August 20, 2008
Schadenfreude File: New Century Running on Fumes
The point I’m trying to make with the schadenfreude files is that it pays to pay attention — sounds obvious, but it isn’t (at least, not for a dummy like me). Or as the great Yogi (Berra) put it: “You can observe a lot just by watching.”
From March 5, 2007: New Century Leads Drop in Shares of Mortgage Lenders
“A surge in defaults on mortgages to the riskiest borrowers has forced more than 20 lenders to close or seek buyers since the start of 2006 … Independent mortgage companies had been thriving until last year as Wall Street snapped up home loans to feed demand from investors for higher-yielding securities … New Century’s fate now rests with the securities firms that once staked it to more than $17 billion and bought its loans by the thousands … The brokerages financed New Century to create a steady flow of mortgages that they packaged into bonds. With delinquent home loans rising nationwide, Wall Street may scale back or cut off credit to mortgage companies … The lenders help subprime mortgage companies by providing ‘warehouse’ lines of credit. They’re called warehouse financing because the banks and brokerages fund individual mortgage loans and then store them until there’s an inventory large enough to sell as a batch.”
I wrote a post in early December 2006 titled Subprime Mortgage Lenders’ Submerging Share Prices, but that was a pretty late-in-the-game observation. Can anyone point me to a series of blog posts/articles written in early 2006 (but not before!) about the coming collapse of the subprime lenders? Thanks.
August 20th, 2008 at 11:43 pm
Go look at the archives on Calculated Risk.
We have been talking about it there for three years.
It has been simply amazing watching how late Wall Street media was to the party.
August 21st, 2008 at 12:14 am
I just quickly looked through Bill Cara’s archive and I didn’t see anything…though I might have missed it. It seems to me Bill was blogging about sub-prime early on. I can’t remember anyone else at the moment.
August 21st, 2008 at 7:43 am
Martinweiss.com
August 21st, 2008 at 8:32 am
Econimist Nouriel Roubini and the Big Picture blog
August 23rd, 2008 at 6:36 am
Here’s one from April 2006
And I know you specified none from before the early 2006 mark, but you may find this Frank Barbera market-wrap from late 2005 interesting. Note the emphasis on financial shares and mortgage companies with subprime lending exposure.
August 23rd, 2008 at 9:41 am
@David: Thanks for the links… interesting that Meredith Withney was quoted in the first one, and Bear Stearns’ Scott Coren identified clearly who was at greatest risk. Frank Barbera’s post was also very good, and not “too early.”
August 24th, 2008 at 10:58 pm
Here’s one of many posts I wrote in early 2006, dated May 1, 2006: How Many Foreclosures Will Hit the Market?
Keep up the good work, Mao, I’m a daily reader. CHS
August 25th, 2008 at 10:23 am
@CHS: Thanks for the link, a timely article indeed. I’ve added oftwominds to my Bloglines and look forward to reading you regularly.
August 27th, 2008 at 5:52 am
Mao, thank you very much for the link!
CHS