This week The Wall Street Transcript has released a new report on the The Financial Crisis in the Banking Sector. This unique 742-page document tracks the thinking and perspective on the major sectors of finance, from 2000 through to 2009, with particular emphasis on the period from 2003 to 2006 when the seeds of today’s crisis were sewn.
The following is a excerpt for the report:
07/19/2004 A. Scott Keys – Executive Vice President and Chief Financial Officer – IndyMac Bancorp, Inc. (NDE)
Mr. Keys: I think the big fear for all mortgage companies is it’s fairly clear that interest rates are going to rise. If they rise very precipitously, it is possible that the housing market could slow down. As I said before, I don’t see an overall reduction in real estate values, but certainly, if rates were to go up 2%-3% from here, that would have a dampening effect on home sales and consumers’ willingness to take additional equity out of their homes. That’s probably the number one thing for us. We have found though that in those types of environments, when rates are rising and the mortgage market is falling in terms of overall mortgages being originated, then our company tends to gain market share. In fact, if you look back to the first quarter of 2003, and compare it to the first quarter of 2004, we were one of, I think, three of the top 50 lenders in the United States that actually had our production grow year over year. And I think we’ll see that trend continue for us. This is because of our focus on the mortgage broker business and the Alt-A business, these are businesses that are a little bit less influenced by the refinancing cycles, and tend to be more focused on purchase business. So that’s a strategy that has been very good for us, and as rates rise going forward, will allow us to differentiate ourselves from some of the other players that are much more dependent on refinancing.
This is a record of in-depth verbatim interviews conducted and published at the time, probably the only long-form, first-hand account of what exactly people were thinking as the crisis unfolded.
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