Dear Mr. Buffett_ What an Investor Learns 1,269 Miles From Wall Street - Janet M. Tavakoli [123]
3 Berkshire Hathaway 2003Annual Report, 5.
4 Housing Vacancies and Homeownership (CPS/HVS), U.S. Census Bureau. In 2002, 67.8 million U.S. (and region) residents owned homes; in 2004, 68.6 million owned homes; in the first quarter of 2008 the number of homeowners was back down to 67.8 million, and at 68.1 million in the second quarter of 2008.
5 Eliot Spitzer, “Predatory Lenders’ Partner in Crime,” Washington Post, 14 February 2008.
6 “Roland E. Arnall, 68; Founded High-Risk Lender Ameriquest,” Washington Post, 20 March 2008. Roland E. Arnall died in March 2008.
7 Gerri Willis discussed 2007 foreclosures during an interview with Jon Stewart on Comedy Central’s The Daily Show on January 30, 2008.
8 Gerri Willis, Andy Serwer, Paul Krugman, Janet Tavakoli, and Peter Dunay, “Busted! Mortgage Meltdown,” CNN, March 28, 2008 (first airing).
9 Ibid.
10 Aaron Krowne, entrepreneur and head of Planet Math, started this website (http://ml-implode.com) in late 2006 to chronicle unfolding events in the troubled US mortgage lending market.
11 “New Century Financial Corporation to Restate Financial Statements for the Quarters Ended March 31, June 30 and September 30, 2006,” PR Newswire, 7 February 2007.
12 Amanda Beck, “KPMG allowed fraud at New Century, report says,” Reuters, March 27, 2008.
13 Vikas Bajaj and Christine Haugney, “Tremors at the Door,” New York Times, 26 January 2007.
14 Warren Buffett’s to Liz Clayman, CNBC interview,13 March 2007.
15 Tom Hudson and Janet Tavakoli, “Fed’s Role in the Subprime Meltdown,” First Business Morning News, 19 March 2007.
16 Berkshire Hathaway 2003 Annual Report, 5.
17 Floyd Norris, “Color-Blind Merrill in a Sea of Red Flags,” New York Times, 16 May 2008.
18 Ibid.
19 “Subprime Winners and Losers,” Squawk Box, CNBC, 3 August 2007. Segment with Janet Tavakoli, Joe Kernen, and Becky Quick.
20 Antonin Scalia to Leslie Stahl, 60 Minutes, CBS, 27 April 2008.
21 David Enrich, “Banks Find New Ways to Ease Pain of Bad Loans,” Wall Street Journal, 19 June 2008. Thrift holding company Astoria Financial Corp’s non-performing loans were $106 million at the end of 2007, but the following quarter, it changed its internal policy to define “non performing” loans as missing three payments instead of two. Wachovia and Washington Mutual started using OFHEO data for first quarter results.
22 Betsy McKay, Wells Fargo’s Net is Better Than Expected, Earnings Decline But Beat Estimates; Stock Rallies 33%,” Wall Street Journal, 17 July 2008.
23 Robin Sidel, “Banking’s Winners and Sinners Part Ways,” Wall Street Journal, 19 July 2008.
24 “Remarks by Chairman Alan Greenspan, Consumer Finance,” at the Federal Reserve System’s Fourth Annual Community Affairs Research Conference, Washington, D.C. April 8, 2005. Greenspan said the following:
With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers. . . . Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending.
The full text is available at http://www.federalreserve.gov/BoardDocs/speeches/2005/20050408/default.htm.
25 Janet Tavakoli and Thalia Assuras, “Making the Most of the Market,” CBS Evening News, 4 August, 2007.
26 Janet Tavakoli to Warren Buffet, e-mail correspondence, 15 August 2007. The following is the gist of my remarks:
Asset-backed conduits that issue commercial paper have been investing