Subprime Lessons on Bloomberg

[fmendez at svb.com]

You're not going to believe what I just finished reading on Bloomberg.
If you'd like to provide the author with your thoughts, he can be
reached at mlewis1@bloomberg.net

A Wall Street Trader Draws Some Subprime Lessons: Michael Lewis
2007-09-05 00:05 (New York)
Commentary by Michael Lewis

Sept. 5 (Bloomberg) -- So right after the Bear Stearns funds blew
up, I had a thought: This is what happens when you lend money to poor
people. Don't get me wrong: I have nothing personally against the poor.
To my knowledge, I have nothing personally to do with the poor at all.
It's not personal when a guy cuts your grass: that's business. He does
what you say, you pay him. But you don't pay him in advance: That would
be finance. And finance is one thing you should never engage in with the
poor. (By poor, I mean anyone who the SEC wouldn't allow to invest in my
hedge fund.)
That's the biggest lesson I've learned from the subprime crisis.
Along the way, as these people have torpedoed my portfolio, I had some
other thoughts about the poor. I'll share them with you.

1) They're masters of public relations.
I had no idea how my open-handedness could be made to look, after
the fact. At the time I bought the subprime portfolio I thought: This is
sort of like my way of giving something back. I didn't expect a profile
in Philanthropy Today or anything like that. I mean, I bought at a
discount. But I thought people would admire the Wall Street big shot who
found a way to help the little guy. Sort of like a money doctor helping
a sick person. Then the little guy wheels around and gives me this
financial enema. And I'm the one who gets crap in the papers! Everyone
feels sorry for the poor, and no one feels sorry for me. Even though
it's my money! No good deed goes unpunished.

2) Poor people don't respect other people's money in the way money
deserves to be respected. Call me a romantic: I want everyone to have a
shot at the American dream. Even people who haven't earned it. I did
everything I could so that these schlubs could at least own their own
place. The media is now making my generosity out to be some kind of
scandal. Teaser rates weren't a scandal. Teaser rates were a sign of
misplaced trust: I trusted these people to get their teams of lawyers to
vet anything before they signed it. Turns out, if you're poor, you don't
need to pay lawyers. You don't like the deal you just wave your hands in
the air and moan about how poor you are. Then you default.

3) I've grown out of touch with ``poor culture.''
Hard to say when this happened; it might have been when I stopped
flying commercial. Or maybe it was when I gave up the bleacher seats and
got the suite. But the first rule in this business is to know the people
you're in business with, and I broke it. People complain about the rich
getting richer and the poor being left behind. Is it any wonder? Look at
them! Did it ever occur to even one of them that they might pay me back
by WORKING HARDER? I don't think so. But as I say, it was my fault, for
not studying the poor more closely before I lent them the money. When
the only time you've ever seen a lion is in his cage in the zoo, you
start thinking of him as a pet cat. You forget that he wants to eat you.

4) Our society is really, really hostile to success. At the same
time it's shockingly indulgent of poor people.
A Republican president now wants to bail them out! I have a
different solution. Debtors' prison is obviously a little too retro, and
besides that it would just use more taxpayers' money. But the poor could
work off their debts. All over Greenwich I see lawns to be mowed, houses
to be painted, sports cars to be tuned up. Some of these poor people
must have skills. The ones that don't could be trained to do some of the
less skilled labor -- say, working as clowns at rich kids' birthday
parties. They could even have an act: put them in clown suits and see
how many can be stuffed into a Maybach. It'd be like the circus, only
better.
Transporting entire neighborhoods of poor people to upper Manhattan
and lower Connecticut might seem impractical. It's not: Mexico does this
sort of thing routinely. And in the long run it might be for the good of
poor people. If the consequences were more serious, maybe they wouldn't
stay poor.

5) I think it's time we all become more realistic about letting the
poor anywhere near Wall Street.
Lending money to poor countries was a bad idea: Does it make any
more sense to lend money to poor people? They don't even have mineral
rights!
There's a reason the rich aren't getting richer as fast as they
should: they keep getting tangled up with the poor. It's unrealistic to
say that Wall Street should cut itself off entirely from poor -- or, if
you will, ``mainstream'' -- culture. As I say, I'll still do business
with the masses. But
I'll only engage in their finances if they can clump themselves together
into a semblance of a rich person. I'll still accept pension fund money,
for example. (Nothing under $50 million, please.) And I'm willing to
finance the purchase of entire companies staffed basically with poor
people. I did deals with Milken, before they broke him. I own some
Blackstone. (Hang tough, Steve!)

But never again will I go one-on-one again with poor people.
They're sharks.

This post transferred from the cdb-l mailing list

[qfaadvsr at comcast.net]

As a professional in the capital markets industry I am disappointed with
this person's views, opinion and discrimination towards a socioeconomic
group of US residents.

He should be a mature professional and just say he made a mistake in buying
subprime loans. Or he didn't understand what he bought. He didn't know that
this sector required proper due diligence on the issuer , originator and
servicer of these loans. You can't rely on Moody's & S & P's ratings
alone!!!!

I personally have stayed away from investing in this arena (even though all
the Wall Street firm have pushed their structured products on me).

I respectfully request that he either apologizes to the American community
since he has posted his opinion in a public medium or offers a retraction.


joe


-----Original Message-----
From: bounce-1779899-8128352@list.cornell.edu
[mailto:bounce-1779899-8128352@list.cornell.edu] On Behalf Of Fred Mendez
Sent: Thursday, September 06, 2007 7:56 PM
To: communitydevelopmentbanking-L
Subject: Subprime Lessons on Bloomberg


You're not going to believe what I just finished reading on Bloomberg.
If you'd like to provide the author with your thoughts, he can be
reached at mlewis1@bloomberg.net

A Wall Street Trader Draws Some Subprime Lessons: Michael Lewis
2007-09-05 00:05 (New York)
Commentary by Michael Lewis

Sept. 5 (Bloomberg) -- So right after the Bear Stearns funds blew
up, I had a thought: This is what happens when you lend money to poor
people. Don't get me wrong: I have nothing personally against the poor.
To my knowledge, I have nothing personally to do with the poor at all.
It's not personal when a guy cuts your grass: that's business. He does
what you say, you pay him. But you don't pay him in advance: That would
be finance. And finance is one thing you should never engage in with the
poor. (By poor, I mean anyone who the SEC wouldn't allow to invest in my
hedge fund.)
That's the biggest lesson I've learned from the subprime crisis.
Along the way, as these people have torpedoed my portfolio, I had some
other thoughts about the poor. I'll share them with you.

1) They're masters of public relations.
I had no idea how my open-handedness could be made to look, after
the fact. At the time I bought the subprime portfolio I thought: This is
sort of like my way of giving something back. I didn't expect a profile
in Philanthropy Today or anything like that. I mean, I bought at a
discount. But I thought people would admire the Wall Street big shot who
found a way to help the little guy. Sort of like a money doctor helping
a sick person. Then the little guy wheels around and gives me this
financial enema. And I'm the one who gets crap in the papers! Everyone
feels sorry for the poor, and no one feels sorry for me. Even though
it's my money! No good deed goes unpunished.

2) Poor people don't respect other people's money in the way money
deserves to be respected. Call me a romantic: I want everyone to have a
shot at the American dream. Even people who haven't earned it. I did
everything I could so that these schlubs could at least own their own
place. The media is now making my generosity out to be some kind of
scandal. Teaser rates weren't a scandal. Teaser rates were a sign of
misplaced trust: I trusted these people to get their teams of lawyers to
vet anything before they signed it. Turns out, if you're poor, you don't
need to pay lawyers. You don't like the deal you just wave your hands in
the air and moan about how poor you are. Then you default.

3) I've grown out of touch with ``poor culture.''
Hard to say when this happened; it might have been when I stopped
flying commercial. Or maybe it was when I gave up the bleacher seats and
got the suite. But the first rule in this business is to know the people
you're in business with, and I broke it. People complain about the rich
getting richer and the poor being left behind. Is it any wonder? Look at
them! Did it ever occur to even one of them that they might pay me back
by WORKING HARDER? I don't think so. But as I say, it was my fault, for
not studying the poor more closely before I lent them the money. When
the only time you've ever seen a lion is in his cage in the zoo, you
start thinking of him as a pet cat. You forget that he wants to eat you.

4) Our society is really, really hostile to success. At the same
time it's shockingly indulgent of poor people.
A Republican president now wants to bail them out! I have a
different solution. Debtors' prison is obviously a little too retro, and
besides that it would just use more taxpayers' money. But the poor could
work off their debts. All over Greenwich I see lawns to be mowed, houses
to be painted, sports cars to be tuned up. Some of these poor people
must have skills. The ones that don't could be trained to do some of the
less skilled labor -- say, working as clowns at rich kids' birthday
parties. They could even have an act: put them in clown suits and see
how many can be stuffed into a Maybach. It'd be like the circus, only
better.
Transporting entire neighborhoods of poor people to upper Manhattan
and lower Connecticut might seem impractical. It's not: Mexico does this
sort of thing routinely. And in the long run it might be for the good of
poor people. If the consequences were more serious, maybe they wouldn't
stay poor.

5) I think it's time we all become more realistic about letting the
poor anywhere near Wall Street.
Lending money to poor countries was a bad idea: Does it make any
more sense to lend money to poor people? They don't even have mineral
rights!
There's a reason the rich aren't getting richer as fast as they
should: they keep getting tangled up with the poor. It's unrealistic to
say that Wall Street should cut itself off entirely from poor -- or, if
you will, ``mainstream'' -- culture. As I say, I'll still do business
with the masses. But
I'll only engage in their finances if they can clump themselves together
into a semblance of a rich person. I'll still accept pension fund money,
for example. (Nothing under $50 million, please.) And I'm willing to
finance the purchase of entire companies staffed basically with poor
people. I did deals with Milken, before they broke him. I own some
Blackstone. (Hang tough, Steve!)

But never again will I go one-on-one again with poor people.
They're sharks.


This post transferred from the cdb-l mailing list

[Mark Winston]

Hey folks. I'm pretty sure this was meant to be satire. From what I
understand, this was the same "voice" Michael Lewis used in his satirical
look at Wall Street in his book "Liar's Poker".











Mark Winston Griffith

Co-Director

Neighborhood Economic Development Advocacy Project

73 Spring Street, Suite 506

New York, NY 10012

212 680-5100, ext 208

MWGriffith@nedap.org

www.nedap.org

-------------------------------------------------------------------

Talking Democracy Media

1238 Dean Street

Brooklyn, New York

11216

(718) 953-1110

MWGriffith@talkingdemocracy.org







-----Original Message-----
From: bounce-1781455-4990295@list.cornell.edu
[mailto:bounce-1781455-4990295@list.cornell.edu] On Behalf Of Joe Rinaldi
Sent: Friday, September 07, 2007 10:25 AM
To: 'Fred Mendez'; 'communitydevelopmentbanking-L'
Subject: RE: Subprime Lessons on Bloomberg

As a professional in the capital markets industry I am disappointed with
this person's views, opinion and discrimination towards a socioeconomic
group of US residents.

He should be a mature professional and just say he made a mistake in buying
subprime loans. Or he didn't understand what he bought. He didn't know that
this sector required proper due diligence on the issuer , originator and
servicer of these loans. You can't rely on Moody's & S & P's ratings
alone!!!!

I personally have stayed away from investing in this arena (even though all
the Wall Street firm have pushed their structured products on me).

I respectfully request that he either apologizes to the American community
since he has posted his opinion in a public medium or offers a retraction.


joe


-----Original Message-----
From: bounce-1779899-8128352@list.cornell.edu
[mailto:bounce-1779899-8128352@list.cornell.edu] On Behalf Of Fred Mendez
Sent: Thursday, September 06, 2007 7:56 PM
To: communitydevelopmentbanking-L
Subject: Subprime Lessons on Bloomberg


You're not going to believe what I just finished reading on Bloomberg.
If you'd like to provide the author with your thoughts, he can be
reached at mlewis1@bloomberg.net

A Wall Street Trader Draws Some Subprime Lessons: Michael Lewis
2007-09-05 00:05 (New York)
Commentary by Michael Lewis

Sept. 5 (Bloomberg) -- So right after the Bear Stearns funds blew
up, I had a thought: This is what happens when you lend money to poor
people. Don't get me wrong: I have nothing personally against the poor.
To my knowledge, I have nothing personally to do with the poor at all.
It's not personal when a guy cuts your grass: that's business. He does
what you say, you pay him. But you don't pay him in advance: That would
be finance. And finance is one thing you should never engage in with the
poor. (By poor, I mean anyone who the SEC wouldn't allow to invest in my
hedge fund.)
That's the biggest lesson I've learned from the subprime crisis.
Along the way, as these people have torpedoed my portfolio, I had some
other thoughts about the poor. I'll share them with you.

1) They're masters of public relations.
I had no idea how my open-handedness could be made to look, after
the fact. At the time I bought the subprime portfolio I thought: This is
sort of like my way of giving something back. I didn't expect a profile
in Philanthropy Today or anything like that. I mean, I bought at a
discount. But I thought people would admire the Wall Street big shot who
found a way to help the little guy. Sort of like a money doctor helping
a sick person. Then the little guy wheels around and gives me this
financial enema. And I'm the one who gets crap in the papers! Everyone
feels sorry for the poor, and no one feels sorry for me. Even though
it's my money! No good deed goes unpunished.

2) Poor people don't respect other people's money in the way money
deserves to be respected. Call me a romantic: I want everyone to have a
shot at the American dream. Even people who haven't earned it. I did
everything I could so that these schlubs could at least own their own
place. The media is now making my generosity out to be some kind of
scandal. Teaser rates weren't a scandal. Teaser rates were a sign of
misplaced trust: I trusted these people to get their teams of lawyers to
vet anything before they signed it. Turns out, if you're poor, you don't
need to pay lawyers. You don't like the deal you just wave your hands in
the air and moan about how poor you are. Then you default.

3) I've grown out of touch with ``poor culture.''
Hard to say when this happened; it might have been when I stopped
flying commercial. Or maybe it was when I gave up the bleacher seats and
got the suite. But the first rule in this business is to know the people
you're in business with, and I broke it. People complain about the rich
getting richer and the poor being left behind. Is it any wonder? Look at
them! Did it ever occur to even one of them that they might pay me back
by WORKING HARDER? I don't think so. But as I say, it was my fault, for
not studying the poor more closely before I lent them the money. When
the only time you've ever seen a lion is in his cage in the zoo, you
start thinking of him as a pet cat. You forget that he wants to eat you.

4) Our society is really, really hostile to success. At the same
time it's shockingly indulgent of poor people.
A Republican president now wants to bail them out! I have a
different solution. Debtors' prison is obviously a little too retro, and
besides that it would just use more taxpayers' money. But the poor could
work off their debts. All over Greenwich I see lawns to be mowed, houses
to be painted, sports cars to be tuned up. Some of these poor people
must have skills. The ones that don't could be trained to do some of the
less skilled labor -- say, working as clowns at rich kids' birthday
parties. They could even have an act: put them in clown suits and see
how many can be stuffed into a Maybach. It'd be like the circus, only
better.
Transporting entire neighborhoods of poor people to upper Manhattan
and lower Connecticut might seem impractical. It's not: Mexico does this
sort of thing routinely. And in the long run it might be for the good of
poor people. If the consequences were more serious, maybe they wouldn't
stay poor.

5) I think it's time we all become more realistic about letting the
poor anywhere near Wall Street.
Lending money to poor countries was a bad idea: Does it make any
more sense to lend money to poor people? They don't even have mineral
rights!
There's a reason the rich aren't getting richer as fast as they
should: they keep getting tangled up with the poor. It's unrealistic to
say that Wall Street should cut itself off entirely from poor -- or, if
you will, ``mainstream'' -- culture. As I say, I'll still do business
with the masses. But
I'll only engage in their finances if they can clump themselves together
into a semblance of a rich person. I'll still accept pension fund money,
for example. (Nothing under $50 million, please.) And I'm willing to
finance the purchase of entire companies staffed basically with poor
people. I did deals with Milken, before they broke him. I own some
Blackstone. (Hang tough, Steve!)

But never again will I go one-on-one again with poor people.
They're sharks.


No virus found in this incoming message.
Checked by AVG Free Edition.
Version: 7.5.485 / Virus Database: 269.13.8/993 - Release Date: 9/6/2007
3:18 PM


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Checked by AVG Free Edition.
Version: 7.5.485 / Virus Database: 269.13.8/993 - Release Date: 9/6/2007
3:18 PM



This post transferred from the cdb-l mailing list

[Gregory Jost]

I forward this article out to a number of people, saying it's so ridiculous
it should be printed in the Onion as satire, and one response came back
saying that it likely is satire. She writes,

"Michael Lewis, who wrote the piece, is the author of Liar's Poker, a
satirical account of his time as a young Wall Streeter just as
mortgage-backed securities were being invented. In other words, I'm sure it
is meant to be satire, not taken seriously..."

This makes sense, but there is no way to know that it's REALLY satire on the
website, especially considering how much of the media portrayal of the
subprime issue has been blame-the-borrower for the problems on Wall Street.

- Greg

-----Original Message-----
From: bounce-1781455-4990064@list.cornell.edu
[mailto:bounce-1781455-4990064@list.cornell.edu] On Behalf Of Joe Rinaldi
Sent: Friday, September 07, 2007 10:25 AM
To: 'Fred Mendez'; 'communitydevelopmentbanking-L'
Subject: RE: Subprime Lessons on Bloomberg

As a professional in the capital markets industry I am disappointed with
this person's views, opinion and discrimination towards a socioeconomic
group of US residents.

He should be a mature professional and just say he made a mistake in buying
subprime loans. Or he didn't understand what he bought. He didn't know that
this sector required proper due diligence on the issuer , originator and
servicer of these loans. You can't rely on Moody's & S & P's ratings
alone!!!!

I personally have stayed away from investing in this arena (even though all
the Wall Street firm have pushed their structured products on me).

I respectfully request that he either apologizes to the American community
since he has posted his opinion in a public medium or offers a retraction.


joe


-----Original Message-----
From: bounce-1779899-8128352@list.cornell.edu
[mailto:bounce-1779899-8128352@list.cornell.edu] On Behalf Of Fred Mendez
Sent: Thursday, September 06, 2007 7:56 PM
To: communitydevelopmentbanking-L
Subject: Subprime Lessons on Bloomberg


You're not going to believe what I just finished reading on Bloomberg.
If you'd like to provide the author with your thoughts, he can be
reached at mlewis1@bloomberg.net

A Wall Street Trader Draws Some Subprime Lessons: Michael Lewis
2007-09-05 00:05 (New York)
Commentary by Michael Lewis

Sept. 5 (Bloomberg) -- So right after the Bear Stearns funds blew
up, I had a thought: This is what happens when you lend money to poor
people. Don't get me wrong: I have nothing personally against the poor.
To my knowledge, I have nothing personally to do with the poor at all.
It's not personal when a guy cuts your grass: that's business. He does
what you say, you pay him. But you don't pay him in advance: That would
be finance. And finance is one thing you should never engage in with the
poor. (By poor, I mean anyone who the SEC wouldn't allow to invest in my
hedge fund.)
That's the biggest lesson I've learned from the subprime crisis.
Along the way, as these people have torpedoed my portfolio, I had some
other thoughts about the poor. I'll share them with you.

1) They're masters of public relations.
I had no idea how my open-handedness could be made to look, after
the fact. At the time I bought the subprime portfolio I thought: This is
sort of like my way of giving something back. I didn't expect a profile
in Philanthropy Today or anything like that. I mean, I bought at a
discount. But I thought people would admire the Wall Street big shot who
found a way to help the little guy. Sort of like a money doctor helping
a sick person. Then the little guy wheels around and gives me this
financial enema. And I'm the one who gets crap in the papers! Everyone
feels sorry for the poor, and no one feels sorry for me. Even though
it's my money! No good deed goes unpunished.

2) Poor people don't respect other people's money in the way money
deserves to be respected. Call me a romantic: I want everyone to have a
shot at the American dream. Even people who haven't earned it. I did
everything I could so that these schlubs could at least own their own
place. The media is now making my generosity out to be some kind of
scandal. Teaser rates weren't a scandal. Teaser rates were a sign of
misplaced trust: I trusted these people to get their teams of lawyers to
vet anything before they signed it. Turns out, if you're poor, you don't
need to pay lawyers. You don't like the deal you just wave your hands in
the air and moan about how poor you are. Then you default.

3) I've grown out of touch with ``poor culture.''
Hard to say when this happened; it might have been when I stopped
flying commercial. Or maybe it was when I gave up the bleacher seats and
got the suite. But the first rule in this business is to know the people
you're in business with, and I broke it. People complain about the rich
getting richer and the poor being left behind. Is it any wonder? Look at
them! Did it ever occur to even one of them that they might pay me back
by WORKING HARDER? I don't think so. But as I say, it was my fault, for
not studying the poor more closely before I lent them the money. When
the only time you've ever seen a lion is in his cage in the zoo, you
start thinking of him as a pet cat. You forget that he wants to eat you.

4) Our society is really, really hostile to success. At the same
time it's shockingly indulgent of poor people.
A Republican president now wants to bail them out! I have a
different solution. Debtors' prison is obviously a little too retro, and
besides that it would just use more taxpayers' money. But the poor could
work off their debts. All over Greenwich I see lawns to be mowed, houses
to be painted, sports cars to be tuned up. Some of these poor people
must have skills. The ones that don't could be trained to do some of the
less skilled labor -- say, working as clowns at rich kids' birthday
parties. They could even have an act: put them in clown suits and see
how many can be stuffed into a Maybach. It'd be like the circus, only
better.
Transporting entire neighborhoods of poor people to upper Manhattan
and lower Connecticut might seem impractical. It's not: Mexico does this
sort of thing routinely. And in the long run it might be for the good of
poor people. If the consequences were more serious, maybe they wouldn't
stay poor.

5) I think it's time we all become more realistic about letting the
poor anywhere near Wall Street.
Lending money to poor countries was a bad idea: Does it make any
more sense to lend money to poor people? They don't even have mineral
rights!
There's a reason the rich aren't getting richer as fast as they
should: they keep getting tangled up with the poor. It's unrealistic to
say that Wall Street should cut itself off entirely from poor -- or, if
you will, ``mainstream'' -- culture. As I say, I'll still do business
with the masses. But
I'll only engage in their finances if they can clump themselves together
into a semblance of a rich person. I'll still accept pension fund money,
for example. (Nothing under $50 million, please.) And I'm willing to
finance the purchase of entire companies staffed basically with poor
people. I did deals with Milken, before they broke him. I own some
Blackstone. (Hang tough, Steve!)

But never again will I go one-on-one again with poor people.
They're sharks.





This post transferred from the cdb-l mailing list

[David.Beck at self-help.o]

Michael Lewis worked on Wall Street when conventional MBS was developing
and wrote a superb book on his experience called Liars Poker. Actually
it's probably worth a re-read in light of current conditions. (More
recently, he also wrote a great book on Bill James' use of stats to
evaluate baseball called Money Ball). Perhaps some may find his article
in Bloomberg insensitive to the families facing foreclosure but it is
clearly tongue and cheek from start to finish and it seems Lewis should
be spared from any email campaign...

My $.02 -

David Beck
Self-Help

-----Original Message-----
From: bounce-1781455-4990067@list.cornell.edu
[mailto:bounce-1781455-4990067@list.cornell.edu] On Behalf Of Joe
Rinaldi
Sent: Friday, September 07, 2007 10:25 AM
To: 'Fred Mendez'; 'communitydevelopmentbanking-L'
Subject: RE: Subprime Lessons on Bloomberg

As a professional in the capital markets industry I am disappointed with
this person's views, opinion and discrimination towards a socioeconomic
group of US residents.

He should be a mature professional and just say he made a mistake in
buying subprime loans. Or he didn't understand what he bought. He didn't
know that this sector required proper due diligence on the issuer ,
originator and servicer of these loans. You can't rely on Moody's & S &
P's ratings alone!!!!

I personally have stayed away from investing in this arena (even though
all the Wall Street firm have pushed their structured products on me).

I respectfully request that he either apologizes to the American
community since he has posted his opinion in a public medium or offers a
retraction.


joe


-----Original Message-----
From: bounce-1779899-8128352@list.cornell.edu
[mailto:bounce-1779899-8128352@list.cornell.edu] On Behalf Of Fred
Mendez
Sent: Thursday, September 06, 2007 7:56 PM
To: communitydevelopmentbanking-L
Subject: Subprime Lessons on Bloomberg


You're not going to believe what I just finished reading on Bloomberg.
If you'd like to provide the author with your thoughts, he can be
reached at mlewis1@bloomberg.net

A Wall Street Trader Draws Some Subprime Lessons: Michael Lewis
2007-09-05 00:05 (New York)
Commentary by Michael Lewis

Sept. 5 (Bloomberg) -- So right after the Bear Stearns funds blew
up, I had a thought: This is what happens when you lend money to poor
people. Don't get me wrong: I have nothing personally against the poor.
To my knowledge, I have nothing personally to do with the poor at all.
It's not personal when a guy cuts your grass: that's business. He does
what you say, you pay him. But you don't pay him in advance: That would
be finance. And finance is one thing you should never engage in with the
poor. (By poor, I mean anyone who the SEC wouldn't allow to invest in my
hedge fund.)
That's the biggest lesson I've learned from the subprime crisis.
Along the way, as these people have torpedoed my portfolio, I had some
other thoughts about the poor. I'll share them with you.

1) They're masters of public relations.
I had no idea how my open-handedness could be made to look, after
the fact. At the time I bought the subprime portfolio I thought: This is
sort of like my way of giving something back. I didn't expect a profile
in Philanthropy Today or anything like that. I mean, I bought at a
discount. But I thought people would admire the Wall Street big shot who
found a way to help the little guy. Sort of like a money doctor helping
a sick person. Then the little guy wheels around and gives me this
financial enema. And I'm the one who gets crap in the papers! Everyone
feels sorry for the poor, and no one feels sorry for me. Even though
it's my money! No good deed goes unpunished.

2) Poor people don't respect other people's money in the way money
deserves to be respected. Call me a romantic: I want everyone to have a
shot at the American dream. Even people who haven't earned it. I did
everything I could so that these schlubs could at least own their own
place. The media is now making my generosity out to be some kind of
scandal. Teaser rates weren't a scandal. Teaser rates were a sign of
misplaced trust: I trusted these people to get their teams of lawyers to
vet anything before they signed it. Turns out, if you're poor, you don't
need to pay lawyers. You don't like the deal you just wave your hands in
the air and moan about how poor you are. Then you default.

3) I've grown out of touch with ``poor culture.''
Hard to say when this happened; it might have been when I stopped
flying commercial. Or maybe it was when I gave up the bleacher seats and
got the suite. But the first rule in this business is to know the people
you're in business with, and I broke it. People complain about the rich
getting richer and the poor being left behind. Is it any wonder? Look at
them! Did it ever occur to even one of them that they might pay me back
by WORKING HARDER? I don't think so. But as I say, it was my fault, for
not studying the poor more closely before I lent them the money. When
the only time you've ever seen a lion is in his cage in the zoo, you
start thinking of him as a pet cat. You forget that he wants to eat you.

4) Our society is really, really hostile to success. At the same
time it's shockingly indulgent of poor people.
A Republican president now wants to bail them out! I have a
different solution. Debtors' prison is obviously a little too retro, and
besides that it would just use more taxpayers' money. But the poor could
work off their debts. All over Greenwich I see lawns to be mowed, houses
to be painted, sports cars to be tuned up. Some of these poor people
must have skills. The ones that don't could be trained to do some of the
less skilled labor -- say, working as clowns at rich kids' birthday
parties. They could even have an act: put them in clown suits and see
how many can be stuffed into a Maybach. It'd be like the circus, only
better.
Transporting entire neighborhoods of poor people to upper Manhattan
and lower Connecticut might seem impractical. It's not: Mexico does this
sort of thing routinely. And in the long run it might be for the good of
poor people. If the consequences were more serious, maybe they wouldn't
stay poor.

5) I think it's time we all become more realistic about letting the
poor anywhere near Wall Street.
Lending money to poor countries was a bad idea: Does it make any
more sense to lend money to poor people? They don't even have mineral
rights!
There's a reason the rich aren't getting richer as fast as they
should: they keep getting tangled up with the poor. It's unrealistic to
say that Wall Street should cut itself off entirely from poor -- or, if
you will, ``mainstream'' -- culture. As I say, I'll still do business
with the masses. But I'll only engage in their finances if they can
clump themselves together into a semblance of a rich person. I'll still
accept pension fund money, for example. (Nothing under $50 million,
please.) And I'm willing to finance the purchase of entire companies
staffed basically with poor people. I did deals with Milken, before they
broke him. I own some Blackstone. (Hang tough, Steve!)

But never again will I go one-on-one again with poor people.
They're sharks.



This post transferred from the cdb-l mailing list

[stookey at verizon.net]

Maybe I'm lost but I found the piece extremely powerful satire. From where
I stand Lewis does a much better job of presenting a critical analysis than
many of us in academia.

Sarah

-----Original Message-----
From: bounce-1781455-5323532@list.cornell.edu
[mailto:bounce-1781455-5323532@list.cornell.edu] On Behalf Of Joe Rinaldi
Sent: Friday, September 07, 2007 10:25 AM
To: 'Fred Mendez'; 'communitydevelopmentbanking-L'
Subject: RE: Subprime Lessons on Bloomberg

As a professional in the capital markets industry I am disappointed with
this person's views, opinion and discrimination towards a socioeconomic
group of US residents.

He should be a mature professional and just say he made a mistake in buying
subprime loans. Or he didn't understand what he bought. He didn't know that
this sector required proper due diligence on the issuer , originator and
servicer of these loans. You can't rely on Moody's & S & P's ratings
alone!!!!

I personally have stayed away from investing in this arena (even though all
the Wall Street firm have pushed their structured products on me).

I respectfully request that he either apologizes to the American community
since he has posted his opinion in a public medium or offers a retraction.


joe


-----Original Message-----
From: bounce-1779899-8128352@list.cornell.edu
[mailto:bounce-1779899-8128352@list.cornell.edu] On Behalf Of Fred Mendez
Sent: Thursday, September 06, 2007 7:56 PM
To: communitydevelopmentbanking-L
Subject: Subprime Lessons on Bloomberg


You're not going to believe what I just finished reading on Bloomberg.
If you'd like to provide the author with your thoughts, he can be
reached at mlewis1@bloomberg.net

A Wall Street Trader Draws Some Subprime Lessons: Michael Lewis
2007-09-05 00:05 (New York)
Commentary by Michael Lewis

Sept. 5 (Bloomberg) -- So right after the Bear Stearns funds blew
up, I had a thought: This is what happens when you lend money to poor
people. Don't get me wrong: I have nothing personally against the poor.
To my knowledge, I have nothing personally to do with the poor at all.
It's not personal when a guy cuts your grass: that's business. He does
what you say, you pay him. But you don't pay him in advance: That would
be finance. And finance is one thing you should never engage in with the
poor. (By poor, I mean anyone who the SEC wouldn't allow to invest in my
hedge fund.)
That's the biggest lesson I've learned from the subprime crisis.
Along the way, as these people have torpedoed my portfolio, I had some
other thoughts about the poor. I'll share them with you.

1) They're masters of public relations.
I had no idea how my open-handedness could be made to look, after
the fact. At the time I bought the subprime portfolio I thought: This is
sort of like my way of giving something back. I didn't expect a profile
in Philanthropy Today or anything like that. I mean, I bought at a
discount. But I thought people would admire the Wall Street big shot who
found a way to help the little guy. Sort of like a money doctor helping
a sick person. Then the little guy wheels around and gives me this
financial enema. And I'm the one who gets crap in the papers! Everyone
feels sorry for the poor, and no one feels sorry for me. Even though
it's my money! No good deed goes unpunished.

2) Poor people don't respect other people's money in the way money
deserves to be respected. Call me a romantic: I want everyone to have a
shot at the American dream. Even people who haven't earned it. I did
everything I could so that these schlubs could at least own their own
place. The media is now making my generosity out to be some kind of
scandal. Teaser rates weren't a scandal. Teaser rates were a sign of
misplaced trust: I trusted these people to get their teams of lawyers to
vet anything before they signed it. Turns out, if you're poor, you don't
need to pay lawyers. You don't like the deal you just wave your hands in
the air and moan about how poor you are. Then you default.

3) I've grown out of touch with ``poor culture.''
Hard to say when this happened; it might have been when I stopped
flying commercial. Or maybe it was when I gave up the bleacher seats and
got the suite. But the first rule in this business is to know the people
you're in business with, and I broke it. People complain about the rich
getting richer and the poor being left behind. Is it any wonder? Look at
them! Did it ever occur to even one of them that they might pay me back
by WORKING HARDER? I don't think so. But as I say, it was my fault, for
not studying the poor more closely before I lent them the money. When
the only time you've ever seen a lion is in his cage in the zoo, you
start thinking of him as a pet cat. You forget that he wants to eat you.

4) Our society is really, really hostile to success. At the same
time it's shockingly indulgent of poor people.
A Republican president now wants to bail them out! I have a
different solution. Debtors' prison is obviously a little too retro, and
besides that it would just use more taxpayers' money. But the poor could
work off their debts. All over Greenwich I see lawns to be mowed, houses
to be painted, sports cars to be tuned up. Some of these poor people
must have skills. The ones that don't could be trained to do some of the
less skilled labor -- say, working as clowns at rich kids' birthday
parties. They could even have an act: put them in clown suits and see
how many can be stuffed into a Maybach. It'd be like the circus, only
better.
Transporting entire neighborhoods of poor people to upper Manhattan
and lower Connecticut might seem impractical. It's not: Mexico does this
sort of thing routinely. And in the long run it might be for the good of
poor people. If the consequences were more serious, maybe they wouldn't
stay poor.

5) I think it's time we all become more realistic about letting the
poor anywhere near Wall Street.
Lending money to poor countries was a bad idea: Does it make any
more sense to lend money to poor people? They don't even have mineral
rights!
There's a reason the rich aren't getting richer as fast as they
should: they keep getting tangled up with the poor. It's unrealistic to
say that Wall Street should cut itself off entirely from poor -- or, if
you will, ``mainstream'' -- culture. As I say, I'll still do business
with the masses. But
I'll only engage in their finances if they can clump themselves together
into a semblance of a rich person. I'll still accept pension fund money,
for example. (Nothing under $50 million, please.) And I'm willing to
finance the purchase of entire companies staffed basically with poor
people. I did deals with Milken, before they broke him. I own some
Blackstone. (Hang tough, Steve!)

But never again will I go one-on-one again with poor people.
They're sharks.





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[Bill at RunontheBank.net]

Moderator's Note.
Because this discussion thread is so active, I am compiling this
morning's posts into this single email. Each new post starts with a
"From:" line.
Bill Myers
CDB list moderator

From: "lisa kiernan" <3plethora@gmail.com>
Hi Everyone,
I do not find this to be a satire, it is offensive. Are we going
back to red lining? One college of mine suggested the author should
become poor.

From: "sarah stookey" <stookey@verizon.net>
Maybe I'm lost but I found the piece extremely powerful
satire. From where I stand Lewis does a much better job of
presenting a critical analysis than many of us in academia.
Sarah

From: "Diane Keefe" <dkeefe@paxworld.com>
Correct.
Best,
Diane Keefe
Pax World Funds

From: "Mark Winston Griiffith" <MWGriffith@talkingdemocracy.org>
Hey folks. I'm pretty sure this was meant to be satire. From what I
understand, this was the same "voice" Michael Lewis used in his
satirical look at Wall Street in his book "Liar's Poker".
Mark Winston Griffith

From: "Rewa Misra" <rmisra@stfx.ca>
Not a critical analysis of sub prime markets at all from a technical
viewpoint. That would have been useful. This is more a criticism of the
poor full of value judgments really. Not worthy of being in the public domain.

From: "Jerry Liudahl" <jliudahl@oregoncommunitycu.org>
Sarah,
I agree completely. That opinion however does not represent the
views or opinions of anyone in this organization in a position of
responsibility, or who is remotely capable of completing full
sentences with multi-syllable words.
Jerry Liudahl
VP Lending
Oregon Community CU
541-681-6032
When ATM fees disappear, no one looks for them.

From: "Edward Dodson" <ejdodson@comcast.net>
Joe Rinaldi wrote:
... this sector required proper due diligence on the issuer
, originator and
servicer of these loans. You can't rely on Moody's & S & P's ratings
alone!!!!
I personally have stayed away from investing in this arena
(even though all
the Wall Street firm have pushed their structured products on me).

Ed Dodson here:
Despite the fact that I had a small role in generating subprime (or, rather,
Alt-A) business at Fannie Mae, this was never a type of mortgage lending I
felt very comfortable about. The problem? While pricing for risk provides
investors with market rates of return that account for forecasted
credit-related losses, borrowers who are determined to be higher risk must
pay higher rates of interest even though they are, generally, less able to
carry higher levels of debt. At the same time, of course, not all subprime
loan terms are equal (i.e., there is a vast difference between a subprime
loan made under terms negotiated between originating lenders and Fannie or
Freddie than those originated by a finance company, or (even worse) by a
company that engages in predatory lending practices with R.E.O. viewed as a
profit center.

From: "Edward Dodson" <ejdodson@comcast.net>
David Beck wrote:
Michael Lewis worked on Wall Street when conventional MBS was developing
and wrote a superb book on his experience called Liars Poker

Ed Dodson here:
We should remember that two major innovations saved the mortgage lending
sector from meltdown in the mid-1980s: first, adjustable rate mortgages;
and, second, the development of MBS. A third saving measure was allowing
banks to amortize negative yield losses on mortgage portfolios (even those
sold to investors at a discount).

What we need to be very concerned about today is that there do not seem to
be any more product or regulatory innovations available to soften the
downturn in which we are immersed.

Industry economists either do not understand the underlying causes of the
business cycle (which I believe is at its heart an 18-20 year land market
cycle); or, the executives heading the financial services industry suffer
from the "irrational exuberance" of being able to post huge paper profits as
the market approaches its high point, ignoring the aggregate stresses that
rising housing (i.e., land) prices impose on the economy as a whole.

The prices of goods and many services is today determined by global forces.
When land costs (which translate into higher and higher costs to lease
office space or employee housing or for warehouses, etc. etc.) cannot be
passed on to customers, businesses find their profit margins squeezed. And,
we know the steps they take to protect desired profit margins: replace
people with capital goods; when that is insufficient, relocate to lower cost
of production locations offshore. When a large enough number of businesses
pursue these measures, we experience regional unemployment problems and
recessions. As we look around the U.S. today, we see the same dynamics in
most parts of the country, some already in recession and others headed in
that direction.

From: "Fred Mendez" <fmendez@svb.com>
I'm a big fan of his work; but this seems a bit over the top even for
him. I was very surprised to see this come across my Bloomberg screen
and actually had this forwarded from a number of traders that know my
line of work. Usually he's funnier and makes better social commentary
than this.

From: "Mark Winston Griiffith" <MWGriffith@talkingdemocracy.org>
I will agree he's done some offensive pieces, likely a April 2007
column in which he makes the argument that it is an overstatement to say that
people have been victimized by subprime lending, but this column is
so over the top and gratuitously obnoxious that its hard to imagine
that he is not using satire, whether it's meant to defend poor
people or not. The biggest tip off is that he is assumes the
persona of a Wall Street trader and Michael Lewis is not a trader,
or at least is not any more.
Mark Winston Griffith
Co-Director
Neighborhood Economic Development Advocacy Project
73 Spring Street, Suite 506
New York, NY 10012
212 680-5100, ext 208
HYPERLINK "mailto:MWGriffith@nedap.org"MWGriffith@nedap.org
HYPERLINK "http://www.nedap.org/"www.nedap.org
-------------------------------------------------------------------
Talking Democracy Media
1238 Dean Street
Brooklyn, New York
11216
(718) 953-1110
HYPERLINK"mailto:MWGriffith@talkingdemocracy.org"MWGriffith@talkingdemocracy.org

From: "Fred Mendez" <fmendez@svb.com>
All -
I'm a big fan of Michael Lewis and have read all of his books. As a
former trader on the options floor and director of a secondary marketing
department, I get his humor and understand the nuances of his type of
satire. This does not measure up to the standards he set in his previous
work. I laughed twice (I've grown out of touch with ``poor culture.''
Hard to say when this happened; it might have been when I stopped flying
commercial) and cringed the rest of the time. I've heard his statements
come from various contacts in the capital markets, and not in satire. So
it hurts a bit more when someone like Michael is given license to put
those words onto the Bloomberg newswire for all to see ... and
eliminating any remaining hesitancy that certain capital market
representatives may have had in voicing some of these opinions which
they hold true. At the end of the day, I don't care if it was satire and
don't care if he apologizes for not making it clear that this was meant
to be satire; the fact that I received this 11 times yesterday from
various sources on Wall Street with varying statements of "I told you
this is what's going on" is what I'm pissed off about. We've all said
things that we regretted and tried to back away from it by saying "it
was a joke." Let's forward this to some of the people working in
agencies to keep LMI folks in their homes and see if they think this is
funny and insightful social satire.

From: Karen Westmont <karenwestmont@yahoo.com>
Oh darn: I had drafted this serious rebuttal to what is now satire:
if you used a loan to buy your house, you got more subsidy (given
your implied income; my calcs) than did at least 3 families for
their subsidized Section 8 housing) Until perhaps this year,
the highest incomed have defaulted more frequently for the last 2
decades than have low-income house buyers) The poor pay about
twice as much for a $1 of house asset (my research) than the
modestly affluent. Since public policy promoted such bad practice,
it pushed wealth from landlords to banks. You gambled on the
shift) Sub-prime loans issued with predatory practices were
fraudulently made: and you bought the fraud. You deserve to be hit.
Karen Westmont

From: "George Samuels" <georgey10@hotmail.com>
It's like writing a satirical piece about the people who lost their
life savings when Enron went down. It's just bad taste.
Obviously, there are parts of the article, like the end when
he calls poor people sharks, that hint to satire, but the whole thing
comes off as more of an attack than anything else.
The truth is that I really don't know any officially "poor"
people, based on the governement's definition, involved in the
current crisis. The word poor is just being misused in general. Most
people who are "poor," living in poverty, aren't living in homes that they own.
There are more middle class people, and upper-middle class
folks who went in over their heads, involved in this thing. I guess
today's middle class is the new poor.
What is clear to me about the current crisis, is that we
have not learned anything from the past. In a few years, it will be
business as usual and no matter how many protections they put in
place, scam artists and the like will still find a way to make money
at the expense of those less fortunate and less informed.
George


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[Bill at RunontheBank.net]

Compiled by List Moderator, Bill Myers

From: "Meissner, Joseph" <JPMeissn@lasclev.org>

This is great satire. Consider also the position of the one who wrote.
Actually, he lost everything to poor people. The poor people have now
become the rich through taking advantage of the rich people who thought
they could rob from the poor through sub-prime loans with teaser rates
(like bait for the fish) and then use adjustable mortgages that really
only adjust upwards. This lender-writer I understand has had to sell
five of his twenty million-dollar mansions and is currently living under
a bridge. Fortunately, this is the bridge where people throw down their
unused McDonald's food so this writer does have enough to eat. As for
drink, he finds left over bottles of cheap wine that still have some
dregs, pours water in them, stirs, and can get high--which he desires to
do so he can continue writing. If anyone is interested, I do have his
under-the-bridge address and he still has an email account at a nearby
public library.

From: "Flanders, Valarie - Bangor, ME" <valarie.flanders@me.usda.gov>

I happen to be a federal agent and have assisted very-low and low-income
households in purchasing homes when they were unable to obtain
"traditional" financing. Our National portfolio delinquency to the
"poor" is less than Private Industry. Underwriting standards are and
always will be determining factors in a homeowners success. However,
federal agents don't get paid commission for loan volume.

I also happen to be an individual that grew up in a large family, and
yes, we were considered poor by most accounts. I have never been
dependent on social services of any kind.

I find satire interesting, thought provoking, and somewhat amusing in
most instances. I would say Mr. Lewis has entertained everyone to some
degree, in some way, with his article. However, I am most interested in
the responses that address the real issues of social economic inequities
and the role we all play in them - what lessons are learned and what do
we do, collectively to implement better systems.

I personally find Mr. Lewis' article offensive. Should it have been
posted on a public board? I guess that answer will depend on what we
all do with the information generated from the responses.


Valarie C. Flanders


From: "Jim Hurley" <jhurley@hanoverfederalcu.com>
George Washington Carver once said "How far we go in life depends on
our being tender with the young, compassionate with the aged,
sympathetic with the striving and tolerant of the weak, the strong
and the POOR, because someday in our lives we will have been all of these."
Michael Lewis needs to get a grip, If I ever heard a call to the
karma gods to be struck by lightning the piece he wrote was most certainly it!

From: "Meissner, Joseph" <JPMeissn@lasclev.org>
This is great satire. Consider also the position of the one who
wrote. Actually, he lost everything to poor people. The poor people have now
become the rich through taking advantage of the rich people who
thought they could rob from the poor through sub-prime loans with
teaser rates (like bait for the fish) and then use adjustable
mortgages that really only adjust upwards. This lender-writer I
understand has had to sell
five of his twenty million-dollar mansions and is currently living
under a bridge. Fortunately, this is the bridge where people throw down their
unused McDonald's food so this writer does have enough to eat. As
for drink, he finds left over bottles of cheap wine that still have some
dregs, pours water in them, stirs, and can get high--which he
desires to do so he can continue writing. If anyone is interested,
I do have his
under-the-bridge address and he still has an email account at a
nearby public library.

From: "Stewart Sarkozy" <stewart@oweesta.org>
Sarah, you are right, fantastic satire. The scary thing is that there
are people in this country, in this world, that actually suffer from
such (mis)conceptions. They are the folks who also believe it is okay
to make as much money off of poor people as possible through a variety
of financing mechanisms. That is why a recent article in the Economist
basically implied that it was insulting to poor people to not offer them
loans at any given rate, because it showed that the rest of us didn't
believe in them and their decision making processes - predatory lenders
unite!
Stewart Sarkozy-Banoczy
Director of Training & Technical Assistance
First Nations OWEESTA Corp
1010 Ninth Street, Suite 3
Rapid City, SD 57701
(605) 342-3770 phone
(605) 342-3771 fax
stewart@oweesta.org
www.oweesta.org
www.ournativecircle.org
www.nfec.info=20
"Developing Native Assets :: Building Native Communities"
OUR NATIVE CIRCLE, the Native Community Development Resource Center
(www.ournativecircle.org) is LIVE! Register now and get involved!



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