In 2005 and 2006, Francois Trahan was...
(a) employed as Chief Investment Strategist at Bear Stearns, and
(b) Wall Street's top-ranked ranked investment strategist according to Institutional Investor Magazine.
Both years, Trahan and his team at Bear Stearns issued detailed and specific warnings about the US housing bubble. Wall Street Law Blog has previously published several posts about Trahan's spot-on warnings about the bubble and his advice to steer clear of investments tied to real estate.
In The Era of Uncertainty, a book published this year and co-authored by the former Bear Stearns strategist,
Mr. Trahan confirms that senior management at Bear Stearns (at the time reporting record profits thanks to its mortgage bond securitization, sales, and trading businesses) was very much aware of his dire prognosis for the housing market and investments linked to real estate.
Indeed, Trahan writes that, before the financial crisis, he had been "pounding the table" about the housing market for "several years."
So why, according to Trahan, did senior management at Bear Stearns ignore all of his warnings? "The answer...," he says in his book, "is that the profits were just too attractive to pass up."
In other words, senior management ignored Trahan because Bear Stearns was raking in the money.
Francois Trahan left Bear early in 2007. His book has a ton of other great stuff about Bear Stearns and about the state of financial markets in the 21st century.