All the Devils Are Here

Edição de 2011. Paperback.

Pág. 24 – Refinanciamento do saldo devedor do empréstimo imobiliário só começou pra valer em 1992.

By 1992, just twenty-three years after its founding, Countrywide had become the largest originator of single-family mortgages in the country, issuing close to $40 billion in mortgages that year alone. Just as rising rates had crushed the S&Ls a decade before, so did falling interest rates now turbo-charge Countrywide’s growth. Lower interest rates helped more people afford homes, of course. But Countrywide began advertising a technique that allowed people who already owned their home to take advantage of lower rates. Refinancing, it was called. Often bor rowers didn’t just refinance their home, they pulled out additional cash against the equity in their homes. For the fiscal year ending in February 1992, refinancings accounted for 58 percent of Countrywide’s business; two years later, they accounted for 75 percent of its business. Although refinancing allowed consumers to take advantage of lower interest rates, it really didn’t have much to do with homeownership. Countrywide wasn’t putting people into homes so much as it was making it possible for homeowners to use their homes as piggy banks.

Pág. 51 – o nascimento dos “quants”

They were called “quants” because they tried to make money not by examining the fundamentals of stock and bonds, but by using more quantitative methods. They devised complex equations rooted in modern portfolio theory, which held as its core principle that diversification reduced risk. They searched for securities that seemed to move in tandem, and then used computers to take advantage of tiny discrepancies in their price movements.

Pág. 84 – Alan Greenspan era próximo de Ayn Rand

As a young economist, Greenspan had come under the spell of Ayn Rand, the author of The Fountainhead and Atlas Shrugged, two of the most influential odes to capitalism ever written. The capitalism Rand believed in was “full, pure, unregulated, laissez-faire capitalism,” as she once put it, the kind that didn’t put regulatory roadblocks in the way of red-blooded entrepreneurs. Greenspan met Rand in the early 1950s, became part of her inner circle, and remained close to her until she died in 1982.

Pág. 91 – um financiamento imobiliário com pequena entrada é um aluguel com dívida, não a compra de uma casa.

On June 29, 2001, Rosner published a research piece that summed up his thinking, entitled, “A Home without Equity Is Just a Rental with Debt.” No one seemed to take much notice. He was working from home one day when the phone rang. On the other end was an elderly man.

Pág. 105 e 107 – machismo. Mulher tem que ser “gentil”


Rumors were spread that Born was just an impossible woman—too shrill and strident to work with the august members of the Committee to Save the World.


Years later, Rubin’s defenders would claim that it was Born’s hard-nosed approach that had turned him against her. She was too strident, they said, too legalistic, not deferential enough to the Treasury secretary. “If she had just been more collaborative,” said one such defender, “Rubin might have been her ally.”

Pág. 117 – “Livre mercado” das agências de rating prejudica o… livre mercado.

Ratings shopping was a classic example of why Alan Greenspan’s theory of market discipline didn’t work in the real world. The market competition between the rating agencies, which Greenspan assumed would make companies better, actually made them worse. “The only way to get market share was to be easier,” says Jerome Fons, a longtime Moody’s managing director. “It was a race to the bottom.” A former structured finance executive at Moody’s says, “No rating agency could say, ‘We’re going to change and be more conservative.’ You wouldn’t be in business for long if you did that. We all understood that.”

Pág. 157 – Goldman Sachs fazia realmente marcação a mercado do valor dos seus ativos.

There were several specific things that the firm did differently than its peers. Goldman was a stickler for using what’s known as mark-to-market accounting, meaning that it marked its books, every day, at the price at which securities traded in the market. CFO David Viniar traced this discipline to the old Goldman Sachs partnership. “People came into the partnership at a certain value, and they left the partnership at a value,” he’d say. If a trader said there wasn’t a price for a particular position, Goldman might force him to sell a little bit, just to see what the price was. There was no pretending.

There were also several squishier aspects to Goldman’s approach to risk management. At most Wall Street firms, the back of- fice—made up of the controllers and risk managers and accountants—is a kind of no- man’s-land. Back office employees don’t produce revenue, are paid less, and are generally treated like inferiors. But at Goldman, this organization was called “the Federation,” and it was powerful. It included a separate group of controllers who independently checked traders’ marks. At its helm sat Viniar, who himself sat on Goldman’s privileged thirtieth-floor executive suite, right next to Paulson and Blankfein

Pág. 205 – Estado da Virgínia exige disclosure da estrutura societária (controladores) das empresas que lá operam.

On January 23, 2006, the AGs announced that Ameriquest had agreed to pay $325 million to settle allegations from forty-nine states that it had engaged in extensive consumer abuse. (Ameriquest didn’t operate in Virginia because the state requires detailed financial disclosure by the main shareholder of any company doing business there, which Arnall refused to provide.)

Pág. 236 – Analfabetismo científico em Wall Street

Breit had also learned over the years that by the standards of a physicist, Wall Street was quantitatively illiterate. Executives learned terms like “standard deviation” and “normal distribution,” but they didn’t really understand the math, so they got lulled into thinking it was magic. Traders came to believe the formulas were not an approximation of reality but reality itself. Which is also why firms needed good risk management departments, he believed. The risk managers were the ones who imposed the reality checks that the traders preferred to ignore.

Pág. 250 – estopim da crise. Calotes logo no início do empréstimo.

Early payment defaults can often trigger repurchase requests from investors, requiring the lender to buy them back. That is happening to New Century. In 2004, it repurchased $136.7 million worth of bad loans. In 2005, that number rose to $332.1 million. By June of 2006, it has been forced to repurchase an additional $315.7 million in defaulted loans.

Pág. 289 – especuladores vendidos a descoberto furiosos com a possibilidade de haver ajuda aos compradores das casas.

It wasn’t to be. In particular, a number of the big investors who were short the triple-A tranches were furious when they discovered what was going on. They were going to make money if enough homeowners were foreclosed on! They didn’t want anyone helping out homeowners at the expense of their profits. Some of the controversy broke into public view in April, when the Wall Street Journal reported on an exchange between the Bear Stearns mortgage desk and John Paulson. Bear sent Paulson a copy of lan- guage it drafted to the basic ISDA swap contract. It unequivocally gave the underwriter of any mortgage-backed security the right to support failing home loans in a mortgage security. “We were shocked,” Paulson lieutenant Michael Waldorf told the Journal. Deutsche Bank and others with big short positions rallied behind Paulson. They said that the Bear proposal was tantamount to market manipulation.

The plan to prevent foreclosures went nowhere.