“Recently, Jesse posted a video on his website of a presentation by William Black. At the start of the presentation, Black asked if there had been a subprime crisis prior to this one. He answered “no.” That, in my view, is incorrect.
In 1988, Citigroup abandoned credit principles and began to engage in real estate lending on actuarial principles… it’s one of the things that took Citi down and required a bailout by a Saudi prince in 1990.
In 1992, Citi did what I consider to be their prototype work in subprime lending when they ventured into the mobile home business. The setup was the same as before. Lending on actuarial principles, then securitization. The whole thing blew up in ’94 and went un-noticed by the media.
When I learned that the top residential lending guys from Citi–the same mobile home geniuses–were hired away by WaMu to take over their operation, I pretty much figured that WaMu was finished.
So, anyone who tells you there’s no way the regulators could have known is full of it.
And that why Citigroup, like Carthage before it, must be destroyed.
The entire culture there is absolutely evil.”