Michael Lewis is the author of many books including The Blind Side, Liar’s Poker, Panic and his latest book about the confusing world of high finance The Big Short: Inside the Doomsday Machine. It’s a look at the mortgage crisis and the few visionaries who saw it coming and made a fortune. His book is now available in paperback.
This interview originally aired in March of 2010 but Lewis’ book is now available in paperback with an updated afterword. Here is a link to read the findings of the Financial Crisis Inquiry Commission which just concluded its investigation into the cause of the 2008 financial meltdown.
As I am watching Michael Lewis talk about the Sub-Prime mortgage crises on CNBC tonight I can only say that he is 100% on the mark. He is correct about AIG and the credit default swaps as well as the Neg Am loans. MANY loan officers sold them for only one reason…. They got paid a TON of money for selling them and 99% of the loan officers had NO CLUE what they were selling! I have been on the "inside" of the mortgage originating machine for the past 13 years; 12 as a mortgagge trainer. I worked at New Century Mortgage and conducted trainings at companies like Countrywide for thousands of loan officers around the country. 90% of the loan officers were not trained well enough to be called anything close to a mortgage professional. Recently I worked a contract for a MAJOR bank on the HAMP program and they are so F***ED up it's unreal. Many people that may be qualified for this program are not getting approved because the people working these loans at the bank are severly untrained. The banks get fined but do they really care? I think not because they make 100 times as much in profits. A solution would be to add $100 fee to EVERY loan and use that money to fund compliance officers. At this bank there were THOUSANDS of "lost" loans in the system as well as thousands of loans in Foreclosure that were not handled correctly. I cannot blame the banks 100% as this program was forced on them by the government overnight. Have to go now…. must buy Mikes book.