Inde

ABCP market. See asset-backed commercial paper market

Abolafia, Mitchel, 228, 238, 252, 255, 260 ABS-CDO, 109, 117, 129, 131, 161-163, 170. See also collateralized debt obligation, tranching

Adjustable-rate mortgages, 20-21, 111-112; growth, 20-21, 25, 68, 106, 111-112, 143; fraction of mortgage originations, 64, 147; at Countrywide Financial, 70, 157, 182-183; at Wash­ington Mutual, 90, 92, 217-220; at Bear Stearns, 212-217.

Ahmanson, 91

Alt-A mortgages, 5, 113, 209; growth, 9, 68, 143, 172-173; fraction of mortgage originations, 64, 147, 155-156, 262; ratings downgrades, 177; at Bear Stearns, 209, 212, 216-217; delin­quency and foreclosures, 215-217; post-2008 financial crisis, 262. See also nonconventional mortgages

Alternative Mortgage Transaction Parity Act. See AMTPA

AMTPA (Alternative Mortgage Transaction Parity Act), 114-115

ARMs. See adjustable-rate mortgages Asset-backed commercial paper market, 116, 139, 161, 163-167; international involvement, 10, 190-194; role in fueling growth of mortgage securiti­zation markets, 86, 139, 144-145, 158, 169, 198, 222, 275; role in 2008 finan­cial crisis, 171, 176, 179-184, 190-194, 222, 226, 268; regulation and decline post-2008 financial crisis, 261, 271; during coronavirus pandemic, 271-272

Bailout. See TARP bailout, Citigroup bailout, FIRREA

Bank of America, 19-21; financial innovation, 20-21, 115, 120; verti­cal integration, 71, 95, 153-155, 167; during and after 2008 financial crisis, 178, 182-183, 266

Bear Stearns, 79-87; vertical integration, 7, 19, 27, 70-72, 79-87, 102, 154-155, 159, 167, 209-212; financial inno­vation, 21; during and after 2008 financial crisis, 26, 28, 145, 177-181, 187, 192-193, 246, 249-250, 255, 259; nonconventional mortgages, 21,

Bear Stearns (continued)

70-72, 205-206, 211-217; mortgage fraud, 199, 208-217, 220-221.

Bernanke, Ben, 2, 174-175, 236, 245; handling of 2008 financial crisis, 247, 252-253, 255, 260

Bond ratings, 12, 106, 113, 117, 122, 129-138, 165; presumption of gov­ernment backing, 16, 22, 52, 65, 68, 129-133; nonconventional mortgages, 113, 134-135, 143-144, 146, 158-160, 177, 182; use of CDO-CDOs to secure high ratings, 143-144, 146; down­grades, 175-177, 180, 182, 208, 222 Borrowing to finance mortgage secu­ritization, 8, 23, 106-108, 143-144, 163-167; role in 2008 financial crisis, 1, 25-26, 82, 171, 175-176, 179-181, 187-188, 207-208, 222, 229, 249-250; GSEs, 49-53, 68; role in fueling growth of mortgage securitization markets, 66-68, 71, 74-75, 80-82, 86-87, 110-111, 116, 139-140, 158, 161. See also asset-backed commercial paper market, repo market

Bowen, Richard M. III, 186 Building societies, 34-36

Bureaucratic organizations, 225, 231-232, 235-238, 270

California housing market, 78, 91, 148, 173, 183, 217-219

Capital markets. See borrowing to finance mortgage securitization, asset-backed commercial paper mar­ket, repo market

Cayne, James, 83

CDO. See collateralized debt obligation CDO-CDO, 118, 143-144, 146, 161, 170 CDS. See credit default swap Cerulo, Karen A., 225, 237-238 Citibank, 93-102, 181, 185-188; vertical integration, 17, 19-20, 27, 69-72, 93-102, 105, 153-155, 167; noncon- ventional mortgages, 20, 70-71, 115, 153-155, 205; during and after 2008 financial crisis, 28, 178-179, 185-188, 266; financial innovation, 70-71, 115, 123. See also CitiFinancial, CitiMort- gage, Traveler’s Insurance CitiFinancial, 94, 101 Citigroup. See Citibank Citigroup bailout, 187-188 CitiMortgage, 94, 101 CMO. See collateralized mortgage obligation

Collateralized debt obligation, 12, 129, 143-144, 159-166, 171-172; financial innovation, 116-118, 129, 140, 186-187, 205-206; ratings, 116-118, 143-144, 177; role in 2008 financial crisis, 247-249, 255. See also ABS-CDO, collateralized mortgage obligation, CDO-CDO, tranching

Collateralized mortgage obligation, 58-59, 117, 120.

Commercial paper market. See asset-backed commercial paper market

Computerization, 28, 75-76, 78, 106, 121-127, 137-138, 140

Conglomerate banks (post-2008), 266-268, 275

Conventional mortgages, 4, 31, 104; FHA establishment, 31, 41, 49; market share, 20-22, 63-64, 147; GSE market dominance, 68, 72, 75, 154-155. See also nonconventional mortgages

Coronavirus pandemic, 271-272 Countrywide Financial, 18, 70-79, 181-183; nonconventional mortgag­es, 20-21, 24, 27, 70-71, 76-79, 143, 153-155, 157-158, 205; vertical integra­tion, 27, 68, 70-79, 155, 167-168, 171; during and after 2008 financial crisis, 28, 73, 175, 179, 181-183; financial innovation, 74-76, 115, 123

Credit cards, 99, 124, 128

Credit default swap, 116-118, 133, 246 Credit scoring, 20, 113, 124-129, 134-136 Cultural frames, 225-227, 231-233, 235-238, 254, 269-270, 273

Currie, Anthony, 209-210

Depository Institutions Deregulation and Monetary Control Act. See DIDMCA

Deregulation, 17-19, 61, 69, 94, 98, 102, 105, 114-115, 138, 257-258, 261, 273-275; of savings and loans, 13, 27, 45-47. See also DIDMCA, AMTPA, Garn-St. Germain Act, Glass-Steagall Act, Regulation Q

DIDMCA (Depository Institutions Deregulation and Monetary Control Act), 44, 114-115

Dodd-Frank Act, 266-267 Dudley, William, 248-249

Economic forecasting, 224-225,

232-247, 254-255, 268-269 Economics (academic discipline), 2,

225-226, 229, 232-237, 254, 258,

269-271. See also macroeconomics, economic forecasting

EMC, 19, 81, 86, 209, 212, 214. See also Bear Stearns

Encore Credit Corporations, 209-210 Enhanced Leverage Fund, 180 European crisis, 6, 10, 188-194, 226 Expertise, 232-233, 258-259, 260,

269-271.

Fair, Isaac, and Company, 125-129 Fannie Mae, 48-53, 119-120, 123; origins,

13-14, 42, 48-53; privatization, 13,

50-53, 119-120; takeover during 2008 financial crisis, 31-32, 178, 252, 262-263, 265-266; mortgage standard-setting, 113; financial innovation, 123-124, 131-132.

See also GSEs

FCRA (Fair Credit Reporting Act), 125-126

FDIC (Federal Deposit Insurance Corporation), 40, 47, 104, 185, 187, 220

Federal Home Loan Mortgage Corpora­tion. See Freddie Mac

Federal interest rates, 112, 172, 229-231; during the stagflation crisis, 15, 43-44, 151; Federal Reserve decision-making, 229-231, 243, 253, 255; during 2008 financial crisis, 253, 255

Federal National Mortgage Association.

See Fannie Mae

Federal Reserve, 96-97, 224-255; role in deregulation, 17, 94; handling of early 2000s recession, 21, 23, 144, 146; handling of 2008 financial crisis, 29, 80, 172, 174-175, 178, 180-182, 185, 187, 192, 224-255, 260, 266-267, 269-272; handling of stagflation, 44. See also FOMC

FHA (Federal Housing Administra­tion), 40-43, 48-49, 51-52, 64, 104, 119-120, 147

FHLBB (Federal Home Loan Bank Board), 39-40, 45-47, 51-52, 111-112

FICO scores, 113, 124-125, 127-129. See also credit scoring, Fair, Isaac, and Company

Financial crises, 108-109, 257-260, 266-276. See also Great Depression, stagflation, 2008 financial crisis

Financial globalization, 10, 26, 188-194; at Citibank, 93-94, 97-98, 185. See also European crisis

Financial innovation, 27-28, 103-105, 107-141; role of government, 4, 14, 52-57, 103-105, 107, 119-120, 124, 257, 275; downsides, 30, 108-109, 258, 260, 269, 271, 276; at Countrywide Financial, 74, 115, 123; at Bear Stearns, 80, 85-85; nonconventional mortgag­es, 111-115, 204-206, 212-214; at Bank of America, 115; at Citibank, 115, 123

Financial sector profits, 7, 33, 72, 141, 158, 170; as share of American economy, 150-151, 226, 268, 276

FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act), 45, 47

Fitch Ratings, 136

FOMC (Federal Open Market Committee), 224-255, 260, 268, 270-271.

FSLIC (Federal Savings and Loan Insur­ance Corporation), 40, 44, 47, 104

Gallin, Josh, 240-241

Garn-St. Germain Act, 15, 45, 112, 114-116

Ginnie Mae, 14, 51-54, 119-121, 262-263 Glass-Steagall Act, 17-18, 97, 136;

repeal, 7, 94, 100, 185, 258. See also Gramm-Leach-Bliley Act, vertical integration

Goldman Sachs, 85, 134, 178, 184-185, 202, 266; lack of vertical integration, 7, 72

Government National Mortgage Association. See Ginnie Mae

Government regulation, 4, 224-257, 267-271; post-Great Depression, 39, 60-61, 97. See also Federal Reserve, FOMC, GSEs, Glass-Steagall Act, Regulation Q, deregulation Government-sponsored enterprises.

See GSEs

Gramlich, Ned, 236, 239 Gramm-Leach-Bliley Act, 94, 138 Great Depression, 31-32, 36-42, 97, 103-104; comparisons to Great Recession, 2, 255; government response, 4, 11, 39-42, 60, 94, 256, 273; impact on Bear Stearns, 82; impact on Citibank, 90

Great Recession, 1, 248, 255, 259-260; global recession, 10, 188-189, 194∙ See also 2008 financial crisis

Greenberg, Alan, 83 Greenspan, Alan, 195, 236, 239, 242 GSAMP Trust 2006-NC2, 134-135 GSEs (government-sponsored enter­prises), 13-16, 31-33, 50-56, 119-120; origins, 13-16, 51-56, 104-105,

131- 132, 276; connections to private banks, 12, 21-22, 59-61, 63-68, 72-73, 74-75, 85, 116; market share, 63-68, 123, 148-149, 154-155; during and after 2008 financial crisis, 261-268, 276∙ See also Fannie Mae, Freddie Mac, Ginnie Mae

Haggerty, Mary, 211

HELs. See home equity loans High-Grade Structured-Credit Strate­gies Fund, 180

HOLC (Home Owners' Loan Corpora­tion), 37, 40

Home equity loans, 20, 68-69, 114; growth, 20, 64, 70, 106, 143, 147, 155, 162-163, 172-173; ratings down­grades, 177∙ See also nonconventional mortgages

Homeownership rates, 31-34, 36-37, 48, 60-61; efforts to increase, 13, 27, 42-43, 276

Housing bubble, 110, 146-151, 254, 257-259; government response, 29, 227, 229-231, 233-234, 238-246, 254; causes, 142-144, 167-170, 172-174; collapse, 172-174, 183-184, 219-220

Industrial processing of mortgages, 106, 129-138

Inequality, 274-275

Inflation, 43; Federal Reserve decision-making, 29, 250-253, 255; during 1970s, 32-33, 43-44, 99, 104-105, 110-112, 115, 139∙ See also stagflation

Interest-only mortgages, 7, 9, 115, 143, 174, 203, 182.

Investment banks, 10-11, 72, 79-87; vertical integration, 10-11, 21, 65-67, 72, 105-106, 138-139; financial in­novation, 120. See also Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, Morgan Stanley

Johnson Administration, 13-14, 50-53, 117-118

JPMorgan Chase, 168, 193, 266; vertical integration, 19, 71, 168; during and after 2008 financial crisis, 178-181, 185, 220, 266

Jumbo loans, 20-21, 78, 113; growth, 9, 20-21, 28, 70, 85, 106, 113-115; frac­tion of mortgage originations, 63-64, 147-148. See also nonconventional mortgages

Killinger, Kerry, 89-92, 183-184, 217-218, 220

Lacker, Jeffrey, 236, 243, 246, 252

Lehman Brothers, 153-155, 192-193; during and after 2008 financial crisis, 1, 10, 29, 145, 164-167, 175, 178, 181, 184, 192-193, 224-225, 227, 249, 251-252, 255, 260; vertical integration, 7, 19, 70-72, 85-86, 158-159; noncon- ventional mortgages, 20-21, 205

Levine, Ross, 108 Lewis, Salim, 82-83 Loeb, David, 73-76, 84 Long Beach Financial, 92, 153, 217-218 Longbrake, William, 89-90

Macroeconomics, 29, 225-228, 233-239, 244-247, 251-252, 254-255, 269-271. See also economics (academic discipline), economic forecasting

Marano, Tom, 209-210

Market devices, 121-122, 129-138.

See also financial innovation

MBA. See Mortgage Bankers Association

MBS-CDO. See collateralized mortgage obligation, tranching

Mergers and acquisitions, 49-50, 115, 138, 256, 273; role in vertical inte­gration, 18, 66-67, 69, 99-101, 158, 167-168; during and after 2008 finan­cial crisis, 29, 145, 178, 208, 252, 260; at Bear Stearns, 82-84, 181, 209-210; at Washington Mutual, 89-93, 178, 217-218; at Citibank, 94, 99-101, 185; at Merrill Lynch, 159; at Morgan Stanley, 159; at JPMorgan Chase, 181, 217-218; at Bank of America, 183; at Countrywide Financial, 183

Merrill Lynch, 154-155; vertical inte­gration, 7, 72, 85; nonconventional mortgages, 159-160, 167-168, 174, 205; during and after 2008 financial crisis, 178, 180-181

Minsky, Herman, 109, 257-259 Mishkin, Frederic, 2, 237, 245, 247-248, 251-252

Misrepresentation of loan applications, 196, 206-207. See also mortgage fraud

Moody's Investment Service and Stan­dard, 136, 175, 180

Morgan Stanley, 154, 167, 266; vertical integration, 7, 72, 85, 159; during and after 2008 financial crisis, 178, 266; nonconventional mortgages, 202, 205 Mortgage Bankers Association, 123-124 Mortgage fees, 11-12, 18, 95, 100, 105,

146, 152; nonconventional mortgages, 20, 25, 66-79, 112-113, 143, 157-158, 160, 183, 195, 197-198, 203, 205-209, 218-221

Mortgage fraud, 177, 195-223, 259, 267; causes, 6, 8-9, 28-29, 81, 170, 195-223; among savings and loans, 46-47. See also misrepresentation of loan applications, predatory lending, securities fraud

Mortgage market competition, 19, 29,

70-71, 104, 198

Mortgage origination, 7, 11-12, 16-21,

27, 59-60, 66-72, 110-115, 122-123, 221-222, 267; at Bear Stearns, 7, 179, 209-211; nonconventional mortgag­es, 8-9, 64, 114-115, 142-169, 175, 183, 195-199, 205, 209-211, 217-219; quan­tity of origination, 23, 63-64, 172, 175; role of GSEs, 49-51, 56, 267; bank establishments and acquisitions of originators, 78, 80-82, 86-87, 91-92, 149, 171; at Countrywide Financial, 181-182; at Washington Mutual, 183, 217-219. See also originate-to-hold model, originate-to-distribute model, vertical integration

Mortgage refinancing boom of

2001-2003, 9, 73, 76, 79, 92, 141-142, 146-149, 170, 259; decline, 7, 9, 24,

28, 142-143, 156-157, 172, 174, 206, 238-239

Mozilo, Angelo, 73-76, 84, 181-183 Mutual funds, 148-149, 190-191 Mutual savings banks, 35-36

NASDAQ index, 146

Negative amortization, 92, 112, 212, 215, 220

Neoliberalism, 29, 260-261, 273-276 Nonconventional mortgages, 7-9, 67-71, 106, 110-115, 142-178; growth of market, 7-9, 22-25, 28, 63-64, 67-71, 142-169, 195, 198, 239, 258, 262-264; at Countrywide Financial, 27, 70, 78-79, 143, 157, 204-207; at Bear Stearns, 80-82, 85-86, 211-217; at Washington Mutual, 92-93, 183-184, 217-221; at Citibank, 101; after 2008 financial crisis, 260. See also adjustable-rate mortgages, Alt-A mortgages, home equity loans, interest-only mortgages, jumbo loans, option ARMs, subprime mortgages

Option ARMs, 92-93, 112, 183, 206, 212-221, 244

Organizational theory. See bureaucratic organizations

Originate-to-distribute model, 5, 9, 49, 60, 151-152, 197. See also mortgage origination, vertical integration

Originate-to-hold model, 63, 67. See also savings and loan banks

Pacific Northwest, 88 Pass-throughs, 120, 129 Peach, Dick, 242 Pepper, Lou, 88-91 Poole, William, 242-243 Predatory lending, 81, 195-197, 199-202, 205-207, 214-222. See also noncon- ventional mortgages, mortgage fraud

Prepayment risk, 14, 55, 57-58, 124,

132- 133, 137

Prince, Charles, 185-186

Private label issuance, 86. See also nonconventional mortgages

Private mortgage bonds, 35-36, 38-39

Quinn, Sarah, 13, 50-53

Race, 143, 195-197, 219, 275

Ranieri, Lewis, 33, 56-59, 85, 131, 133 Real Estate Mortgage Investment Con­duits. See REMICs

Refinancing. See mortgage refinancing Regulation. See government regulation Regulation Q, 39, 41, 43-45, 50; aboli­tion, 15, 89, 98-99, 116

REMICs (Real Estate Mortgage Investment Conduits), 57, 85, 122, 129, 131-132

Repo market, 163-164; role in fueling growth of mortgage securitization markets, 86, 139, 144-145, 158, 275; role in 2008 financial crisis, 176, 180, 222, 249-250, 268; regulation and decline post-2008 financial crisis, 271; during coronavirus pandemic, 271-272

Resolution Trust Corporation (RTC), 47, 86

Risk-taking, 4, 30, 185-187, 256-258, 260; among savings and loans, 15, 32, 46, 89; in nonconventional mortgage market expansion, 25, 157-158, 198, 207-209; at Bear Stearns, 80-84;

at Citibank, 185-187. See also bond ratings

Rubin, Howard, 85

Rubin, Robert, 185-186

Salomon Brothers, 15, 56-57, 154, 178; financial innovation, 16, 56-57, 59, 84-85, 120, 133; lobbying, 33

S&P. See Standard and Poor's Savings and loan banks, 10-13, 27, 32, 64-67; crisis and decline, 13, 15-16, 32-33, 43-48, 55-56, 58-51, 105, 109-111, 139, 257; origins, 32-35, 39-41; financial innovation, 115. See also Washington Mutual

Saxon Capital, 159

SEC (Securities and Exchange Commission), 52, 120, 133, 136, 197

Securities fraud, 197-199. See also mortgage fraud

Shadow banking. See asset-backed commercial paper market, repo market

Shareholder value capitalism, 274 SIVs. See special investment vehicles SMMEA (Secondary Mortgage Market Enhancement Act), 131

Special investment vehicles, 164-167 Special-purpose vehicles, 122, 129-133 SPVs. See special-purpose vehicles Stagflation, 104-105, 273; effects on savings and loans, 32-33, 43-44, 104, 257; role in prompting financial innovation, 99, 104-105, 111-112, 115, 139-140

Standard and Poor's, 134, 136

Subprime mortgages, 1-2, 113, 134-135, 202, 261-262; growth, 9, 20, 64, 67, 106, 114-115, 153-156; fraction of mortgage originations, 64, 147; at Countrywide Financial, 70, 78-79, 143, 153-155, 182; at Bear Stearns, 81, 153-155, 209-210, 212; at Wash­ington Mutual, 92-93, 153-155, 184, 217-218; at Bank of America, 153-155; at Lehman Brothers, 153-155; at

Merrill Lynch, 153-155; at Citibank, 153-155, 187; role in 2008 financial crisis, 173-175, 178, 245-248; regula­tory response, 239, 245-258. See also nonconventional mortgages

TARP (Troubled Asset Relief Program) bailout, 178, 187-188, 253

Taxes on mortgage-backed securities, 57 Tax Reform Act of 1986, 15, 57, 114, 131 Tea Party, 195

TRA. See Tax Reform Act of 1986 Tranching, 12, 117-118, 137-138, 161-163; development, 14, 28, 32-33, 58, 106, 120, 122, 132-133; ratings, 12, 129-131,

133- 135; repackaging in 2000s, 143-144, 163, 170, 205-206, 208

Traveler's Insurance, 17, 99-100 Troubled Asset Relief Program. See

TARP bailout.

2008 financial crisis, 1-2, 6, 145, 170-194; existing accounts, 5-7, 108-110; regulatory response, 29, 246-255, 259-260; collapse of Coun­trywide Financial, 73, 178, 181-183; collapse of Bear Stearns, 79-80, 179-181; collapse of Washington Mutual, 183-185; impact on Citibank, 185-188. See also European crisis, Great Recession, TARP bailout

US Treasury bonds, 23, 57, 96, 112, 131, 164, 228, 272; equivalence of mortgage-backed securities, 16, 52, 65, 68, 133, 146

VA. See Veterans Administration Vertical disintegration, 39, 59-60 Vertical integration, 7-8, 63-102, 158-160; development, 10-13, 16-21, 63-102, 107, 138-140, 151-156; collapse, 25-26, 145, 167-168, 171, 260; downsides, 151-156, 167-168, 197-199, 207-212, 222-223, 257-258

Veterans Administration, 31, 42

WaMu. See Washington Mutual Bank Washington Mutual Bank, 19, 72, 87-93,

181; nonconventional mortgages, 20-21, 90, 92, 153-155, 183-184, 205, 217-221; vertical integration, 27, 72, 87-93, 102, 205; during and after 2008 financial crisis, 178-179, 183-185; mortgage fraud, 199, 208, 217-221.

See also Long Beach Financial

Wells Fargo, 153-143, 181, 266; vertical integration, 19, 71; nonconventional mortgages, 21, 154

Williams, John, 234, 241-242

World War II, 34, 42, 82, 97

Wriston, Walter, 93-94, 97-99