Wall Street Law Blog

Derivatives and Financial Risk Management: Wikipedia "books"

A GREAT RESOURCE FOR EVERYTHING

If you already know that Wikipedia has collections of related articles on just about every topic under the sun, then skip this post (but feel free to spend some quality time browsing our archives and topical index!) ... 

These Wiki-books come with tables of contents and a very smart-looking layout that can really help when you need some quick answers (the usual warnings about checking facts and Wikipedia omitted on the grounds that you already know them). 

The link takes you to a Wiki-book that Wall Street Law Blog downloaded this morning -

Great Resource  - Derivatives / Risk Management in Finance

 

You can also very easily create a custom book that includes pretty much anything on Wikipedia.

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Thanks for all of the clicks, follows, reads, feedback, etc. in 2010.  On behalf of Wall Street Law Blog, let me be the 10,000th person to wish you a Happy New Year!  We look forward to a productive 2011.

Brett Sherman

The Sherman Law Firm (publishers)

Predatory Subprime Lending Nothing New - Familiar Abuses an Issue in 1998

 

 

Whoa Nelly... Take a peek into the FTC archives.   Subprime mortgage lending was a disaster in the 1990's too...

 

 

 

 

*INTRODUCTION 

Precisely one decade before JP Morgan announced an agreement to buy Bear Stearns for $2 per share (later increased to $10 per share), the FTC heard and adopted testimony on abusive subprime lending practices.  

That's right, 10 years to the day before Bear Stearns collapsed, the FTC highlighted serious problems in the subprime lending industry.

 

Two subprime abuses the FTC described way back in March 1998:

 

 

 

• 1990's SUBPRIME LENDERS FREQUENTLY BASED UNDERWRITING DECISIONS ON HOME EQUITY RATHER THAN ABILITY TO REPAY

 

• SUBPRIME LENDERS IN THE 1990'S CONVINCED BORROWERS TO REFINANCE AGAIN AND AGAIN. 

     

 

MARCH 16, 1998; FTC PRESS RELEASE ON ABUSIVE PRACTICES IN SUBPRIME LENDING

*FTC Testifies On Enforcement And Education Initiatives To Combat Abusive Lending Practices 

(Excerpted and reprinted from http://www.ftc.gov; highlighted by Wall Street Law Blog)

"Subprime lending refers to the extension of high interest rates or higher fee loans to higher risk borrowers." 

 

"Predatory practices in the subprime mortgage lending market such as 'equity stripping,' 'packing,' andnd 'flipping' and the threat these practices pose to vulnerable homeowners were the subjects of testimony delivered today..."

 

"[The subprime] segment of the lending industry has grown substantially since the early 1990s."

 

 

"In addition to an expansion in the number of loans, the Commission's testimony notes that the composition of the industry is changing..."

 

"One of the most dramatic changes has been the growth in subprime mortgage lending by large corporations that operate nationwide..."

 

Abusive subprime lending practices in the 1990's

*EQUITY STRIPPING

"Equity stripping occurs when a loan is made based on the equity in a property rather than on a borrower's ability to repay the loan." 

"As a general rule, loans made to individuals who do not have the income to repay such loans usually are designed to fail. They frequently result in the lender acquiring the borrower's home and any equity the borrower had in the home."  

A Wall Street Law Blog reminder:

Remember, this is from 1998!  Wall Street CEOs claimed to be shocked by lending practices during the recent subprime crash...

*LOAN PACKING

"Packing is the practice of adding credit insurance or other "extras" to increase the lender's profit on a loan. Lenders often stand to make significant profits from credit insurance and, therefore, have strong incentives to induce consumers to buy it as part of a loan."  

*MORTGAGE FLIPPING

"Flipping occurs when a lender induces a borrower to repeatedly refinance a loan, often within a short time frame, charging high points and fees each time..."

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Brett Sherman, The Sherman Law Firm

Publishers - Wall Street Law Blog