Follow The Money

Publish date:

With all the finger pointing going on, and consistent with our concern that incentives contributed to the clusterfuck that is the mortgage industry today, we decided to take a quick look at fees to see what kind of cash was flowing around in the business. A small, back of the napkin guess has become quite a large (if somewhat simplistic) model so I thought we'd share it with you and see what you had to say.
In summary, our incomplete and work-in-progress calculations figure for something like $2 trillion in fees flowing to various parties in the real-estate, mortgage, securitization and securitization^2 businesses between 2003 and mid-2008. That's some serious swag, and you don't have to look very far to see why no one was in much of a hurray to shut any of it down or to rock the boat.
Of course, we've made some pretty thick assumptions, particularly where management and underwriting fees come in with respect to the securitization layers of the industry. As usual, we are enlisting the help of the savviest readers on the street (Main or Wall). Browse on through the model, particularly the assumptions sheet, and if you see something you know is off, and if you can pitch us a decent source for better figures, we'll tweak it right up. Find something spectacular and we will buy you lunch from our newly minted Dealbreaker Swag Lunch Fund.
Or, if you are a Google Docs user yourself, take a copy for yourself and play with it. We'd love to see what you come up with. If you'd like to jump into a copy and do some collaborating, send me a request for an invitation at ep at dealbreaker dot com and I'll add you as a collaborator.
3:47 pm: MBS underwriting fee adjusted to 1.25% (need a better source here but this might be close).
Dealbreaker MBS Fees Model