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ALL IN

CONTENTS

The bubble: “A credit-induced boom”.................................................................
Mortgage fraud: “Crime-facilitative environments”...........................................
Disclosure and due diligence: “A quality control issue in the factory”.................
Regulators: “Markets will always self-correct”....................................................
Leveraged loans and commercial real estate:
“You’ve got to get up and dance” ....................................................................
Lehman: From “moving” to “storage” .................................................................
Fannie Mae and Freddie Mac: “Two stark choices”............................................

In , the Bakersfield, California, homebuilder Warren Peterson was paying as lit-
tle as , for a ,-square-foot lot, about the size of three tennis courts. The
next year the cost more than tripled to ,, as real estate boomed. Over the pre-
vious quarter century, Peterson had built between  and  custom and semi-custom
homes a year. For a while, he was building as many as . And then came the crash.
“I have built exactly one new home since late ,” he told the FCIC five years
later. 
In , the average price was , for a new house in Bakersfield, at the
southern end of California’s agricultural center, the San Joaquin Valley. That jumped
to almost , by June . “By , money seemed to be coming in very fast

and from everywhere,” said Lloyd Plank, a Bakersfield real estate broker. “They
would purchase a house in Bakersfield, keep it for a short period and resell it. Some-
times they would flip the house while it was still in escrow, and would still make 
to .” 
Nationally, housing prices jumped  between  and their peak in , 
more than in any decade since at least . It would be catastrophically downhill

from there—yet the mortgage machine kept churning well into , apparently in-
different to the fact that housing prices were starting to fall and lending standards to
deteriorate. Newspaper stories highlighted the weakness in the housing market—
even suggesting this was a bubble that could burst anytime. Checks were in place, but

