Pub. Date:
Yale University Press
Other People's Houses: How Decades of Bailouts, Captive Regulators, and Toxic Bankers Made Home Mortgages a Thrilling Business

Other People's Houses: How Decades of Bailouts, Captive Regulators, and Toxic Bankers Made Home Mortgages a Thrilling Business

by Jennifer S. Taub
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Product Details

ISBN-13: 9780300168983
Publisher: Yale University Press
Publication date: 05/27/2014
Pages: 416
Product dimensions: 6.20(w) x 9.30(h) x 1.30(d)

About the Author

Jennifer Taub is a professor at Vermont Law School and formerly an associate general counsel at Fidelity Investments. She lives in Northampton, MA.

Table of Contents

Introduction: Lost Ground 1

Part I Highfliers

Chapter 1 The Nobelmans 9

Chapter 2 The Condo King and His Empire 17

Chapter 3 The Run on American Savings and Loan 34

Chapter 4 The Saturday Night Massacre 47

Chapter 5 Deregulation Inauguration 59

Chapter 6 The Red Baron of Finance 78

Chapter 7 The Bailout 97

Chapter 8 Friends of the Court 108

Part II Repeat Performance

Chapter 9 Friend of the Family 123

Chapter 10 The Factory Line 140

Chapter 11 The Bubble 163

Chapter 12 First to Fall 188

Chapter 13 Surf and Turf 209

Chapter 14 Legal Enablers of the Toxic Chain 222

Chapter 15 The Great Betrayal 247

Part III Myth Confronts Reality

Chapter 16 Dispelling Myths about the Crisis 269

Epilogue: Cast Again 284

Notes 303

Acknowledgments 385

Index 391


Do the conditions that caused the financial crisis persist? Could this happen again?

Unfortunately, yes. In 2009 Federal Reserve chairman Ben Bernanke defended the multi-trillion-dollar bailouts, explaining that "it wasn't to help the big firms that we intervened. . . . When the elephant falls down, all the grass gets crushed as well." Today, the elephants are larger than ever, and the grass is still crushed. The top banks are bigger, and they still borrow excessively in the short-term and overnight markets, leaving them vulnerable to runs. But let's be clear. For most Americans, it's not a question of when the next crisis will hit, but when this one will end.
Why another book about the financial crisis? What's new here?

 I wrote Other People's Houses because I wanted to tell the story of the crisis from the perspective of homeowners. Many books about the crisis speak in broad concepts, or they dramatize the crisis exclusively from the vantage point of bank executives and high-level government officials. Homeowners who are included can appear randomly selected, like stock characters. Other People's Houses takes a fresh approach. The central narrative thread is the Nobelman v. American Savings Bank decision, a Supreme Court case that still prevents families from saving their homes through bankruptcy. My book uncovers the back stories of the associated homeowners, bankers, and regulators and traces them forward from the savings and loan debacle, through the toxic-mortgage-backed financial crisis, to the JPMorgan Chase $6 billion London Whale trading losses.

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Other People's Houses: How Decades of Bailouts, Captive Regulators, and Toxic Bankers Made Home Mortgages a Thrilling Business 3 out of 5 based on 0 ratings. 1 reviews.
jax2009 More than 1 year ago
The author has a story to tell, a thesis to argue, and a point to make and accomplishes all, however if you were looking for The Book on the 2008 financial crisis, this is not it. What you get out of this book depends on how much you know, or think you know, going in. I thought I knew a good deal going in, yet was able to pick up some important details. The book is heavily footnoted, though mostly with news reports and secondary sources. The story is of the US financial system starting with the S&L crash in the 1970s and 1980s, proceeding to the housing bubble of the 1990s and the crash of 2008, and some of the aftermath. The author's thesis is that this is after all one story, and the S&L crash was an enabler and an (unheeded!) warning of what was to come. The point she argues is that the post-2008 bailout could have and should have included the homeowners and not just the big banks, specifically the ability for bankruptcy courts to modify mortgages and write off principle. It may come as a surprise to some that this is not possible today, thanks (!) to Congress, because until a few years ago it was possible in many states. The author's perspective on all of this is to blame the banks for greed, corruption, predatory lending, and maybe greed again, with the solution being more regulation. My opinion differs slightly here, I do not see the "predatory lending" as a large issue. I think that the author has not included a lot of the perspectives of the real estate or banking industries. She does not seem to think that individual buyers ever speculated on their own principle residence, or on additional properties. She may never have seen any of these "Flip That House!" series where late night viewers are taught to "buy" properties with other people's money. The import of the fact that a third or more of mortgage customers in 2006 never made even the first payment (because they never intended to) seems to have escaped her, even though she does mention the fact. So, in my view, the book never really grapples with the full complexity of the crash. It also does not take into account the "quantitative easing" we have seen since 2012. Since it does mention other events as late as 2013, this is something of an omission as it puts the past into additional perspective – and largely supports the author's ideas. I had higher hopes than this when I ordered the book. The excerpted chapter published online to promote the book relates a bit of Alan Greenspan dialog and properly analyzes it in historical context (as being very nearly insane). And the author does properly quote Greenspan on the nut of this whole deal, on page 164 in text and page 174 as a quote, "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity (myself especially) are in a state of shocked disbelief." Shocked to find gambling going on in the establishment! The author also mentions the market failure in August/September of 2008 which gave rise to the demand for $700,000,000,000 in TARP money, but only in passing. I would give it much heavier emphasis, it puts a lot of past and future behaviors in context. And the author waves off the CRA's contribution to the mess. This is probably correct, but a bit more argument is needed and it is not (in my analysis) quite as trivial as she makes it out. Overall I recommend the book but only mildly.