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Notes to Chapter 5 565

Chapter 5
1. Gail Burks, written testimony for the FCIC, Hearing on the Impact of the Financial Crisis—State of
Nevada, session 3: The Impact of the Financial Crisis on Nevada Real Estate, September 8, 2010, p. 3.
2. Tom C. Putnam, president, Putnam Housing Finance Consulting, written testimony for the FCIC,
Hearing on the Impact of the Financial Crisis—Sacramento, session 2: Mortgage Origination, Mortgage
Fraud and Predatory Lending in the Sacramento Region, September 23, 2010, pp. 3–4.
3. Board of Governors of the Federal Reserve System, Federal Reserve Statistical Release Z.1: Flow of
Funds Accounts of the United States, release date, December 9, 2010, Table L.1: Credit Market Debt Out-
standing, and Table L.126: Issuers of Asset-Backed Securities (ABS)
4. Jim Callahan, interview by FCIC, October 18, 2010.
5. Lewis Ranieri, former vice chairman of Salomon Brothers, interview by FCIC, July 30, 2010.
6. Federal Deposit Insurance Corporation, “Managing the Crisis: The FDIC and RTC Experience”
(August 1998), pp. 29, 6–7, 407–8, 38.
7. Ibid., 417.
8. Ibid., pp. 9, 32, 36, 48
9. The figures throughout this discussion of CMLTI 2006-NC2 are FCIC staff calculations, based on
analysis of loan-level data from Blackbox Inc. and Standard & Poor’s; Moody’s PDS database; Moody’s
CDO EMS database; and Citigroup, Fannie Mae Term Sheet, CMLTI 2006-NC2, September 7, 2006, pp.
1, 3. See also Brad S. Karp, counsel for Citigroup, letter to FCIC, November 4, 2010, p. 1, pp. 2–3. All rat-
ings of its tranches are as given by Standard & Poor’s.
10. Technically, this deal had two unrated tranches below the equity tranche, also held by Citigroup
and the hedge fund.
11. Fed Chairman Ben S. Bernanke, “The Community Reinvestment Act: Its Evolution and New
Challenges,” speech at the Community Affairs Research Conference, Washington, D.C., March 30, 2007.
12. Ibid.
13. See Glenn Canner and Wayne Passmore, “The Community Reinvestment Act and the Profitability
of Mortgage-Oriented Banks,” Working Paper, Federal Reserve Board, March 3, 1997. Under the Com-
munity Reinvestment Act, low- and moderate-income borrowers have income that is at most 80% of area
median income.
14. Fed Chairman Alan Greenspan, “Economic Development in Low- and Moderate-Income Com-
munities,” speech at Community Forum on Community Reinvestment and Access to Credit: California’s
Challenge, in Los Angeles, January 12, 1998.
15. John Dugan, interview by FCIC, March 12, 2010.
16. Lawrence B. Lindsey, interview by FCIC, September 20, 2010.
17. Souphala Chomsisengphet and Anthony Pennington-Cross, “The Evolution of the Subprime
Mortgage Market,” Federal Reserve Bank of St. Louis Review 88, no. 1 (January/February 2006): 40
18. Southern Pacific Funding Corp, Form 8-K, September 14, 1998
19. The top 10 list is as of 1996, according to FCIC staff calculations using data from the following
sources: Inside Mortgage Finance, The 2009 Mortgage Market Statistical Annual, vol. 1, The Primary Mar-
ket (Bethesda, Md.: Inside Mortgage Finance Publications, 2009), p. 214, “Top 25 B&C Lenders in 1996”;
Thomas E. Foley, “Alternative Financial Ratios for the Effects of Securitization: Tools for Analysis,”
Moody’s Investor Services, September 19, 1997, p. 5; and Moody’s Investor Service, “Subprime Home Eq-
uity Industry Outlook—The Party’s Over,” Moody’s Global Credit Research, October 1998.
20. “FDIC Announces Receivership of First National Bank of Keystone, Keystone, West Virginia,”
Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency joint press release,
September 1, 1999.
21. FCIC staff calculations using data from Inside MBS & ABS.
22. See Marc Savitt, interview by FCIC, November 17, 2010.
23. Henry Cisneros, interview by FCIC, October 13, 2010.
24. Glenn Loney, interview by FCIC, April 1, 2010.
25. Senate Committee on Banking, Housing, and Urban Affairs, The Community Development, Credit
Enhancement, and Regulatory Improvement Act of 1993, 103rd Cong., 1st sess., October 28, 1993, S. Rep.
103–169, p. 18.
26. Ibid., p. 19.