(or): How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon
Overview of the book from Barnes and Noble:
In Reckless Endangerment, Gretchen Morgenson, the star business columnist of The New York Times, exposes how the watchdogs who were supposed to protect the country from financial harm were actually complicit in the actions that finally blew up the American economy.
Drawing on previously untapped sources and building on original research from coauthor Joshua Rosner—who himself raised early warnings with the public and investors, and kept detailed records—Morgenson connects the dots that led to this fiasco.
Morgenson and Rosner draw back the curtain on Fannie Mae, the mortgage-finance giant that grew, with the support of the Clinton administration, through the 1990s, becoming a major opponent of government oversight even as it was benefiting from public subsidies. They expose the role played not only by Fannie Mae executives but also by enablers at Countrywide Financial, Goldman Sachs, the Federal Reserve, HUD, Congress, the FDIC, and the biggest players on Wall Street, to show how greed, aggression, and fear led countless officials to ignore warning signs of an imminent disaster.
Several times in the past when I’d ask bloggers and diarists about how far Fannie and Freddie were implicated in the meltdown, and the major degree to which Republicans, of course, spoke of it as the central cause, I was soothed by them to a certain degree. I’d hoped ithey weren’t some Democratic Sacred Cows. I’ve still been wondering, and this interview and book show that it wasn’t entirely right to be so sanguine.
Morgensen mentions the Clinton notion that all Americans should own their own homes, though that was a Bush theme as well, and did NOT mean that lenders should have given liar’s loans, or given borrowers sub-prime rates when they were eligible for prime. Still, here’s some history they found with loads of culprits in the top firms, in games where the Foxes were watching the Henhouses.
Morgensen is quoted in this piece at Business Insider:
Reckless Endangerment is an economic whodunit, on an international scale. But instead of a dead body as evidence, we have trillions of dollars in investments lost around the world, millions of Americans jettisoned from their homes and fourteen million U.S. workers without jobs. Such is the nature of this particular crime.
Recognizing that a disaster this large could not have occurred overnight, Josh and I set out to detail who did it, how, and why. We found that this was a crisis that crept up, building almost imperceptibly over the past two decades. More disturbing, it was the result of actions taken by people at the height of power in both the public and the private sectors, people who continue, even now, to hold sway in the corridors of Washington and Wall Street. [snip]
Familiar as we are with the ways of Wall Street, neither Josh nor I was surprised that the large investment firms played such a prominent role in the debacle. But we are disturbed that so many who contributed to the mess are still in positions of power or have risen to even higher ranks. And while some architects of the crisis may no longer command center stage, they remain respected members of the business or regulatory community. The failure to hold central figures accountable for their actions sets a dangerous precedent. A system where perpetrators of such a crime are allowed to slip quietly from the scene is just plain wrong.
In the end, analyzing the financial crisis, its origins and its framers, requires identifying powerful participants who would rather not be named. It requires identifying events that seemed meaningless when they occurred but had unintended consequences that have turned out to be integral to the outcome. It requires an unrelenting search for the facts, an ability to speak truth to power.
The interviewer sucks, he’s filling in for Ratigan, and I can’t find other interviews yet.
It’s interesting and vile that Bill Dayley and Tom Donilon from Fannie and Freddie now hold key positions in the Obama White House, another case of revolving doors generating WTF? Questions as to players in certain backgrounds being slotted into positions that seem to have no connection to their expertise, even if it’s criminal or amoral expertise. (Well, not the Chief of Staff job so much, I guess.)
Here’s some history on Freddie and Fannie and their quasi-private status, and a bit about the Obama administration ‘unwinding’ them.
Updated: If you don’t care for this interview, I found one at Bloomberg I’ll post in the comments.
(cross-posted at dagblog.com)