- Roughly half the dollar value of foreclosed-upon mortgages is in California, which has 12% of the population.
- California Scheming — the leader of a real estate fraud ring in Beverly Hills is sentenced to 14 years in jail for buying the lousiest homes on Beverly Hills blocks, then having them appraised like their neighbors. Lehmann Bros., who lost $42 million in the scam, hired a private detective to check up on these guys and found they were inflating appraisals and spending the loans on private jets. This kind of thing was imitated all over Southern California on half-million dollar homes in dumpy neighborhoods with nobody being caught because the losses from fraud were too spread out for anybody to bother burning any shoe leather to check them out. (It makes you wonder how much money would have been saved if Wall Street firms had employed a few hundred Philip Marlowes to gumshoe around California`s subdivisions checking up on mortgage applicants?)
As a native Californian, something that I`ve noticed is an increasing intellectual disconnection between the power centers of the East and the reality on the ground in California. At bottom, this financial crisis is California`s fault. But Wall Street and Washington seemed to have no clue what California was like in this decade. Observe, for instance, all the incredulity when I`ve pointed out the role of Latinos in the housing fiasco.
In the 1960s, it was a cliche that California was where America`s future was being test-driven. That has certainly panned out, and yet New York and Washington D.C. strike me as having lost interest in California, and thus have become increasingly oblivious to the future of the country.
A generation ago, New York and DC interest in California was motivated by envy, along with fear that California would someday displace them at the top of the totem pole. That fear has faded as California`s future has faded.
Yet, California`s fraction of the nation`s population has grown since the 1960s, making the state even more important than when it was closely observed.