Synopsis
With the consequences of the subprime mortgage crisis still making headlines more than four years after its onset, there can be little doubt that we are facing one of the greatest financial calamities in United States history--one that destroyed an estimated 40% of the world's wealth by 2009! Although many accounts of this crisis have pointed fingers at particular villains or causes, none have offered a complete plan for rebuilding the all-important U.S. mortgage market - until now. Investor advocate and structured finance expert William Frey has proven that he is one of the few people in the world with the expertise to build a successful mortgage finance market, having created from scratch a mortgage backed securities market in Russia in 2006 that continues to thrive today. In Way Too Big to Fail, Frey reveals why we are at a critical crossroads as a nation between a future mortgage market dominated by the government and one that is powered by the private sector. If, consistent with the statements of this administration, we are working towards the latter, important changes must be made right now. Drawing on his colorful experiences as a banker, trader, researcher, and salesperson throughout the twists and turns of the mortgage boom and the resulting mortgage crisis, Frey lays out in clear and accessible language how realigning economic incentives in the U.S. mortgage market can bring back private capital, revitalize a broken system and make the dream of homeownership a reality once again.
About the Author
WILLIAM A. FREY began his career on Wall Street in 1981 in the then nascent field of securitization. After nearly fifteen years in major firms including Morgan Stanley, Smith Barney, and Bear Stearns, Bill founded Greenwich Financial Services (GFS) in 1995, where he serves as principal and CEO today. Under Frey's leadership, GFS has structured and sold billions of dollars of mortgage backed securities. In 2003, recognizing that the U.S. MBS market was fueled by loans that were unlikely to be repaid, Frey decided to look for opportunities in other countries. GFS completed the first Russian securitization transaction with auto loans in 2005 and followed in 2006 with the first MBS for Russian mortgage certificates. Each of these deals won a "Deal of the Year" award from industry groups. More importantly, neither has suffered any credit losses during the recent worldwide financial turmoil. Recently Frey has emerged as the most vocal advocate for bondholder rights in the wake of the Mortgage Crisis. The central theme of Frey's advocacy is that the solutions proposed by federal and state governments will do more harm than good. The proposed changes usually ignore the contracts that govern mortgage securities, massively increasing losses to bondholders who are typically pension and retirement funds. Furthermore, the U.S. forced abrogation of trillions of dollars of investor contracts will stop the flow of private capital to the United States, thereby choking off the eventual recovery of the housing market and, indeed, the entire U.S. economy. Frey's advocacy for contract integrity and his visionary solutions that work for all market participants are recognized as key components in the eventual recovery of the mortgage capital markets.
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