But that doesn’t matter; the book is called Confessions of a subprime lender : an insider’s tale of greed, fraud, and ignorance and it is a fantastic look at what was going on in the subprime mortgage industry before “subprime” took its place as a four-letter word in the national lexicon.

Bitner was one of those people who handed out mortgages to people who had less than perfect credit. In 2000, he started a firm with two other men to help fill a very lucritive gap in the money business. They started a firm called Kellner Mortgage Investments in Texas and began a near-decade business that eventually went belly-up with the rest of the subprime industry.

Bitner explains how his company dealt with the borrowers, the actual people seeking mortgages, by working through brokers/loan officers/cheats/etc.

I can’t think of another industry where the vendor-client relationship has such a high degree of distrust. If almost three-fourths of all potential transactions are somehow fradulent, unreliable or misleading, it means the business model is fundamentally flawed.

The harsh reality if brokering subprime mortgages is that many loan officers are more concerned with their own paycheck than with the best interests of the borrower.

But then, what do you do with this mortgage that’s just going to sit around for 30 years?

In America, you turn it in to a commodity and sell the hell out of it.

That’s exactly what happened in this industry. It securitized and packaged into a product that would be sold as an investment (don’t ask me how, @mmagnolia22 saw my eyes glaze over a few times as Bitner got in to the flow of money and advanced, to me, economics).

But it’s not just the groups of borrowers, brokers, lenders, investment companies and ratings companies who should be blamed. Part of the problem came from appraisers. All of the properties had to be appraised, and ofter the appraiser was hired by a broker and “asked” to inflate the price of a property, thus increasing the broker’s commission when the deal closed. The only problem was that by artifically increasing property values of one home, when another appraiser would look at comparables for another home, they would raise its value because of the comp. WTH? So property values kept skyrocketing as bad appraisals by bad appraisers led to bad appraisals by good appraisers.

The rate of property appreciation experienced on a national basis over the last seven years was nit only a function of market demands but was due, in part, to the subprime industry’s acceptance of overvalued appraisals, coupled with a high percentage of credit-challenged borrowers who financed with no money down.

It’s all very technical and confusing, but an absolutely fascinating read. The thing that people have to keep in mind about subprime mortgages and mortgages in general is that it’s all risk management. Based on what you know about the borrower’s history, will they pay their mortgage on time? Unfortunately, somewhere along the lines greed got the better of a lot of people and now we’re in a serious crisis.

Oh, but there’s more bad news ahead, you say?

Yup.

Later in the book, Bitner talked at great length about all of the subprime Adjustable Rate Mortgage (ARMs) that would be coming up for readjustment in the near future. Well, that future came and went, and it’s what we witnessed as the housing bubble burst and people were being evicted from their the bank’s homes. But there is another daunting problem out there that hasn’t been discussed in the MSM or many blogs, pay-option ARMs. These types of mortgages were commonly used in Florida and California (the latter I’m positive he mentioned, don’t quote me on the former). A majority of those mortgages are going to be due for their adjustments, as the name implies, in 2011. Meaning, people who had no money down on a home and have been paying ridiculously low rates are going to find themselves in dire straits as they try to make ends meet while staying in their house.

Another round of bubble-bursting is coming. Brace yourselves.

Although Wall Street is skilled at making money, risk management has never been an area of expertise. This point can’t be stressed enough: The current mortgage debacle is a direct result of Wall Street’s inability to manage risk. In fact, companies like Merrill Lynch had no effective risk management processes in place until shortly before the subprime implosion. Since the focus was in feeding the securitization machine and driving profits, no one was paying attention to the basic fundamental principles of risk management.

All-in-all, it was a great and (pretty) easy read. Just under 200 pages; I finished it in over the course of a few reading sessions on a Saturday.

• Richard Bitner’s blog: Lending Sanity
• Review from The Big Picture
• Review from Letters On Pages

About a week ago, I finished reading Helen Thomas’s Watchdogs of democracy?: the waning Washington press corps and how it has failed the public. And I absolutely loved the book.

If you’re in journalism, interested in journalism or think the media is a left-leaning entity, I would highly recommend giving it a read. Thomas calls out the press for doing nothing when President Bush called on America to go to war with Iraq. She points out that it is the media’s function to question our leaders and ensure the public is getting all the information. “Gotcha journalism” is the biggest buzzword, but asking those kind of questions usually helps expose corruption or incompetence.

Thomas goes on to talk about media consolidation, and its impact on the messages Americans receive.

As Representative Maurice Hinchey once said, media consolidation “is the most critical issue facing the American people today: whether to allow a handful of people to determine what information we receive and influence the decisions we make.”

Congressman Bernie Sanders (I-Vt.) summed up the issue well when he said the FCC rules “will lead to even fewer media giants owning and controlling what people see, hear, and read in America. That’s truly dangerous because the health of our democracy depends on multiple viewpoints being debates. When you have only a few companies controlling everything, you get one corporate view.”

Even if you’re not interested in the rest of the book, I would suggest picking up a copy and reading her epilogue.

She definitely sticks it to bloggers, saying they aren’t really journalists and shouldn’t be credentialed for events. Thomas says that “real journalists” work for papers, wire services or television outlets. But those outlets are the ones being impacted by media consolidation.

While blogging may be more of an opinion piece, in lieu of journalism, bloggers are digging up facts and writing posts that are in the public interest. The problem stems from writers who are pushing their opinions as reality, and the readers who believe those interpretations to be true.

Overall, it’s a great read, though. I would urge you to go out and borrow the book for a weekend.

Heading down Arkansas way

On another note, I’m in the process of getting ready to head out to the brand new terminal at Indianapolis International Airport. This will be my first trip through Weir Cook Terminal, and from everything I’ve heard, it’s fantastic.

I’ll be working this week’s Sun Belt game on ESPN+, Florida Atlantic at Arkansas State.

I was looking forward to heading to Arkansas for the weekend. It’s in the south, it should be warm, right? Apparently not. The forecast for tomorrow has the high at 48°, but we’ll be there at 7:00am and it’s going to be cold!

Rental car delicious-ness

I couldn’t believe I got this rental car in Monroe, Louisiana. A Ford Mustang? From an airport that only takes prop and regional jets? And they had a whole fleet of Ford Mustangs?

I guess I should look into moving to Monroe, LA, there’s apparently more happening there than it appears.

In college, I was supposed to read the “Freshman reader,” which is a book assigned to all incoming students. I didn’t read it, I had no desire to, and we weren’t even going to discuss it in a class. I read textbooks, instruction manuals, blogs, newspaper article and scripts with great regularity, but nothing from the fiction or non-fiction section of the library.

When I was a kid, I loved reading. Granted it was Encyclopedia Brown or those choose-your-own-adventure books, but I loved it. I was passionate about reading things. I guess I just got too busy with everything else, and now I feel like I’ve missed out.

Well, I decided that missing out should come to an end. @mmagnolia22 and I went and got library cards at the Central Library in June (I even got a new driver’s license to prove I was a Marion County resident).

I didn’t check out any books until August. Whoops.

Here’s the deal, I really wasn’t sure what I wanted to read. I mean, there’s so many choices. Novels, non-fiction, biographies, large-print, the Bible, periodicals. That book place has everything! Then I had a quick conversation with myself in my head.

“You know, authors often go on press tours to promote their latest work.”

“I know, I get so bored when I see them on The Daily Show.”

“Wait, we’re a fan of TDS. We could read some of those books.”

Join the club!

And thus, The Daily Show Book Club was born.

I went through the 2008 guest list (via Wikipedia) and found people promoting books I thought sounded interesting. I haven’t gotten very far into 2007, but you can find a list of every guest here.

I’ve currently got a list of 21 books, 2 of which I’ve already finished. You can find my currently checked out books in the sidebar (which is no longer on the side, but at the bottom of the page).

I finished reading Allen Raymond’s How to rig an election: confessions of a Republican operative, I’ve provided a brief review below.

I recently also completed David Perlmutter’s Blogwars. This is a fascinating read if you’re interested in politics and blogging, more importantly the two together. Parts of it were a bit over my head (I never thought great Greek and Roman thinkers would have something to do with political blogs), but overall I was glued to the pages. I discovered a lot of great political blogs that I quickly added to Netvibes for easy access (I also shared that tab on my public Netvibes page; I’m a big fan of Pollster.com).

How to rig an election

I really enjoyed How to rig an election (as @mmagnolia22 will tell you, I won’t stop talking about it). It was a fascinating read.

I’m not giving anything away, but the author spent time in prison for his part in some questionable campaign tactics. And this all takes place in the late ’90s and early ’00s.

You see how Raymond won elections in New Jersey and elsewhere, while following his rise to prominence within the Republican party. Some of the actions he takes are downright terrible, but there are some interesting lessons he shares. The one that most struck me was when he made the point that he never outright lied in a campaign, but he twisted the truth until it reflected the reality he wanted to show.

At one point, he discusses the barometer used when trying to decide if a certain action should be taken.

“while I don’t necessarily recommend that you do the program, I don’t see anything illegal about it.”

For me that was a green light. Everything I had learned about campaigning dictated that it was all about not stepping over the bright line of the law. You could stepy up to the bright line, just not over it. Throughout my career, “It’s not illegal” was always enough to march with.

His whole point was the get the reader to take a closer look at the messages peddled by politicians and their staffs and to take a critical eye to campaign materials. It worked.

I would highly recommend this read leading up to the election, you can find both campaigns using strategies discussed in this book. And you can’t go wrong with reading his opinions about George W. Bush before he became President.

“When I was young and irresponsible, I was young an irresponsible,” and the press had started accepting that as an answer. I found it personally infuriating. In the first place, on what planet is the age of forty a part of one’s youth? In the second place, it should count. What basis do you have to judge a candidate on if not his own deeds? His words?

There was just a seed of him being defined as the scion of wealth and privilege saying “You know my name, you know my Daddy-It’s my turn to be president.”

There are some grammatical errors that were missed, and odd sentence structure, but if you imagine you’re reading a blog entry (and focus on the fact this wasn’t written by a professional writer) you’ll soon get over any bad feelings. Except maybe on page 41, where this little gem occurs

mis52
[next line]
demeanor domestic violence.

How to rig an election
Raymond, Allen
Simon & Schuster

Indianapolis-Marion County Public Library
Amazon.com

Next up on the list of recommended reading:
Watchdogs of democracy? : the waning Washington press corps and how it has failed the public
Thomas, Helen

White House ghosts : presidents and their speechwriters
Schlesinger, Robert