Rapid Increases in Fraud Rates
Investor Michael Burry, made famous by “The Big Short” book and movie, noticed significant increases in mortgage fraud as the housing bubble grew toward its peak before collapsing and initiating the Great Recession.
“It is ludicrous to believe that asset bubbles can only be recognized in hindsight,” wrote Burry, according to “The Big Short: Inside the Doomsday Machine” by Michael Lewis. “There are specific identifiers that are entirely recognizable during the bubble’s inflation. One hallmark of mania is the rapid rise in the incidence and complexity of fraud …”
