ABD
I didn't get around to posting yesterday. I'm slipping.
You know who else is slipping? Lube-man.
Went to a presentation by one of the new SPEA faculty yesterday on the mortgage crisis. Pretty interesting stuff, not just in the conclusions, but also the story of how she got the data and wrote the paper. She had interned at a "large national bank" (she has a confidentiality agreement with them), and over time, she managed to acquire a large, detailed data set on their issuance of mortgages. So, after grunting it out and lucking out in getting this data (which all happened before the mortgage crisis hit), she had to deal with a dissertation advisor who was an education economist and didn't really care about her research and two other committee members who informed her that they were leaving the university, giving her two months to finish her dissertation (which she did).
Her lesson for us: this is NOT the way to go about doing a dissertation.
Anyway...it was an interesting portrait of how this career works for us beginners. It's goddaman hard. And it's hard, mostly, because you are supposed to produce new knowledge, but for the most part, you don't have the time or money to get new data. So, you are left with the task of using publicly available data sets in some kind of new way. This is hard to do, because lots of very smart, very driven people are doing the exact same thing and have been for years and years. Her experience was atypical. It worked out for her, but it's a big risk to try to get your own data. From what I can tell, dissertations are all about momentum. If you lose momentum, your advisors lose interest in you, and you can't teach in the program anymore cause you've been there too long, and you're running out of money and need to take a job, and pretty soon, you're ABD (industry slang for "all but dissertation") and working at Starbucks or something, with the chances that you'll actually finish the damn thing growing more remote every year.
Oh well! This is my career...I've made my choice and I'm stickin to it, unless and until it becomes obvious that I can't feed and shelter myself as an academic.
Oh, the findings of the research...loans from brokerage firms requiring low-documentation loans (i.e., "liar's loans") had high levels of default (something like 30%); high-documentation loans from brokerage firms had the second highest rates of default; bank-issued low-documentation loans were 3rd hightest in default; and bank-issued high-documentation loans were least likely to default.
posted by Joe @ 10:14 AM
11 Comments:
If we can both agree on the premise that Banks like making money why would they lend money to people so carelessly? Did their lust for money just make them more greedy and mendacious than usual?
Alas no.
http://en.wikipedia.org/wiki/Mortgage-backed_security
"First, mortgage loans are purchased from banks, mortgage companies, and other originators. Then, these loans are assembled into pools. This is done by government agencies, government-sponsored enterprises, and private entities, which may offer features to mitigate the risk of default associated with these mortgages. Mortgage-backed securities represent claims on the principal and payments on the loans in the pool, through a process known as Securitization. These securities are usually sold as bonds, but financial innovation has created a variety of securities that derive their ultimate value from mortgage pools.
Most MBS's are issued by the Government National Mortgage Association (Ginnie Mae), a U.S. government agency, or the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), U.S. government-sponsored enterprises. Ginnie Mae, backed by the full faith and credit of the U.S. government, guarantees that investors receive timely payments. Fannie Mae and Freddie Mac also provide certain guarantees and, while not backed by the full faith and credit of the U.S. government, have special authority to borrow from the U.S. Treasury. Some private institutions, such as brokerage firms, banks, and homebuilders, also securitize mortgages, known as "private-label" mortgage securities."
You seem like you are really aching for an argument about this. Well, sorry..I'm not going to bite. The advantage of this being my blog is that I get to decide what I want to talk, when I want to talk about it. If and when I want to argue about the causes of the financial meltdown, I'll let you know by writing about it. I mean, again, I'm not into being a comment nazi..offer whatever you'd like, but don't expect me to respond to any and all ideological provocations.
I'll just say briefly that I understand...the "comfortable narrative" for conservatives is to blame this collapse on market distortions caused by government policy and government institutions. Not surprisingly, I find that explanation laughably incomplete.
I should also say that your pseudonymous pseudonyms are pretty sweet, as as you are my only commenter, I appreciate the fact that you are interested enough to read and respond, even if I don't always have the time to engage in vigorous online debate.
I'm sorry I thought you were interested in the origin on the financial crisis given you keep posting about it, that the largest participants in the housing market are governmental entities and that their actions and inactions had a substantial impact on this particular set of issues. Though I suppose studying the outcomes of the various policies intended to increase participation in the housing market -- like most public policy -- would be sort of a downer.
Oh, I am interested in it, and I've followed coverage of it quite closely, but I wasn't primarily discussing those things in this post, and therefore I am disinclined to discuss them right now. My blog, my agenda. This post was primarily about doing research, not my attempt to offer a comprehensive account of the financial meltdown.
I also think you're mistaken that I keep posting about it. I think this is the first time I mentioned it in any detail, and I only mentioned it in passing here.
And in that spirit of me egomanically controlling the agenda on my own blog...I'm now done discussing this.
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Ok, new comment policy. Any insulting comments will be deleted (including from me when they slip out in a moment of totally justified righteous indignation).
People are willing to be much bigger dicks over the internet than they are in person. I don't want this to be the kind of place that facilitates that. So, please, no more ad hominem attacks. I don't want to have to use the comment moderation thing.
Addendum:
I'm not entirely sure why I do this blog. I have a lot of thoughts, and I enjoy writing them down. And, some people enjoy reading them. And I use the term "some" quite loosely.
So, this is a small thing I do, for fun, not work. If people are mean and combative in their comments, well, then this blog becomes work for me (because that's precisely what does happen in my profession), and it moves from being something I enjoy to something I don't enjoy. Which defeats the purpose of it.
So, if your comments further the goal of fun, that's good. If they don't, well...the internet is a big place. I'm sure you can find other boys and girls who enjoy fighting more than I do.
I hate you.
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