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Six years into the three-part bust of the mid-2000s, both residential and commercial real estate prices have yet to recover. With substantial icebergs still floating in financial waters, policy experts converged at AEI on Thursday to discuss the outlook of the post-bubble world. AEI’s Desmond Lachman discussed the prospects for the future of the eurozone and stressed the reinforcing, self-destructive nature of the liquidity and funding problems facing the European region. Thomas Zimmerman of United Bank of Switzerland Investment Bank pointed out that while U.S. households were deleveraging, substantial imbalances in the U.S. economy persisted, which will take years to sort out. National Mortgage News’s Mark Fogarty followed up by describing the factors that caused mortgage underwriters to leave the market and led to rises in mortgage foreclosure rates. Chris Whalen from Target Capital Partners then discussed the legal and financial framework behind the shrinking consumer credit sector, and indicated that current policy would do little to stop the sector from shrinking. AEI’s John Makin recapped the last six years of policy blunders that have exacerbated the cleanup from the bubble, and painted a moderated picture of the year ahead as countercyclical stimulus measures are unwound.
That we are still living in the wake of the U.S. housing bubble is a dominant financial and economic fact of 2012. But is the end really approaching at long last? The housing bubble was accompanied by one in commercial real estate, making it a double bubble. To further complicate matters, the European sovereign debt bubble has given the 21st century a complex, international bubble cubed. It’s been one disaster after another, leading us to wonder, what’s next? Should we expect a bottoming of the financial recession, a sideways movement, a recovery or a continued onslaught of problems? Our panel of experts will share their thoughts.
MARK FOGARTY, National Mortgage News
DESMOND LACHMAN, AEI
JOHN H. MAKIN, AEI
CHRIS WHALEN, Tangent Capital Partners
THOMAS ZIMMERMAN, UBS Investment Bank
ALEX J. POLLOCK, AEI
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Mark Fogarty is the editorial director of the Mortgage Group at SourceMedia in New York. He oversees all of the company's mortgage publications and websites, including National Mortgage News, Origination News, Mortgage Servicing News and Mortgage Technology. He also chairs SourceMedia's mortgage-related conferences. He has worked with the publication for 27 years. Before that, he worked at the Jersey Journal (Jersey City, NJ) and the South Bergenite (Rutherford, NJ).
Desmond Lachman joined AEI as a resident fellow after serving as a managing director and chief emerging-market economic strategist at Salomon Smith Barney. He was previously deputy director in the International Monetary Fund's Policy and Review Department and was active in staff formulation of the organization’s policies toward emerging markets. Mr. Lachman has written on topics such as economic policy, fund arrangements, monetary reform, import restrictions and exchange rates. At AEI, he studies major emerging-market economies and the role of multilateral lending institutions.
John H. Makin is a resident scholar at AEI and a principal at Caxton Associates. Mr. Makin has been an advisor to numerous U.S. government agencies, the Federal Reserve System and the Bank of Japan. He is a member of the Council on Foreign Relations and the Economic Club of New York. Mr. Makin joined AEI in 1984 after a distinguished career in academic research. He is the author of numerous books and articles on financial, monetary and fiscal policy, and he writes AEI's monthly Economic Outlook.
Alex J. Pollock is a resident fellow at AEI focusing on financial policy issues, including housing finance, government-sponsored enterprises, retirement finance, corporate governance, accounting standards and the banking system. Before joining AEI, he spent 35 years in banking, including 12 years as president and CEO of the Federal Home Loan Bank of Chicago. He is the author of numerous articles on financial systems and the organizer of the Deflating Bubble series of AEI conferences. In 2007, he developed a one-page mortgage form to help borrowers understand their mortgage obligations. He is a director of the Chicago Mercantile Exchange, the Great Lakes Higher Education Corporation and the International Union for Housing Finance, and the chairman of the board of the Great Books Foundation.
Chris Whalen is senior managing director of Tangent Capital Partners in New York, where he works as an investment banker providing advisory services to companies in the financial services sector. He is the co-founder and vice chairman of the board of Lord, Whalen LLC, the parent company of Institutional Risk Analytics. Mr. Whalen currently edits The Institutional Risk Analyst, a weekly news report and commentary on significant developments in and around the global financial markets. Mr. Whalen is a fellow of the Networks Financial Institute at Indiana State University. He is also a member of Professional Risk Managers’ International Association (PRMIA). He was regional director of PRMIA’s Washington, D.C. chapter from 2006 to 2010. He is a member of the Economic Advisory Committee of the Financial Industry Regulatory Authority and the Global Interdependence Center in Philadelphia. He is also is the author of the December 2010 book, “Inflated: How Money and Debt Built the American Dream.”
Thomas Zimmerman is a managing director at United Bank of Switzerland Investment Bank (UBS). He has been involved in managing the firm's research efforts on asset-backed and mortgage-backed securities for the past 11 years. Before joining UBS, Mr. Zimmerman managed the research groups on asset-backed and mortgage-backed securities at Prudential Securities and Chemical Bank. He started his research career as a vice president in the mortgage research department at Salomon Brothers. His research has appeared in numerous fixed-income publications and industry reference works, and he was a member of the UBS research team that consistently ranked first in the annual Institutional Investor survey of fixed-income analysts.