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Quote by Michael Connelly

“It was during my explanation to my young daughter that I finally realized why I had been drawn to this particular practice of law. Yes, some of my clients were just gaming the system. They were charlatans no better than the banks they were taking on. But some of mu clients were downtrodden and disadvantaged. They were true underdogs in society and I wanted to stand for them and keep them in their homes for as long as I possibly could.”

Quote by Michael Connelly

Book:The Fifth Witness
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The Fifth Witness

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Author

Michael Connelly
Michael Connelly

Michael Connelly is an American author renowned for his crime novels. His works often set in Los Angeles, delve into the complexities of law and morality. Born on July 21, 1956, Connelly's writing career began with a passion for journalism, which later led to novel writing. more

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“When the Goldman Sachs saleswoman called Mike Burry and told him that her firm would be happy to sell him credit default swaps in $100 million chunks, Burry guessed, rightly, that Goldman wasn’t ultimately on the other side of his bets. Goldman would never be so stupid as to make huge naked bets that millions of insolvent Americans would repay their home loans. He didn’t know who, or why, or how much, but he knew that some giant corporate entity with a triple-A rating was out there selling credit default swaps on subprime mortgage bonds. Only a triple-A-rated corporation could assume such risk, no money down, and no questions asked. Burry was right about this, too, but it would be three years before he knew it. The party on the other side of his bet against subprime mortgage bonds was the triple-A-rated insurance company AIG—American International Group, Inc.”

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Book:The Big Short: Inside the Doomsday Machine
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“On its surface, the booming market in side bets on subprime mortgage bonds seemed to be the financial equivalent of fantasy football: a benign, if silly, facsimile of investing. Alas, there was a difference between fantasy football and fantasy finance: When a fantasy football player drafts Peyton Manning to be on his team, he doesn’t create a second Peyton Manning. When Mike Burry bought a credit default swap based on a Long Beach Savings subprime–backed bond, he enabled Goldman Sachs to create another bond identical to the original in every respect but one: There were no actual home loans or home buyers. Only the gains and losses from the side bet on the bonds were real.”

Wall StreetGoldman SachsCredit Default SwapSubprime Mortgage BondsMike Burry
Book:The Big Short: Inside the Doomsday Machine
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“Where to find the borrowers with high FICO scores? Here the Wall Street bond trading desks exploited another blind spot in the rating agencies’ models. Apparently the agencies didn’t grasp the difference between a “thin-file” FICO score and a “thick-file” FICO score. A thin-file FICO score implied, as it sounds, a short credit history. The file was thin because the borrower hadn’t done much borrowing. Immigrants who had never failed to repay a debt, because they had never been given a loan, often had surprisingly high thin-file FICO scores. Thus a Jamaican baby nurse or Mexican strawberry picker with an income of $14,000 looking to borrow three-quarters of a million dollars, when filtered through the models at Moody’s and S&P, became suddenly more useful, from a credit-rigging point of view. They might actually improve the perceived quality of the pool of loans and increase the percentage that could be declared triple-A. The Mexican harvested strawberries; Wall Street harvested his FICO score.”

Wall StreetSubprime Mortgage LoansRating AgencyFico ScoreTriple A
Author:Michael Lewis
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“In 2000, 41 percent of all borrowers with subprime loans would have qualified for conventional financing with lower rates, a figure that increased to 61 percent in 2006. By then, African American mortgage recipients had subprime loans at three times the rate of white borrowers. Higher-income African Americans had subprime mortgages at four times the rate of higher-income whites. Even though it’s own survey in 2005 revealed a similar racial discrepancy, the Federal Reserve did not take action. By failing to curb discrimination that its own data disclosed, the Federal Reserve violated African Americans’ legal and constitutional rights.”

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Book:The Color of Law: A Forgotten History of How Our Government Segregated America
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“Everyone thinks Goldman is so fucking smart,” he railed. “Just because Goldman says this is the right valuation, you shouldn’t assume it’s correct just because Goldman said it. My brother works at Goldman, and he’s an idiot!”

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Book:Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System from Crisis — and Themselves
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