I’ve been teaching at the graduate level for years, and at times, I’ve toyed with the idea of getting a PhD. In the end, I always came to the same conclusion; I didn’t want to spend my professional life writing papers that no one would read, and fewer would care about. Even if you write a great paper, it’s unlikely that anyone would ever see it.

In any event, a friend sent this one to me, and I’ve bounced it to a few others, and it’s actually worth giving a once over.

Basically, in the wake of the financial crisis, four of the major servicers of CMBS paper were sold and there were concerns raised that the new owners would direct the sales of failed loans to affiliates that were in the business of buying these assets. At the time, these were only concerns; to prove self-dealing is a whole other matter.

Someone (Maisy Wong, University of Pennsylvania) actually did the math, and was able to show that the loans that were sold after the change of ownership had substantially higher loss rates relative to other servicers that had not been sold. The author’s estimate is that there was $2.3 billion left on the table, and this was probably at least partially a result of self-dealing.

If you’re interested in the math, or the logic, the paper (“CMBS and Conflicts of Interest: Evidence from Ownership Changes for Servicers, October 2016”) may be found here. The math gets a little sticky, but the abstract of the paper is easy enough to follow and makes the points effectively.

This is the sort of paper that should be front page news, but as most financial journalists are journalists and not math people, a lot of this sort of analysis goes unread and unreported.