Dr. Michael Burry (inventor of the credit default swap on MBS): Fraud is Integral

[SOS]

Michael Lewis writes a facsinating profile of Dr. Michael Burry in the new Vanity Fair.
Michael Burry is the man who invented the credit default swap on mortgage-backed securities.
Dr. Burry is an intriguing figure. He has Aspberger's Syndrome. He out-smarted every banker on Wall Street.
It's an excellent Wall Street article, with information you've never heard before.
Entire article is linked below.

Dr. Burry said one thing which really jumped out:

"The U.S. mortgage-bond market was huge, bigger than the market for U.S. Treasury notes and bonds. The entire economy was premised on its stability, and its stability in turn depended on house prices continuing to rise. “It is ludicrous to believe that asset bubbles can only be recognized in hindsight,” he wrote. “There are specific identifiers that are entirely recognizable during the bubble’s inflation. One hallmark of mania is the rapid rise in the incidence and complexity of fraud.… The FBI reports mortgage-related fraud is up fivefold since 2000.” Bad behavior was no longer on the fringes of an otherwise sound economy; it was its central feature. “The salient point about the modern vintage of housing-related fraud is its integral place within our nation’s institutions,” he added."



http://www.vanityfair.com/business/features/2010/04/wall-street-excerpt-201004