Comments on: Rules Initiated the Real Estate Meltdown http://blogs.gartner.com/jim_sinur/2008/10/28/rules-initiated-the-real-estate-meltdown/ A member of the Gartner Blog Network Fri, 20 Nov 2009 13:06:56 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Jim Sinur http://blogs.gartner.com/jim_sinur/2008/10/28/rules-initiated-the-real-estate-meltdown/comment-page-1/#comment-41 Jim Sinur Wed, 12 Nov 2008 23:34:03 +0000 http://blogs.gartner.com/jim_sinur/2008/10/28/rules-initiated-the-real-estate-meltdown/#comment-41 I don't think anyone blames the vendors of the rules capabiilites; It is the managers that set the underwriting rules too low creating toxic mortagages. Other managers packaged these toxic mortgages into investments that were AAA(I have no idea how that happened other than there was no oversight).The underwirting rules were set too loose and everybody knows :) I don’t think anyone blames the vendors of the rules capabiilites; It is the managers that set the underwriting rules too low creating toxic mortagages. Other managers packaged these toxic mortgages into investments that were AAA(I have no idea how that happened other than there was no oversight).The underwirting rules were set too loose and everybody knows :)

]]> By: Mark Eastwood http://blogs.gartner.com/jim_sinur/2008/10/28/rules-initiated-the-real-estate-meltdown/comment-page-1/#comment-39 Mark Eastwood Wed, 12 Nov 2008 21:25:48 +0000 http://blogs.gartner.com/jim_sinur/2008/10/28/rules-initiated-the-real-estate-meltdown/#comment-39 Jim, I appreciate the need to scenario test potential rule changes before pushing them to production. Fair Isaac will soon have this capability in the Blaze Advisor suite. We currently have simulation testing components to some of our other offerings. That said, your article seem to imply that RBMS and their governance is to blame for unreasonable credit origination strategies, lack of oversight to the securitization market, total lack of governance of the credit derivatives market and the compound effects of the mark-to-market account rules. It’s a complex problem that has been brewing for years and compounding itself. I understand there are more mortgage backed securities than actual mortgages and trillions more in other related, complex derivatives. One strategy for helping organizations understand the impacts of turbulent markets is stress testing. I imagine stress testing for variations in interest rates, unemployment, inflation and other factors can be used in conjunction with simulation testing to more roundly investigate the impact of a policy change. BRMS (and decision management) is a growing and maturing discipline and definitely needs better governance but, what counts is the business policy not the implementation mechanism for the policy. mee Jim,
I appreciate the need to scenario test potential rule changes before pushing them to production. Fair Isaac will soon have this capability in the Blaze Advisor suite. We currently have simulation testing components to some of our other offerings.

That said, your article seem to imply that RBMS and their governance is to blame for unreasonable credit origination strategies, lack of oversight to the securitization market, total lack of governance of the credit derivatives market and the compound effects of the mark-to-market account rules. It’s a complex problem that has been brewing for years and compounding itself. I understand there are more mortgage backed securities than actual mortgages and trillions more in other related, complex derivatives.

One strategy for helping organizations understand the impacts of turbulent markets is stress testing. I imagine stress testing for variations in interest rates, unemployment, inflation and other factors can be used in conjunction with simulation testing to more roundly investigate the impact of a policy change.

BRMS (and decision management) is a growing and maturing discipline and definitely needs better governance but, what counts is the business policy not the implementation mechanism for the policy.

mee

]]> By: Look Before You Leap » Smart (Enough) Systems, the blog http://blogs.gartner.com/jim_sinur/2008/10/28/rules-initiated-the-real-estate-meltdown/comment-page-1/#comment-32 Look Before You Leap » Smart (Enough) Systems, the blog Sat, 01 Nov 2008 17:05:20 +0000 http://blogs.gartner.com/jim_sinur/2008/10/28/rules-initiated-the-real-estate-meltdown/#comment-32 [...] Jim Sinur wrote “Rules Initiated the Real Estate Meltdown” [...] [...] Jim Sinur wrote “Rules Initiated the Real Estate Meltdown” [...]

]]> By: Process for the Enterprise » Blog Archive » Good Presentation on Mixing Rules and Processes http://blogs.gartner.com/jim_sinur/2008/10/28/rules-initiated-the-real-estate-meltdown/comment-page-1/#comment-29 Process for the Enterprise » Blog Archive » Good Presentation on Mixing Rules and Processes Thu, 30 Oct 2008 23:52:55 +0000 http://blogs.gartner.com/jim_sinur/2008/10/28/rules-initiated-the-real-estate-meltdown/#comment-29 [...] On a (somewhat) related note, a somewhat humorous post from Jim Sinur on how rules might have initiated the real-estate [...] [...] On a (somewhat) related note, a somewhat humorous post from Jim Sinur on how rules might have initiated the real-estate [...]

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