TANTA ON "DUE DILIGENCE"

I noted below that the "due diligence" firms were looking a fewer loans because Wall Street wasn't interested. Tanta at Calculated Risk gives us the dynamics and as usual, greed was to blame:

I can also remember losing deals because I wanted 20% or 30% due diligence and some other bidder would allow 10%. All over the mortgage world in 2003-2006 there were credit analysts being backed into corners by furious salespeople and traders and everyone else whose visions of the deep end of the bonus pool were evaporating when the credit people wouldn't race to the bottom on due diligence levels. You can try telling these people that you don't want to own loans that someone else doesn't want you to look at closely beforehand, but that won't work. It certainly didn't work well back in 2005 when nobody was taking any credit losses and the RE party was still white-hot. There was always someone saying, "Look, those geniuses on Wall Street will take it with 5%. What exactly is it you think you know that they don't?"