explanations

Oct 3, 2008

Over the past several months the financial crises in America has
consumed lots of discussion. I have found few facts and a lot of long
pointed fingers. For my own references here are several articles
that attempt to explain some of the issues:

1. The Subprime Primer. This is a picture story in PowerPoint.
  http://michaelperelman.files.wordpress.com/2008/02/presentation1.pps

2. This one is factual and a good read.
  http://www.reason.com/news/show/129158.html

3. This one looks a bit deeper and points some fingers:
  http://www.youtube.com/watch?v=1RZVw3no2A4

4. A paper authored by Steven D. Levitt (Freakonomics). Here Levitt says,
  all the information in what is written here is from Doug Diamond and
  Anil Kashyap:

  http://freakonomics.blogs.nytimes.com/2008/09/18/diamond-and-kashyap-on-th
e-recent-financial-upheavals/

5. Formal paper written be real Economists:
  Leveraged Losses: Lessons from the Mortgage Market Meltdown
  David Greenlaw, Jan Hatzius, Anil K Kashyap, Hyun Song Shin
  http://faculty.chicagogsb.edu/anil.kashyap/research/MPFReport-final.pdf

Ed.