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highly prescient 1999(!) article from the New York Times
From: David Farber <dave () farber net>
Date: Thu, 25 Sep 2008 20:20:21 -0400

Also read Deer Hunting for Jesus

Begin forwarded message:

From: "Perry E. Metzger" <perry () piermont com>
Date: September 25, 2008 4:23:14 PM EDT
To: dave () farber net
Subject: possibly for IP...


This has been making the rounds. It is a highly prescient 1999(!)
article from the New York Times about the brave new world of subprime
mortgages.

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=all

Initial fun quotes:

  The action, which will begin as a pilot program involving 24 banks
  in 15 markets -- including the New York metropolitan region -- will
  encourage those banks to extend home mortgages to individuals whose
  credit is generally not good enough to qualify for conventional
  loans. Fannie Mae officials say they hope to make it a nationwide
  program by next spring.

  Fannie Mae, the nation's biggest underwriter of home mortgages, has
  been under increasing pressure from the Clinton Administration to
  expand mortgage loans among low and moderate income people and felt
  pressure from stock holders to maintain its phenomenal growth in
  profits.

And here's the money shot:

  In moving, even tentatively, into this new area of lending, Fannie
  Mae is taking on significantly more risk, which may not pose any
  difficulties during flush economic times. But the
  government-subsidized corporation may run into trouble in an
  economic downturn, prompting a government rescue similar to that of
  the savings and loan industry in the 1980's.


Perry




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