The Subprime Primer

My friend in the mortgage industry back in Philly sent me a funny Powerpoint presentation that’s floating around to help explain the subprime loan mess. I’ve embedded it here using Powerpoint’s semi-adequate Save as Web Page feature. Enjoy.

UPDATE: Apparently, the link does not work for Mac users. I’ll see if there’s another way I can embed it.

UPDATE 2: ‘Sidereal’ in the comments found it at another link. Click here. That should work for everyone. Thanks!


  1. 5

    ArtFart spews:

    4 There’s some really interesting data there. Cities originated out of people gathering for mutual protection. In the last few decades, the development of Suburbia has been largely driven by…well, developers’ greed, mostly, but also the underlying assumption that John Q. America can make it all on his own, and doesn’t need all those “riff-raff” hanging anywhere near him.

    So now we have what societal infrastructure starting to dry up because there ain’t the resources to keep watch over areas that are half abandoned. Now the tables are turned, and Mr. Cynical is the one who’d better be watching for tennis shoes hanging from the power lines. Oh, by the way, Mr. C…the thugs are packing bigger heat than you are.

  2. 6

    rhp6033 spews:

    They missed some of the best lines. They should have included:

    “If we screw up the system big enough, we can convince the Congress to bail us out. All we have to do is threaten the collapse of the entire banking system, just like we did in the Savings & Loan Crisis in the 1980’s. Congress will be forced to use taxpayer money to bail us out.

    Of course, there will still be lots of losers – homeowners trying to refinance against depreciated property, any new home buyers trying to find financing, neighbors of foreclosed properties who have to deal with drug dealers & vagrants squatting in empty foreclosed houses, police depts. dealing with the associated cime, etc. But WE won’t lose!

  3. 7

    rhp6033 spews:

    Ever notice that Republicans, who preach “responsibility”, really only mean that the little guy should be held responsible for Republican mistakes?

    Take, for example, the credit card lending practices. Companies market to students & other “high risk” people, with teaser rates which quickly jump to much higher rates. Then when the predictable happens (these high-risk people can’t pay, and declare bankruptcy), the Republicans preach “responsibility” and change the bankruptcy code to make sure the little guys pay, regardless. The fact that they made a business decision to make risky loans on the promise of huge profits doesn’t seem to be a problem to them, at all.

    Same with the sub-prime fiasco. They make all the money brokering the loans, then expect us (the taxpayer) to bail them out when things go south.

  4. 8

    ratcityreprobate spews:

    It has taken the American people way too long to diagnose the pathology of arrogance and self-pity of the GOP and their business friends, in which what is theirs is theirs and what is anybody else’s is negotiable.

  5. 9

    Daddy Love spews:

    It’s not coincidence that the looting of HUD, the S&L disaster, and this mortgage/real estate/financial services cesspool have all occurred during Republican administrations.

    Another reason to be suspicious of real esate “broker” Dino Rossi.

  6. 11

    Responsible Home Owner spews:

    I agree that PART of this mortgage mess is maybe 10% of the people not able to pay their now adjusted rates, were swindled. BUT the remaining 90% are greedy buyers wanting to have a champagne lifestyle on a beer budget. I was offered an adjustable rate bringing my mortgage payment from $1300/month down to $900 a month BUT also understood it was ADJUSTABLE” and would raise DEFINATELY in a few years up to $1400/month. Hmmm in 3 years would I really be making an additional $100/month?! NO! So I went 30 year fixed and fixed payment of $1300. I bought a home I could afford and didn’t over spend. These irresponsible buyers need to be held accountable and the lenders need to deal with the borrowers going under and oh well if the CEO of Wamu loses a few million or the CEO of Countrywide “retires” with $150 mill vs. $300 mill. It’s time for the irresponsible lenders to go under with no bail out and those greedy borrowers to deal with the REALITY they can not afford a $500k home making only $50k a year! They KNEW what they were getting into with these ARM rates and decided “well we will figure it out when time comes” well time has come and they haven’t done anything to “figure” it out!

  7. 12

    Roger Rabbit spews:

    I can’t download that thing, and don’t need to. The situation is easy to understand:

    Greedy lenders + lax regulators = bad loans

  8. 14

    Roger Rabbit spews:

    People who know their history realize that before banking regulation came along financial panics occurred with the same regularity as leaves falling off trees in autumn.

  9. 15

    Roger Rabbit spews:

    @7 More and more Republican socialism is creeping into our economy. Bankers lend money to poor credit risks and pass the losses to paying customers by jacking up their rates. Health providers give free care to people frozen out of the health insurance market and pass the costs to paying customers by raising premiums. In each case, this corporate socialism becomes a self-perpetuating vicious cycle by freezing more and more people out of credit and health insurance markets by continually raising rates on those who do pay to make good losses incurred by serving the ever-growing numbers who can’t pay. Ultimately, there will be only one credit card customer left, and only one health insurance policy left, and those two customers will have to be rich enough to support the rest of us. Socialism and the implosion of capitalism all rolled into one, brought to you by American corporate greed and Republican antipathy to regulating anything no matter how destructive it is.

  10. 16

    Roger Rabbit spews:

    Goddam Republican communists are gonna wreck this country and destroy the capitalist system. Then all my stocks will be worthless. Maybe I should buy wheat futures before we’re all standing in breadlines.

  11. 17

    Don Joe spews:

    The irony is almost funny. This same propensity to package the ugly and the bad up with the good has led to a potential campaign finance snag for McCain.

    McCain wants to opt out of public financing for his campaign, primarily because he will soon bump up against the mandated spending limits. So, he’s, essentially, told the FEC that he wants to opt out of the public financing deal. Only, the FEC doesn’t have a quorum to respond.

    Why does the FEC not have a quorum? Well, President Bush has appointed Hans von Spakovsky, the GOP voter-suppression wonk, to the FEC, but confirmation of his appointment, along with a few others, is currently stalled in the Senate. The Democrats want a separate up/down vote for von Spakovsky and the Republicans want to lump von Spakovsky in with all the other FEC appointees.

    The irony operates on a couple levels, because the law of which McCain is about to run afoul is the McCain-Feingold.

  12. 18


    The irony operates on a couple levels, because the law of which McCain is about to run afoul is the McCain-Feingold.

    A fitting end for the Maverick.

  13. 19

    Roger Rabbit spews:

    @17 Dee-lish-us!!! If the GOPers inside on a package vote, then the Senate Democrats may have no choice but to accomodate them — in which case, they should vote against the whole fucking package of appointees. Throw ‘em all out! Make Bush start from scratch. They deserve it.

  14. 20

    Roger Rabbit spews:

    It’s exactly this kind of manipulative bullshit that will make it impossible for President Obama to “work with” Republicans. He’ll find out very quickly that the only way to deal with Republican cockroaches is to fire up the propane torch and go hunting with a flashlight under every kitchen and bathroom cabinet until every last one of the vermin have been incinerated.

  15. 21

    proud leftist spews:

    11: ” . . . the remaining 90% are greedy buyers wanting to have a champagne lifestyle on a beer budget.”

    Calling someone “greedy” for wanting to own a home, an essential part of the American dream, is truly over the top. Moreover, claiming that subprime borrowers wanted to have a champagne lifestyle (and you know them all personally, I presume, and surveyed them?) treats reality with a cavalierness that suggests you are a Republican. Many borrowers may have been overly optimistic, even unreasonably so. But, greedy? No way. The borrowers’ alleged greed doesn’t hold a candle to that of the lenders.

  16. 22

    GBS spews:

    Does everyone NOW understand why regulations are BAD??

    Sheeeez, if you haven’t been listening to our conservative “friends” what this country needs is less regulations on business and more Tax Breaks for the Paris Hilton producer types.


  17. 23

    GBS spews:


    Congressman Renzi charged in land deal
    Arizona Republican indicted in conspiracy involving federal land swap.

    Can you believe it?!?!?!

    A REPUBLICAN, indicted.

    I can see 1-2 “bad apples” from the Republican Party getting indicited, 3-4 maaaaaaaay-be, but holy shit, what are we up to now? eleventeen?

  18. 25

    ArtFart spews:

    21 It’s typical of conservatives to rob, rape, pillage and murder, and then to blame the victims.

  19. 26

    Daddy Love spews:

    11 RHO

    I agree that PART of this mortgage mess is maybe 10% of the people not able to pay their now adjusted rates, were swindled. BUT the remaining 90% are greedy buyers wanting to have a champagne lifestyle on a beer budget.

    And I agree that you don’t know what percentage of anyone is, does, or thinks anything. But other than your totally ignorant opinion, you’re spot on.

  20. 27

    Responsible Home Owner spews:

    26 and 21…WE As American Citizens don’t need mommy and daddy to tell us how to use our money now do we? BUT when we mess up, everyone else who looked at their finances and realized they couldn’t afford that home with their income, chose to be RESPONSIBLE and borrowed what they REALISTICALLY could afford. Those that chose to spend more than they are worth are now screwed! BUT you’re telling me it’s ok that we RESPONSIBLE borrowers, ie tax payers, bail out the ones who chose to spend more than they could afford? THEY are not “victims”! THEY CHOSE TO GO DOWN THIS ROAD! So if I go out and buy myself a Ferrari I obviously cannot afford, will you pay for me to keep it?

  21. 28

    Daddy Love spews:


    Oh,come now. A Republican in a shady real estate financing deal? Who’s ever heard of such a thing?

  22. 29

    Daddy Love spews:


    What I AM telling you, as opposed to the words you’re trying to put in my mouth, is that you don’t know how many people, if any, fit your description, the thus your opinion is totally ignorant.

  23. 30

    proud leftist spews:

    AF: “21 It’s typical of conservatives to rob, rape, pillage and murder, and then to blame the victims.”

    In that regard, I recently heard a perfect example of the Republican notion of accountability: A cousin’s young son complained that his brother had broken his toy car. When asked how that had happened, the lad explained that his brother had made him so mad that he picked up his car and threw it against the wall, thereby disabling the vehicle. In a nutshell, Accountability According to Republicans, wouldn’t you agree?

  24. 31

    Politically Incorrect spews:

    So, I guess the solution is to have the government take over all aspects fo the economy. Let it decide who gets a loan, who doesn’t. Who gets a car, who doesn’t. How many tons of baseball caps are made each year, who makes them, who gets to buy them.

    That system doesn’t work so well.

    As far as the mortgage mess goes, it will be over in a couple of years. A lot of people on the thin side of life will get hurt, and the whole economy will suffer. But i’d rather have the shit we’ve got now than a government-controlled, command economy like communism or socialism.

  25. 33

    Politically Incorrect spews:


    No, I would not agree. The kid broke his own truck and it’s his fault. The dumbass that smoked for 50 years and got cancer also did it to himself.

    Neither the Dems or the Reps are big on personal responsibility. It’s always “somebody else’s fault!”

  26. 34

    GBS spews:

    @ 27:

    Watch the powerpoint presentation again. It’s in cartoon form so I would’ve assumed it wouldn’t have been too technical for you.

    The subprime mess isn’t so much about individuals not understanding their loans, it’s how they were packaged up and sold on Wall St. under false pretenses that’s causing the bigger mess.

    Sort of reminds me of the S&L scandal of the 80’s that bilked millions and millions of dollars from the public.

    Hmmmm . . . I can’t remember which brothers benefitted from that scam. It’ll come to me later I’m sure. One of them is well known in politics today, though. I think the other brother recently got out of politics.

    Puddy, can you do some facts checkin on that?

  27. 35

    GBS spews:

    @ 31:

    Regulations and government controll of all business are two completely different things and have NOTHING to do with each other.

    Sheeeez, no wonder the Republcians are getting booted out of office. It’s not for a lack of ideas, it’s just that ALL their ideas SUCK.

  28. 36

    rhp6033 spews:

    R. Homeowner @ 11:

    I’d agree that people need to be responsible and avoid those loans. I was trapped in an adjustable-rate mortgage when I first bought back in 1980, fresh out of graduat school, and it took me eight years to get out of it. I’ll never do that again.

    But it’s really not entirely the borrower’s fault. Many are first-time buyers, and they are relying upon their real estate agent for advice. The agent wants them to buy as much property as they can qualify for, so he/she will refer them to a lending broker who will write whatever mortgage will get them in the door. It’s a rare real estate agent who will advise their client to “buy down” because they shouldn’t pay for a bigger house, even though there are mortgages available which will allow them to do so. I’m probably better equiped that most to deal with this kind of pressure, but most people aren’t. That’s why we need rules enforced which prevent lending abuse.

    Secondly, even if an individual first-time buyer is trying to act responsibly, they are still affected by the others who aren’t. Over the past few years easy mortgage lending helped fuel the speculative and inflationary rise in home prices, essentially doubling housing prices over the course of three years (at least in this area). For first-time buyers, this means that they are under pressure to get into the market and buy at any cost, before they are shut out entirely by rising prices, even though those rising prices are being fueled by artifically easy credit.

    It’s a little like participating in a sport where using steroids is either not against the rules or it isn’t enforced – you don’t want to do it, but if everyone else is, you really have no choice if you want to play.

    Now, regarding those who were using “liar’s loans” (no income verification required) in order to flip properties for speculative profit: they are on their own. They took a risk in order to make a big profit in a short time for little work, and if it didn’t work out for them, tough.

  29. 37

    proud leftist spews:

    27: “BUT you’re telling me it’s ok that we RESPONSIBLE borrowers, ie tax payers, bail out the ones who chose to spend more than they could afford? THEY are not “victims”!”

    I said no such thing. I simply asserted that your characterization of subprime borrowers as “greedy” and wanting to live “a champagne lifestyle on a beer budget” is not reasonable and does not accurately reflect how these people came to get these loans. Now that you’ve added some more blame the little guy nonsense to your fantasy, let me suggest that these borrowers are far less likely to get any significant bailout (maybe a delay in foreclosure proceedings) from the government. Who is more likely to get such bailout? The lending industry that made some very unreasonable and irresponsible policies concerning lending strategy. I am sure, however, that you have no trouble with your tax dollars going to bail out a nice Republican institution like the lending industry. You really should learn that speaking out one’s ass tends to preclude coherence.

  30. 38


    So, I guess the solution is to have the government take over all aspects fo the economy. Let it decide who gets a loan, who doesn’t. Who gets a car, who doesn’t. How many tons of baseball caps are made each year, who makes them, who gets to buy them.

    That system doesn’t work so well.

    No, that’s not what we’re saying at all, and I’m actually very concerned for you that you actually thought that this is what we’re talking about.

  31. 39

    rhp6033 spews:

    Another Republican sentenced:

    Chad Castagana was sentenced by a California court to a mental institution and ordered to take his meds.

    “Castagana, who has described himself as a “compulsive” Republican voter, was convicted at trial last year of mailing threatening letters in 2006 to celebrities and politicians he considered too liberal.”

    Hmmm, I guess if alchoholism can be considered to be a mental disease, perhaps being a “compulsive Republican voter” might also be so labeled?

    I guess I shouldn’t make fun of the mentally ill. But I can’t help but wonder if any of our regular wingnut posters has been missing from these boards lately….

  32. 40

    ArtFart spews:

    31 Ah yes…a nice little reactionary tantrum about how “you lefties wanna break our backs with regulations and build a horrible naaaaaanny state!”

    See Roger’s comment #14 above. I’m old enough that I went to school when they taught us all about that in American history class. I expect it’s been pretty much expunged from the curriculum.

    After 1929, the government took it upon itself to impose some rules on the “financial community”, like requiring banks to loan their depositors’ money out in a way that it was likely to be paid back, and preventing people from borrowing against their homes to play the stock market.

    Why did they have to do this? Because before they did, the banks and the brokers ripped off a lot of people who didn’t know any better and things got righteously fucked up.

    For the last half century, the righties (and some gutless so-called “democrats”) have been systematically whittling away at those rules, either by repealing them or by filling regulatory agencies with appointed hacks who didn’t enforce them. And you know what? Everything’s getting all fucked up again.

  33. 41

    Responsible Home Owner spews:

    One again…can I go get myself a Ferrari by the dealership who will do ANYTHING to get the sale? Please please then everyone else can help me cover the cost by allowing me to re-finance it at a lower rate. We are grown adults, I assume (yeah I just made an ass out of u and me) and we all went to school (assuming again) therefore we all are responsible for ourselves and the choices we make. I put myself in secer credit card debt when I was in my 20’s, since then got out via paying it all off on my own, no bankruptcy, but never once did I blame the government or cc companies for ME spending money I didn’t have. They offered it, I spent it and it was MY responsibilty to pay for my debt. Since then I no longer use credit cards. I wasn’t allowed to “re-fi” my higher interest rates in order to continue carrying debt I really couldn’t afford. The lenders should not be bailed out what so ever but neither should the borrowers. All involved should take their mistakes and learn from them, as is the the circle of life…live and learn.

  34. 42

    proud leftist spews:

    39: “Hmmm, I guess if alcoholism can be considered to be a mental disease, perhaps being a “compulsive Republican voter” might also be so labeled?”

    The next edition of DSM surely should include such a listing. I can just see Republican criminals (most of whom reside in Congress) pleading in court, “Mercy, Your Honor, mercy. I’m a Republican. I can’t be held responsible.”

  35. 43

    Richard Pope spews:

    rhp6033 @ 39

    The “compulsive Republican voter” didn’t try the insanity defense?

  36. 44

    Richard Pope spews:

    Lee — thanks for explaining Republican economics. Excellent slide show presentation!

  37. 45


    You’re welcome. I wish I knew who to credit, but it was something that just turned up in my inbox last night.

  38. 46

    rhp6033 spews:

    RP @ 43: Well, he was sentenced to a mental institution, so draw your own conclusions. I guess the envelopes with the white powder he mailed to Democratic Congressional offices probably had the judge a wee bit concerned about how he might take it to the next level.

  39. 47

    ArtFart spews:

    39/43/46 This isn’t just “mental illness”–it’s criminal insanity. If this guy’s whacked enough to send threats to strangers, let him sit in the dark with his Napoleon hat on for a while longer and he might decide to try to carry them out.

  40. 48

    ArtFart spews:

    41 Well, I guess it’s great that yours don’t stink, but it would seem that there are a lot of other people who are more subject to human frailty–like he naivite to believe that nice man behind the desk in the fancy suit who’s saying that there’s nothing to worry about, that real estate always rises in value, that sure we might have to raise your interest but that will be just another sign that the economy’s getting even stronger, so you’ll be getting a bigger paycheck, right? And Mister Customer, aren’t you getting tired of sharing your bedroom with your two youngest kids? Just sign here, and we can fix all that!

    And yeah, it’s great you’ve kept your financial nose clean–as a matter of fact so have I. My bride and I live in the same house we bought in 1976 for $38K. It’s long since been paid off, our kids are grown and gone, and we’re pretty comfortable. On the other hand, whoever’s to blame, when everything goes in the crapper we’re all going to suffer. Go re-read the article linked to in comment #4. There are squatters living in foreclosed houses in Beverly Hills, for Chrissakes! Don’t think for a minute that Seattle’s going to miss all the fun. Your banker and your government have danced really long and hard, and it’s time to pay the fiddler.

  41. 50

    Aaron spews:


    Mark The Redneck-Wonk says:

    [Deleted – off topic]

    Ha ha ha! I love it when that happens.

  42. 51

    Mark The Redneck Wonk spews:

    I love it when you fucking losers sit there and watch me.


    Get a fucking life. Losers…

  43. 52

    Mark The Redneck-Wonk spews:

    Remember “black listing”? When you fucking racists insisted that “NINJA” people get home loans at favorable terms?

    So mortgage industry did it. Now you don’t like it when they hafta live up to adult terms.

    So let’s cut them off. Let them live in slums. Fuck them.

    And it’s still a fucking waste for another law enforcement officer to die defending a marxist clinton.

  44. 53

    Daddy Love spews:

    Responsible Home Owner

    I challenged you and claimed that you don’t know shit. I’m glad you decided not to contest that, because you know you don’t.

  45. 56

    FricknFrack spews:

    Another one bites the dust. WHY am I not surprised he’s another self-serving Republican?
    Congressman Indicted in Ariz. Land Deal
    PHOENIX – Federal authorities announced corruption charges Friday accusing Rep. Rick Renzi of engineering a swap of federally owned mining land to benefit himself and a former business partner and stealing from his insurance company’s clients.

    A lengthy federal investigation that had put the three-term Republican congressman under a cloud for more than a year culminated in a 26-page indictment issued Thursday against him and two other men. Renzi announced Aug. 23 that he wouldn’t run for re-election in Arizona’s mostly rural 1st Congressional District. [snipped, link listed above]

  46. 57

    Mark The Redneck-Wonk spews:


    OFM released the cost of SB 6621 today that creates “free” health care for the people of The Feminist Utopia of Washington. The price tag is $ 145,112,994,843.

    Where the fuck does senator Hyphen-Name think we’re gonna find that kind of money?

    If ya think health care is expensive now, wait until it’s “free”.


    Do an experiment for me and report back. Go to your neighbors and tell them you want them to pay for your health care so it’s “free” to you. Demand that they give you hunnerd dollar bills. Let me know how many of them do it.

  47. 58

    Daddy Love spews:


    Hey, MTR. Health care is never free. But you know what? Pooling risk (you know, what insurance companies do to save money) um, saves money. Fucking duh.

  48. 59

    The Blatantly Obvious spews:

    @ 57 Mark The Retarded Redneck

    Do an experiment for me and report back. Pay your fucking gambling debt.

  49. 60

    The Blatantly Obvious spews:

    MTR depends on old fashioned health care insurance.

    He blows his paycheck on pull tabs and if he wins, he gets that nasty tumor removed. If he loses, he waits for the next paycheck and repeats.

  50. 61

    Harry Reid spews:

    Daddy Love says:


    Oh,come now. A Republican in a shady real estate financing deal? Who’s ever heard of such a thing?

    Hehehehe Good one. By the way you must be “pot” because I am “Kettle”.

  51. 62

    Jane Balough's Dog spews:

    If ya think health care is expensive now, wait until it’s “free”.


    Liberals have managed to spend over 10k per kid for free public education in Seattle yet 40% of them pass it up. If liberals get a hold of healthcare forgetaboutit.

  52. 63

    George Bush spews:

    Shady real estate deals.. ahe ahe.. child’s play!

    I fucking bought Iraq!! Only cost 700 billion dollars and 4000 American lives so far! .. ahe.. ahe..ahe..

    And it was worth it! Look at the price of oil.

    Black gold.

    Texas tea.

    I rule! ahe.. ahe…

    Stoopid fools.

  53. 64

    Daddy Love spews:

    The again, Harry, you might convince us if you had some kind of fucking proof. I read the “Harry Reid land deal” bullshit, and it was basically bullshit. A deal he declared in the propoer disclosure documents. Renzi has been fucking indicted on multiple felonies. Uh, not the same thing, idiot boy.

    Aldso not like Ted Stevens having Alaskan interests remodel his house. Not like Denny Hastert pushing through Federal huighway funds that benefit his real estate holdings (Hastert allegedly pocketed $2 million by buying cheap real estate then dramatically escalating its value by using his position to push through a federally funded highway that his constituents didn’t want–uhh, $2.5 million profit).

    BTW, re: Harry Reid: he reported his ownership of the property and he reported his profit in the eventual sale. You are referring to a technicality that disclosed the 2004 sale as though he held the property in his individual name, rather than in the name of the LLC through whose ownership he held a stake in the property. There was never any concealment of transactions or amounts, only a disagreement about how it should be reported. Funny how that’s a scandal to a Republican but Rick Renzi’s felony indictments don’t seem to show up on your radar. Funny.

    What about Renzi, dude? Got a problem with wire fraud, extortion, money laundering? Yeah, I didn’t think so.

  54. 65

    kettle spews:

    January 28, 2007

    BULLHEAD CITY, ARIZ. — It’s hard to buy undeveloped land in booming northern Arizona for $166 an acre. But now-Senate Majority Leader Harry Reid effectively did just that when a longtime friend decided to sell property owned by the employee pension fund that he controlled.

    In 2002, Reid (D-Nev.) paid $10,000 to a pension fund controlled by Clair Haycock, a Las Vegas lubricants distributor and his friend for 50 years. The payment gave the senator full control of a 160-acre parcel in Bullhead City that Reid and the pension fund had jointly owned. Reid’s price for the equivalent of 60 acres of undeveloped desert was less than one-tenth of the value the assessor placed on it at the time.

    Six months after the deal closed, Reid introduced legislation to address the plight of lubricants dealers who had their supplies disrupted by the decisions of big oil companies. It was an issue the Haycock family had brought to Reid’s attention in 1994, according to a source familiar with the events.

    If Reid were to sell the property for any of the various estimates of its value, his gain on the $10,000 investment could range from $50,000 to $290,000.

    It is a potential violation of congressional ethics standards for a member to accept anything of value — including a real estate discount — from a person with interests before Congress.

    In a statement, Reid’s spokesman Jon Summers said that the transaction was not a gift and that the price was due to the property’s history and the fact that only a partial interest was sold. Reid’s action on the lubricants issue was unrelated to the sale and reflected the senator’s interest in fairness for small businesses, Summers said.

    Reid “has never taken any official action to provide personal financial benefit to me, and I would never have asked him to,” Clair Haycock has told The Times. Haycock’s son, John, who runs the petroleum-products distribution company with him, said in a recent e-mail that it was “absolutely wrong” to connect the land sale and Reid’s lubricants legislation, which did not pass.

    Legislative efforts

    Records and interviews show that beginning in the mid-1990s, Reid tried several times to push legislation that would have protected lubricants distributors from abrupt cancellations by their suppliers. Though unsuccessful, the legislation sent a clear message to the oil firms that there was congressional interest in the matter, according to Sarah Dodge, then-legislative director for an industry group that worked on the bill.

    By the time of the land sale, the Haycocks say, they had lost interest in the issue and were not aware that the legislation had been introduced.

    Because an employee pension fund had owned the land Reid purchased, labor law experts contacted by The Times said, a below-market sale would raise additional questions. Pension fund trustees like Clair Haycock have a duty in most cases to sell assets for their market value, the experts said.

    “I think this would have been considered a potentially serious issue” at the time, said Ian D. Lanoff, who led the Labor Department’s pension division during the Carter administration and was provided basic details of the case — though not the identity of the lawmaker — by The Times.

    “Theoretically it’s a serious issue for the trustee who sold the property, though practically it may not be” because the pension plan is now closed and its obligations were met, Lanoff said.

    John Haycock said his workers received all promised benefits from the Haycock Distributing Co. pension plan and were therefore unaffected by the land transaction. Federal records confirm this.

    Reid’s interest in the barren parcel dates back to the period of 1979 through 1982, when he and Clair Haycock bought the 160 acres. Haycock bought a three-eighths interest, equivalent to 60 acres, for $90,000 — $1,500 an acre. Reid, then a Nevada lawyer and political figure, bought the other five-eighths, the equivalent of 100 acres. They did not divide the parcel.

    The property has sweeping mountain and mesa views and now abuts a housing development, which could make it attractive to developers. But there are some limitations. The land has a steep wash, or desert streambed, and the adjacent land has a gravel pit.

    In early 1987, Haycock turned over his interest in the land to the pension fund, for which he acts as trustee. The fund provided retirement benefits for about 80 employees, and under law, employers must contribute to such funds each year.

    In the early 1990s, California investors bought the entire 160 acres from Reid and Haycock for a little over $1.34 million — around $8,400 an acre. The new owners obtained approval to develop a mobile home and recreational vehicle park. But a few years later they defaulted, and Reid and the pension fund were once again the land’s joint owners.

    Development slowed in the late 1990s, and Reid and the Haycocks say the property became a cash drain. In 1999, according to Reid’s office, the senator began working without success with developer Craig Johnson on a plan for the property. At some point, Reid’s office said, he offered to give the land to Johnson, who declined. Johnson has confirmed that offer. In a statement Reid’s office provided, Johnson described the listless market and the property’s challenges.

    In 2001, Haycock Distributing Co. decided to convert its existing pension fund into a 401(k) retirement program. In liquidating its assets, the firm decided that the plan must quickly sell its share of the property.

    Lawyers advised the Haycocks that the family could not buy it from the pension fund, so Clair Haycock approached Reid. At first, Reid said “he and his wife were not interested due to the property’s past history,” Haycock wrote in a letter to The Times.

    “Eventually, he gave me $10,000 for my share,” Clair Haycock wrote. “I was just happy to have been able to liquidate the property from my pension plan.” Reid’s office said the senator and his wife purchased it reluctantly. “Because it had minimal value to them, they were willing to pay only a minimal price,” a Reid staffer wrote in response to questions.

    How good a deal?

    How good a deal did Reid get? Paying $166 an acre for Mohave County land is “a super deal,” said the county assessor, Ron Nicholson. But the precise answer in this case, Nicholson said, is complicated by the fact that only a minority portion of a partnership was for sale; minority shares can be difficult to sell. Other experts who reviewed the transaction for The Times acknowledged the complexity of the deal but said the senator appeared to have acquired valuable property for a fraction of its value.

    “The price strikes me as low,” said professor Crocker H. Liu, McCord chair of real estate at Arizona State University’s W.P. Carey School of Business. “But I don’t know what other considerations — valuable or otherwise — were part of this transaction. Usually when a purchase price is that low, there is other juice in the deal.”

    Calculating the precise amount of Reid’s discount is difficult because of varying values assigned to the property around that time, including some by the senator himself. In his 2001 Senate financial disclosure, Reid valued his Bullhead City acreage at $5,000 to $10,000 an acre. When questioned about the filing several months ago, Reid’s office said he might have overstated the value. A Reid spokesman said the senator was in the process of amending his ethics statements to more accurately describe the terms of the deal.

  55. 66

    FricknFrack spews:

    @ 4 McCain Am – Wow! What a fascinating article. Thx, saved it to my favs too.

    Lee & @ 1 sidereal (I have firefox too) that Subprime Primer was helpful.

    Guess I just need to keep hanging onto my house, couldn’t sell it at this point anyway. Got another month or so before the Plumbing Inspectors from California show up with regards to replacing all my pipes. I was accepted into the ABS Pipes Class Action Lawsuit last month & there’s a 60-90 day wait period. Need to recheck my paperwork, since they’ve changed info on their ‘net FAQ – as to 60-90 days from which point? For my Phoenix (bankrupted) brand, they will only pay 60% of pipes only, no mold issues or repairs. Still that’s 60% more than nothing, so I’m resigned.

    From what I’m reading here, I just need to keep hanging in there. I’m just about a mile or so north of Greenlake within walking distance of many attractions, so this moldy oldie house is probably worth hanging onto until the mortgage fiasco sorts itself out in a few years. Not getting so many [actually, not ANY] requests these days from developers wanting to take over the neighborhood (not surprising). I can keep washing dishes in the bathtub, at least now I’m feeling somewhat more hopeful after reading here.

  56. 67

    Responsible Home Owner spews:

    Bottom line Daddy O’…start taking responsibilty for your own actions. BTW I asked a few times, will you pay for my new Ferrari because I have decided I no longer want to be responsible for myself. I think you and our state government should take care of my selfish sorry ass! Either act like a grown adult and start taking some responsiblity or don’t go buy a home, cars etc if you still want someone else to pay for it! Go live back home in Mommy and Daddy’s basement and hide behind your computer!

  57. 68

    Roger Rabbit spews:

    @11 Considering how much deception exist in the marketplace, and that a team of lawyers and economists with mainframe computers would have trouble deciphering the fine print found in today’s mortgage contracts, I find it difficult to blame buyers on anything.

    It used to be that the epitome of business success was beating competitors by offering a better product or service at a good price. Now it seems all the brains in American business are dedicated to dreaming up clever deceptions to mislead consumers into signing bad deals.

    Capitalism is on its last legs.

  58. 69

    Roger Rabbit spews:

    The only thing American business produces anymore is innovative schemes to filch money from the unwary public. We are bombarded with endless salvos of those. Everything else is offshored.

  59. 70

    Responsible Home Owner spews:

    Re:68 I had those same options everyone else had, I have access to a PC and the internet and researched the hell out of my mortgage options. I used MY brain and math skills to decipher my options. I didn’t even need a lawyer to help me figure out I would not be making $100/month more in 3 years. I decided to I guess “settle” for a new smaller home than the new huge home I wanted, because I would afford it. The government here in Washington already has told us voters, we are not smart enough to understand initiatives we voted for…therefore I can understand now why so many weren’t smart enough to do the math. We really need to invest in our education system!

  60. 72

    Responsible Home Owner spews:

    71-ALWAYS DO! we need it here obviously in Washington since we have so many people that can’t understand basic math or how to read an initiative!

  61. 73

    Roger Rabbit spews:

    How To Spend $1.2 Billion In 1.2 Seconds

    “HAGATNA, Guam (AP) — A B-2 stealth bomber crashed Saturday at an air base on Guam, but both pilots ejected safely and were in good condition, the Air Force said.

    “It was the first crash of a B-2 bomber, said Capt. Sheila Johnston, a spokeswoman for Air Combat Command at Langley Air Force Base in Virginia. …

    “Each B-2 bomber costs about $1.2 billion to build. All 21 stealth bombers are based at Whiteman Air Force Base in Missouri, but the Air Force has been rotating several of them through Guam since 2004 … to boost the U.S. security presence in the Asia-Pacific region while other U.S. forces diverted to fight in the Middle East.”

    Quoted under fair use; for complete story and/or copyright info see

    Roger Rabbit Commentary: Holy shit … that’s more money than the average American wage earner makes in 30,000 years!!! Somebody’s gonna get a royal ass-chewing for this!!!

  62. 74

    Roger Rabbit spews:

    Given a dry weight of 158,000 lbs, the B-2 costs $475 an ounce — about 1/2 its weight in gold.

  63. 75

    The Blatantly Obvious spews:

    “Responsible Home Owner”

    What do you think?

    Is it a “random excuse maker Artificial Intelligence” for the Real Estate Industry or a “NEOCON-TRIAL LAWYER BOT 5000″ for the “We Need Reasonable Deniabilty Virus” unleashed by BushCo?

    Everything this “BlogBot” makes less sense every time you confront it with actual facts.

  64. 76

    Richard Pope spews:

    Roger Rabbit @ 74

    At the time the B-2 bombers were built, gold was considerably less than $475 per ounce. Even considering that a troy ounce is about 1.1 ounces avoirdupois.

  65. 77

    Roger Rabbit spews:

    @76 Cripes, Richard, you’re a walking encyclopedia. Surely there’s a better way to turn that talent into a livelihood than wasting it on practicing law? As Mr. Magoo (or someone) said, “The law, sir, is an ass.”

  66. 78

    Roger Rabbit spews:

    I believe that came from Dickens. I’m sure Richard knows. Richard seems to know almost everything.

  67. 79

    The Blatantly Obvious spews:

    @ 78 I believe it was Shakespeare “Much Ado About Nothing”

    But then Richard would no better

  68. 81

    The Blatantly Obvious spews:

    Con. Away! you are an ass; you are an ass.
    Dogb. Dost thou not suspect my place? Dost thou not suspect my years? O that he were here to write me down an ass! but, masters, remember that I am an ass; though it be not written down, yet forget not that I am an ass. No, thou villain, thou art full of piety, as shall be proved upon thee by good witness. I am a wise fellow; and, which is more, an officer; and, which is more, a householder; and, which is more, as pretty a piece of flesh as any in Messina; and one that knows the law, go to; and a rich fellow enough, go to; and a fellow that hath had losses; and one that hath two gowns, and everything handsome about him. Bring him away. O that I had been writ down an ass! [Exeunt.}

    Much Ado about Nothing

    Act IV. Scene II.

  69. 82

    The Blatantly Obvious spews:

    Dogb sounds more and more like “Responsible Home Owner” all the time.

    Or just another wingnut crank

  70. 84

    The Blatantly Obvious spews:

    Censor Shakespeare! I dare you!

    No… really don’t censor Shakespeare.

    That would suck.

    And, be wrong in every imaginable way.

    Like the Free Speech stuff.



    Untapped phone lines.

    stuff like that.

  71. 85

    Broadway Joe spews:

    TBO @ 84:

    Why am I suddenly reminded of the first episode of “WKRP in Cincinnati”?


  72. 87

    ArtFart spews:

    74 $475 an ounce? How does that stack up against the wholesale price of high-grade smack made from Afghan poppy juice?

    It’s been so long now since the B2’s got built, that what with various mergers and acquisitions in the aerospace industry, layoffs and retirements of the people who worked on the original project, and consignment of the computers and tooling systems used to third world junk piles, it’s dubious as to whether replacement B2’s could be built. So, the loss of a couple more will no doubt be justification for the design and construction of a whole new series of aircraft, at a cost of maybe a quarter of a trillion dollars.

    Your great-great-great-great-great grandchildren will be stuck with the tab for that one.

  73. 88

    Lily spews:

    This pp presentation is great. It shows how greedy the financial professionals were in approving loans to anyone with a pulse, then selling the loans to other financial professionals. The banks and mortgage companies had no reason to care if the loans were ever paid because they didn’t deal with them after that.

    And the typical conservatard shows up here screaming “dumb homeowners!” Right. Regular people with regular jobs are supposed to know more than the financial professionals who set up the whole mess.

  74. 89

    Responsible Home Owner spews:

    Lily….read 70. I guess because I know how to read English and have at least basic math skills I was able to process the difference in my mortgage options and chose my 30 year fixed all on my own. My financial professional “who set up this whole mess” didn’t fool me…and I didn’t even need a lawyer to figure it all out. Us people need to be responsible foor our own actions, quit blaming everyone else for poor research and decisions. Yes the money hungry mortgage companies didn’t care about us borrowers..unfortunately, no company exec cares about the customer anymore…even more reason for us consumers to do our research and not depend on someone else. In this day of technology age, most people have plenty of access to internet and of all things a calculator. Once again I’m not saying the lenders should walk free, NO they should go bankrupt and lose millions or even billions, but the borrowers who over extended themselves whould not be crying wolf after buying a home worth far more than they could afford. Just like racking up CC debt, are we now going to blame the CC companies because people rack up thousands in debt on things they WANT but don’t NEED?

  75. 90

    Lily spews:

    Mortgage lenders can say “no” to applicants. Credit card companies don’t have to send a card with a $20k limit to anyone who can sign their name. The financial professionals have a lot of control here. They’re trying to pass it off to people who aren’t financial professionals. See the problem?

  76. 91

    slingshot spews:

    Responsible homo-ner; yours, your kids’ and their kids’ tax dollars too, will be used to bail out bankers and Wall St. sheisters who knew what they were peddling was smoke. Remember that as you figuratively chisle your rugged individualism into the Mt. Rushmore of your self-image.

  77. 92

    Responsible Home Owner spews:

    91 – Reread my post you idiot! I have said numerous time we should NOT be bailing out the bankers and such! Can you freakin’ read????? BUT I also do not believe we should be bailing out the borrowers!

  78. 94

    ArtFart spews:

    92 Where’s you money, Einstein? Stuffed in your mattress? Betcha it’s in a bank somewhere. If that bank goes tits up, then what? Supposedly Uncle Fed has your ass covered (if you don’t have too much deposited in any one place, but at the very least you’re going to have to put up with a degree of inconvenience collecting. Now, if there’s a few million folks in the same boat with you, it’s going to be….well, like dealing with the government! Take a number, and sit over there until we call on ya.

  79. 95

    Responsible Home Owner spews:

    94-Well according to your way of thinking the banks must not be federally insured??? Well if my bank (credit union) goes tits up I guess you Dems will be willing to cover my accounts, and also if I decided I’d rather spend my paychecks on fun and shopping instead of my mortgage, you’ll also be helping me make my mortgage payments! THANK YOU! I can’t wait to see how much I can save once the dems take over!

  80. 96

    Don Joe spews:

    @ 95

    Got it. Bankers should not be bailed out, but they should be insured by the Federal government.

    I have to confess, I’m not particularly anxious to see you try explain the difference. Some people get into that sort of comedy, but I don’t.

  81. 97

    ArtFart spews:

    I guess this makes about as much sense as the way we’re given the opportunity to buy cars that can go 150 miles per hour, and then there have to be cops to make sure we don’t actually try to go that fast and kill ourselves.

  82. 98

    slingshot spews:

    Bankers (and the securities industry) need to be regulated (duh). With the experience of the Great Depression- banks, at least, should be insured. Regulation will help alleviate some of the corruption which is endemic to the money changer corps. The Dems are, without doubt more apt to apply regulation than the R’s. In fact, there’s a much ballyhooed press conference from early in the Dub administration where they carried out chain saws and garden shears to demonstrate their deregulation plans for the banking and securities folks.
    Do a little research beyond the end of your own nose, and you’ll find that there is flat-out fraud in many of those home buyer’s contracts. It looks like the lower the sub-prime customer, the higher the fraud, too.