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570 Notes to Chapter 7

78. FCIC calculation based on Federal Housing Finance Agency, “Data on the Risk Characteristics
and Performance of Single-Family Mortgages Originated in 2001–2008 and Financed in the Secondary
Market” (September 13, 2010), Table 1-C; this report covers all loans purchased or securitized by the GSEs
or in private-label securitizations. Delinquency data provided by Wells Fargo covered 81% of loans.
79. “Orders Issued Under the Bank Holding Company Act,” Federal Reserve Bulletin 75, no. 4 (April
1989): 304.
80. “Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvest-
ment Act,” Federal Register 54 (April 5, 1989): 13742. This remains the interagency policy. “Community
Reinvestment Act: Interagency Questions and Answers Regarding Community Reinvestment; Notice,”
Federal Register 75 (March 11, 2010): 11666.
81. Glenn Loney, interview by FCIC, April 1, 2010.
82. “Community Reinvestment Act Regulations and Home Mortgage Disclosure; Final Rules,” Federal
Register 60, no. 86 (May 4, 1995): 22155–223.
83. Division of Consumer and Community Affairs, memorandum to Board of Governors, August 10,
1998.
84. Federal Reserve Board press release, “Order Approving the Merger of Bank Holding Companies,”
August 17, 1998, pp. 63–64.
85. Lloyd Brown, interview by FCIC, February 5, 2010.
86. Andrew Plepler, interview by FCIC, July 14, 2010.
87. Assuming 75% AAA tranche ($1.20), 10% AA tranche ($0.20), 8% A tranche ($0.30), 5% BBB
tranche ($0.40), and 2% equity tranche ($2.00). See Goldman Sachs, “Effective Regulation: Part 1, Avoid-
ing Another Meltdown,” March 2009, p. 22.
88. David Jones, interview by FCIC, October 19, 2010. See David Jones, “Emerging Problems with the
Basel Capital Accord: Regulatory Capital Arbitrage and Related Issues,” Journal of Banking and Finance
24, nos. 1–2 (January 2000): 35–58.
89. Henry Paulson, testimony before the FCIC, Hearing on the Shadow Banking System, day 2, ses-
sion 1: Perspective on the Shadow Banking System, May 6, 2010), transcript, p. 34.
90. Jones, interview.

Chapter 7
1. For example, an Alt-A loan may have no or limited documentation of the borrower’s income, may
have a high loan-to-value ratio (LTV), or may be for an investor-owned property.
2. Inside Mortgage Finance, The 2009 Mortgage Market Statistical Annual, vol. 2, The Secondary Mar-
ket (Bethesda, MD: Inside Mortgage Finance, 2009), p. 9, “Mortgage & Asset Securities Issuance” (show-
ing Wall St. securitizing a third more than Fannie and Freddie); p. 13, “Non-Agency MBS Issuance by
Type.” FCIC staff calculations from 2004 to 2006 (for growth in private label MBS).
3. Charles O. Prince, interview by FCIC, March 17, 2010.
4. John Taylor, interview by FCIC, September 23, 2010.
5. William A. Fleckenstein and Frederick Sheeham, Greenspan’s Bubbles: The Age of Ignorance at the
Federal Reserve (New York: McGraw-Hill, 2008), p. 181.
6. Alan Greenspan, “The Fed Didn’t Cause the Housing Bubble,” Wall Street Journal, March 11, 2009.
See also Ben Bernanke, “Monetary Policy and the Housing Bubble,” speech at the Annual Meeting of the
American Economic Association, Atlanta, Georgia, January 3, 2010.
7. Alan Greenspan, testimony before the Senate Committee on Banking, Housing, and Urban Affairs,
109th Cong., 1st sess., February 16, 2005.
8. Fed Chairman Ben S. Bernanke, “The Global Saving Glut and the U.S. Current Account Deficit,” re-
marks at the Sandridge Lecture, Virginia Association of Economics, Richmond, Virginia, March 10,
2005.
9. Frederic Mishkin, interview by FCIC, October 1, 2010.
10. Pierre-Olivier Gourinchas, written testimony for the FCIC, Forum to Explore the Causes of the
Financial Crisis, day 1, session 2: Macroeconomic Factors and U.S. Monetary Policy, February 26, 2010,
pp. 25–26. .
11. Paul Krugman, interview by FCIC, October 6, 2010.