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Fantastic! A Must Read Oct 06, 2009
I originally bought the book, Behind the Housing Crash because I met the author and I thought, "Hmm, I know someone who wrote a book, I should be supportive and buy it." I did not expect the book to be as page turning and enjoyable as it was.
In all honesty, I am not a financial guru. I do not read the financial page of the paper for enjoyment, nor do I subscribe to various financial magazines. In fact, I prefer to leave that aspect of my life to my financial advisor. So, when I picked up Behind the Housing Crash, I honestly expected it to be dry and boring and difficult to read. Boy was I wrong! It was thoroughly enjoyable, EXTREMELY well written and very easy to understand.
I honestly wish that I had read this book years ago. Mr. Clarey has worked in the industry, done extensive research, laid out the facts, supported that with charts and graphs, and yet, he goes above and beyond just informing. He shares stories and anecdotes that turn all the data into reality and make it very easy to read.
Although a very easy book to read, parts were hard to stomach. It is distressing to discover that banks do not always look at the facts and figures and do not base their decisions on research based practices and data. This book opened my eyes and really made me understand fully why we have so many homes that are being foreclosed on and brand new homes that are left sitting empty.
It is with full confidence that I recommend Behind the Housing Crash. It is a great read, very informational and easy to follow. I can't imagine a person out there who wouldn't learn at least one thing from reading this book.
A Captivating Read! Oct 05, 2009
Immensely enjoyed this book and found myself not able to put it down at times. Clarey is very knowledgeable on economics and the housing crash and delightfully witty as he regales many of his personal experiences in banking. You will receive a very clear picture of why we are where we are in this current economy. Fully enjoyable to the very end!
1 of 1 found the following review helpful:
 Great if you know nothing about the housing markets Sep 18, 2009
Aaron is a very bright man. However, like most people, Aaron sees the world through rose-tinted lenses. He thinks Glenn Beck and Rush are objective journalists, which is truly laughable. He sees no fault in America except for liberals. He is a typical conservative that implies that Bush's deficits were ok, but Obama's are not. He also suffers from a really bad case of "I'malwaysright" syndrome. To be fair, I have followed his blog for over 3 years, and typically do agree with him on economic issues. I have noticed, however, if I don't agree with him 100%, he won't publish my comments.
His book is excellent if you don't know anything about housing markets or mortgages. However, he essentially repeats the same story over and over, "greedy middle managers turned a blind eye to reality in order to make bonuses. I'm smarter than they are but never got promoted." What the poor guy doesn't realize, is that while he probably is smarter than his bosses were, he has such a lack of social skill and tact that he'll never be promoted. I can't disagree with his basic premise, but after the 3rd or 4th telling of that same storyline I was bored.
2 of 2 found the following review helpful:
Judge a book by its cover (and the reviews) Jan 24, 2009
Mr. Clarey's book is best described by what's on it's cover: an insider's confession of the factors behind the housing crash. The photograph shows a bewildered bank analyst wondering who will buy all the empty McMansions before him.
Aaron Clarey worked in the financial sector analyzing loan proposals. His humorous anecdotes of bogus business deals lacking even rudimentary plans and credit documentation would be hysterical if the results weren't so tragic.
Mr. Clarey describes not only the inept management and slick lies of failing businessmen trying to get loans for their boondoggles, but also how bankers fall all over themselves to close these deals for the sake of goodwill or good commissions. He explains how bank employees who protected banks from risk only risked their jobs.
Mr. Clarey familiarizes the layman with the methods used to compile a rotten loan: bogus appraisals, cherry-picked comparables, falsified or nonexistent income statements, artist conceptions, and compounded leveraging.
This woeful tale is told by a skilled storyteller, not an English major, so forgive the grammatical errors and improper use of semi-colons. I found the insights far more enjoyable and enlightening than any book I read in English class. This book is to banking what Upton Sinclair's book The Jungle was to meat packing, except with far more humor and far less haughty vocabulary.
If you take each anecdote and multiply it by 10 million, you'll have a pretty good idea why we are in the economic mess we're in. The culprits begin with our National Housing Policy to encourage "affordable housing", the Government Sponsored Enterprises which facilitated these goals, securitization of mortgage backed assets spreading contagion through the financial sector, and commission structures which encouraged bad loans.
The book spares few people from blame, including hapless borrowers who willingly bit off more than they could chew, to arrogant and stupid developers, to greedy bankers.
The book is well worth the asking price and it's a quick and enjoyable weekend reading. If you or a family member is trying to figure out what went wrong but can't understand the lofty papers of Economics Ph.D.s in their ivory towers, Mr. Clarey was an eyewitness who brings the story down to Earth in ways anyone can understand.
1 of 1 found the following review helpful:
Very enjoyable read, lot of good facts, not as dry as you'd think Jan 21, 2009
_Behind the Housing Crash: Confessions from an Insider_ describes the causes, symptoms and some immediate consequences of the overly optimistic bank lending policies which were common for the last eight or nine years at most U.S. banks. It is a fascinating book which I would recommend to most readers, and especially to anyone thinking of buying a house or who is entering the corporate world for the first time.
The author, Aaron Clarey, is an economics and finance consultant and teacher who worked for nine years at various banks and credit unions in the Minneapolis / St. Paul area of Minnesota. While he cites a large number of facts and figures regarding general trends in lending, home ownership, and home finances, he also writes about his own personal experiences while working in that field. This creates a very readable balance between general theory and personal anecdote. His writing style is conversational with more than a bit of humor. In the book, Clarey discusses some of the historical foundations for the current housing and banking problems, the sociological factors, historical trends, and how all those played out on a large and small scale in the banking, home-building and home-buying industries.
But there are two things which make the book a standout (and one that I will likely recommend to a number of friends and have already decided to give to one friend as a very late Christmas gift):
1) There is an amazing amount of very useful detail about the inner workings of the banking system, or at least how it is supposed to work. For instance, while I see a lot of credit unions around and know that they are somehow different than a bank, I was not aware there is a functional hierarchy, with credit unions usually getting the smaller and/or riskier loan applicants who had been passed over by the bigger banks. I knew that car salesman will sometimes bring along repeat customers with them as they change employers, but I was unaware this frequently happened with bankers too. Clarey also gives a lot of in-depth information about why and how to use such tools as absorption studies, price-to-rent and price-to-income ratios, and LTV ratios when considering whether to buy or sell a house.
2) _Behind the Housing Crash_ is also a series of case studies on bad management practices and what signs to watch for when you are wondering if it is time to leave a particular boss, company or industry. There is a discussion of how important morale is to productivity and how simple things like a pleasant atmosphere, consistent procedures and supportive supervisors can vastly improve morale -- or destroy morale and productivity if those things are missing. There is a discussion on how promoting people based not on qualifications but based on family relations (nepotism) or who their friends are (cronyism) ultimately destroys a company's potential. There is also a discussion on why it is a bad sign when a boss is profligate with their subordinates' time and energy because the boss hopes if this subordinate will "write it up anyway" enough times, somehow the loan will suddenly seem profitable. All of these behaviors and many others described by Clarey are common in white-collar settings and usually point to some level of management getting so concerned with appearances or fads they lose sight of the underlying purpose of the business -- in the case of the banks and credit unions Clarey worked for, they lost sight of the fact they were in business to make money and you don't make money on loans unless you loan to people you know will pay you back with interest.
Clarey's entire discussion of the "Thin-Skinned Economy" is well worth reading too.
Clarey's conclusions are well argued and he backs up his arguments with a large array of facts, figures, and information on historical trends. While I don't always agree with his pessimism about how this will all play out in the long run, I thoroughly enjoyed his book and happily give it five stars.
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