From Main Street to Wall Street

From Main Street to Wall Street Connecting the Dots in the Mortgage Meltdown

Valdis Krebs! University of Cambridge – Judge Business School! September 23, 2014!

Mortgage Meltdown in Cleveland, Ohio •  One of the highest foreclosure rates in the USA during 2005-2010 –  Especially in the former steelworker community of Slavic Village

•  Foreclosed Cleveland mortgages were found in many Wall Street RBMSes and CDOs

Copyright © 2014, Valdis Krebs

Main Street Foreclosure

3729 East 54th Street


Network of Actors for 3729 East 54th Street Purchase


Main Street Detail

Data in spreadsheet gathered by Cleveland City Councilman Anthony Brancatelli


SEC Filings show Aggregation of Main Street Transactions into RBMS


Wall Street Detail (RBMSes à CDO)


Network Actors in Transactions from Main Street to Wall Street


To: Wall Street


From: Main Street

Obvious vs. Non-Obvious •  Real Estate transaction documents allow extraction of standard financial data –  Map obvious transactions & flows

•  But what about the non-obvious? –  What are the patterns behind the visible flows?

–  Who are the key players?


Obvious Main Street Network Home buyers, hi-lited in pink, have been foreclosed upon


Non-obvious Pattern Extraction •  Start with common spreadsheets found in all businesses •  Look for data that signals similarity/ difference between items •  Use Prolog to find and extract hidden pattern data •  Map and measure patterns of similarity and difference using standard SNA software (InFlow).


Non-Obvious Main Street Network

The thicker the line, the more transactions performed together.

Now it is obvious who the key non-obvious players are!


Someone Does Go to Jail…

Mortgage Broker gets 14 years in Prison!

http://archive.wkyc.com/news/story.aspx?storyid=136388


From Main Street to Wall Street

From Main Street to Wall Street

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