The Global Financial Crisis according to Nye Lavalle

Global Financial Crisis Survey

Nye Lavalle is a consultant and foreclosure fraud expert. Lavalle has been credited with discovering and documenting foreclosure fraud and robo-signing in the mid to late nineties. Lavalle made claims regarding fraud and abuse in mortgage securitizations that he argued would ultimately bring down the U.S. economy. He specifically shined the light on Bear Stearns, WAMU, and Fannie Mae many years before their problems surfaced nationally and played major roles during the Global Financial Crisis. Lavalle is the subject of a 2/4/2012 NYTimes article by Gretchen Morgenson (Pulitzer Prize winner and co-author of Reckless Endangerment) titled A Mortgage Tornado Warning, Unheeded and more background on Lavalle can be found at his page at Wikipedia. See also Lavalle's 21st Century Loan Sharks Report, Predatory Grizzly "Bear" Attacks Innocent, Elderly, Poor, Minorities, Disabled & Disadvantaged!, After The Storm as well as Bear Stearns and EMC Mortgage to Pay $28 Million to Settle FTC Charges and Fannie Report Warned of Foreclosure Problems in 2006 (WSJ 3/25/2011).

1. Which FCIC View best represents the causes of the Financial Crisis?

None of the views. While the report has many accuracies, it is incomplete. They didn't have enough time and didn't interview enough of the right people. The commission should be an ongoing commission, although with interim reports. Like the game telephone, unless you are the first person, the translation gets mixed up. Something always get's lost in the translation. If 20 students were asked to read the same book and then write a book report, if you get 20 different versions, are any of them wrong? No, because human beings are born with different genetic temperaments and each interpretation is their own. People will interpret information based on their own temperament, experiences and beliefs.

2. Which narrative presented by Douglas Elliott and Martin Baily of the Brookings Institute in Telling the Narrative of the Financial Crisis: Not Just a Housing Bubble best represents the causes of the Financial Crisis?

None of these narratives. The crisis can't be summarized in a simple narrative. Very few people have a grasp of the whole onion. It's far more complex and deeper and we don't know what is yet to be discovered. Plus it is still evolving.

3. The Global Financial Crisis is ongoing and will end in the year

2013 or beyond. I think we are in roughly the third inning.

4. What were the primary causes of the Global Financial Crisis?

Greed, ignorance, arrogance, and international bankers.

5. What still should change as a result of the crisis?

We need to revamp the world financial system and take consumer money out of the too big to fail banks. We should go back to a more paper based society (rather than a digital society) where there are actual certificates and paper trails rather than digital accounting systems and spreadsheets that can be manipulated. Computerization should be used to help, not hinder and conceal.
  1. Consumer banking (home finance for most homeowners) should be exclusively handled by credit unions with no profit incentive.
  2. Community banks should be for small business.
  3. National banks should support big business and wealthy consumers.
  4. Investment banks (brokerage, etc.) should not be part of banks, and should focus on traditional financing roles.
  5. Insurance companies should be separate and distinct and regulated both nationally and in the respective states.

Compiled by Gary Karz, CFA
Host of InvestorHome

Global Financial Crisis Survey

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