Blog Entry 11-26-15
I just finished reading a book titled “The Big Short” last week. Very interesting from the perspective of financing in this country and mortgages especially. What interested me the most is how many people who worked on Wall Street, top CEOs of banks and firms that were too BIG to fail, that were completely oblivious to having a sound understanding of the financial instruments that they were underwriting and insuring.
Too often, at least I believe, that we place too much emphasis on formal education. People are being taught “what” to think and now “how” to think, especially in the areas of consumer finance.
Just think about it, everyone who is reading this current blog entry, how many of you have mortgages for the homes that you reside in? Now, how many of you who possess mortgages have received notices from other financial institutions, be they banks or mortgage companies, informing you that they have purchased your mortgage from the original company that financed your loan to purchase your home? Have you ever asked yourself, “Why has my original mortgage been bought and sold by other creditors”?
You would be surprised that your auto loans, student loans, credit card receivables, and other debt that you owe have been sold and packaged into “collateral debt obligations”(CDO) that are traded as derivatives. But, you know, they don’t teach you that in school. So, just keep reading my blog! 🙂
Halim A. Flowers