Customer Reviews

The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America--and Spawned a Global Crisis

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This was a strong book. Strong in the sense of well documented and researched, and strong in vivid detail and tone. The author says he has been covering predatory lending since the early 90's and I can believe it. He has many anecdotes, many stories of individuals being defrauded, and many interviews of persons who worked for predatory lenders. This is the first writing of any kind I can find to enable me to understand predatory lending, as opposed to just dumb subprime lending. This understanding arose when the author cited statistics that show 99.75% of these lenders' loans were not to purchase a house but to people who already owned a house. The book conveys in very strong detail the ways in which First Alliance and Ameriquest "preyed" on elderly, minority, sometimes incompetent homeowners and tricked them into putting their homes at risk for loans that were unnecessary, more expensive than called for and in many cases based on fraudulent documentation. There is no doubt that these are stories of outright criminal behavior and many more people should have been prosecuted for what they did (the owner of First Alliance and Ameriquest has died). Mr Hudson depicts thoroughly the business model of predatory lending, their hiring and training and sales practices, their advertising budgets and their lobbying prowess (he absolutely impales Deval Patrick, ACORN and many other organizations as being bought off by the predatory lenders). He provides real insight when he demonstrates that the owners of these businesses appear to take it for granted that they will only be in business for a few years. I was stunned that it appears to have been incredibly easy for someone who has previously run one of these companies and bankrupted it to set up another such business and go right back to defrauding homeowners. There should be some licensing or process that companies have to go through to get into that position. (I was reminded of another book I read recently called Dark Harbor about the mob dominating the NYC waterfront in the 1940s and 1950s, where the mob was able to obtain one union charter after another without any investigation of any kind).

The subtitle of the book refers to a gang on Wall Street but, although there was some content in the book that related to Wall Street, I would estimate it was no more than 20% and it was much less substantial and vivid than the dominant story about the predatory lenders. There was a page or two on rating agencies, about 20 pages on the relation between Lehman and First Alliance including a short summary of a trial that I found quite anticlimatic and a page that seems to have been taken right out of a recent book about Lehman called A Colossal Failure of Common Sense. I suspect there was some effort to position the book in buyers' minds as an anti-Wall Street book and while the author does have that perspective there just isn't that much content on that subject, compared to the detailed accounts of the predatory lenders fleecing their customers. Also, the majority of the book is set in the 90's (indeed, it begins in the 80's). Only the last 100 pages of the text are set in the 2000's. So I do not think such marketing is particularly accurate, which is ironic given the book's point of view.


A small point: when I bought this, Amazon's links were confusing the author, Michael W Hudson, with a Michael Hudson who is a different author.

The author has done an excellent job in demonstrating that the major subprime lenders,the great majority being concentrated in or near Orange County ,California,such as R Arnall's Ameriquest and A Mazilo's Countrywide,were engaged in a pattern ,repeated over and over again thousands of times,of deliberate misrepresentation,forgery and fraud.The goal was to misinform potential buyers seeking fixed rate loans so that they could be manipulated and maneuvered into signing variable rate adjustable loans with initial ,low ,teaser rates that would then increase dramatically after 2-5 years.The basic sales pitch was the old " bait and switch " gambit.

The author demonstrates that the major subprime lenders especially targeted older,elderly,single, black women with low incomes who owned their homes outright and /or had low fixed rate mortgages on their homes ,but who were either in poor health and/or seeking loans to upgrade /fix up their homes.The author provides numerous case studies demonstrating precisely how these black women were tricked and manipulated into agreeing to adjustable rate loans that dramatically increased their monthly payments over time.The same initial customer would then be victimized over and over again by affiliated subprime lenders who would claim that they could reduce the monthly mortgage payment .

The author shows how these firms were directly connected to the major Wall Street investment banks,especially Lehman Brothers.He then traces the securitization practices of the commercial banking industry and shows how the loans were spread and sold worldwide.

This book shows that the subprime real estate mortgage loan industry collapse was very similar to the collapse of the Savings and Loan industry in the 1988-1991 time period that resulted from highly speculative,Ponzi loan practices that started in the early 1980's .

I recommend this book for purchase.It is the first book to concentrate specifically on analyzing the subprime crisis as a criminal enterprise.

The previous reviewers have done a good job of explaining basically what The Monster is all about. However, I would like to highlight why the book presents a unique challenge to academic economic theory, particularly as it applies to public policy.

The foundation stone of Neo-Classical economics is that market participants are inherently rational, are capable of "discovering" the best available deals, and will quickly put destructive market participants out of business. This is the Revealed Truth of Milton Freidman, the bonkers Objectivist philosophy of the beyond bonkers Ayn Rand, the rigid simple mindedness of the economics texts by Gregrory Mankiw and the Harvard kids who have been force fed this abstracted, idealized, establishmentarian slop....

Micheal Hudson never explicitly sets out to torpedo theoretic economics, he simply sets forth the way a set of perverse incentives, aided and abetted by an utterly dysfunctional regulatory apparatus, could make an absolute, unrecoverable hash of the Ivy League worldview... one in which all markets naturally seek the most efficient (and in Friedmanite orthodoxy) most moral allocation of assets and talent.

Hudson instead shows a nested structure of economic actors that behave more like criminalized, methamphetamine soaked, reckless, soulless swine. It is abundantly clear that "incentive structures" can, quite easily, produce outcomes that have a high degree of local rationality, i.e. individuals maximizing their gains, while at the same time have a higher degree of systemic irrationality.... i.e. stuffing grossly fraudulent paper into the securitization system in wholesale quantities with zero regard for the ultimate consequences. Such as imploding the credit markets...

Frankly, Hudson's book should be a mandatory text in every introductory economics class taught in this country, because it dispositively proves that the Neo-Classical/Washington Consensus model is a broken model.

I have a thirty year background in financial services that includes working for the largest banking companies in three countries so have been an avid reader of many books written in the last couple years that try to explain the global financial crisis. This book is really good so have no problems recommending it; a plus is that it avoids getting too technical but, instead, keys in on the players. And, what a bunch they were. Sadly, most of them are still around and still out there fleecing those that can least afford it. There is no doubt in my mind that the mortgage crisis coupled with two expensive wars have put this country in financial jeopardy that will take years to come back from, if ever.

The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America - and Spawned a Global Crisis by Michael W. Hudson

"The Monster..." is the page-turning expose of the subprime mortgage business. Award-winning reporter Michael W. Hudson narrates a fascinating web of deception that was infuriatingly targeted against the most vulnerable of our society. It describes the scoundrels and their methods. This 384-page book is composed of the following fifteen chapters: 1. Godfather, 2. Golden State, 3. Purge, 4. Kill the Enemy, 5. The Big Spin, 6. The Track, 7. Buried, 8. Boil, 9. The Battle for Georgia, 10. The Trail, 11. Feeding the Monster, 12. Chimera, 13. The Investigators, 14. The Big Game, and 15.Collapse.

Positives:
1. A top-notch book that is well-researched and well-written.
2. An accessible book for the masses. It's not a technical book, the stories, narrations drives this book.
3. Reads like a very good novel in which the criminals and victims lives are intertwined by events. The characters and their roles comes to light.
4. This book totally changed my perception of how predatory lending went down. Fascinating and upsetting at the same time.
5. Predatory business model illustrated.
6. Wall Street's main villain, Lehman. Their role and impact.
7. The subprime abuses of Roland Arnall of Ameriquest.
8. The impact of politics in the deregulatory business.
9. The essence of the subprime business explained. Educational indeed.
10. Mr. Hudson makes it fairly clear, first of all, predatory lending was a crime that was perpetuated against the most vulnerable of our society. Secondly, it was mainly refinancing loans. In other words, they targeted the elderly and minorities who already owned homes and had enough equity to make the crime work. Sickening!
11. The book contains so many interesting and sad stories of victims of predatory loans.
12. Predatory lending was not just limited to loans with bad terms but outright fraud to get the approval of said loans in the first place. The book relays how one manager figured that $75 million out of the $90 million in mortgages he sold contained some sort of "material fraud".
13. Prudential's role in the subprime business.
14. The role of "securitization" in the subprime business.
15. Thought-provoking quotes, "If you don't believe in the product you're selling, he thought, you're just a con artist".
16. The stories of the rise and fall of many subprime institutions: FAMCO, Keystone to name a few.
17. The Federal Trade Commission was the only federal agency that showed concern about mortgage lending abuses.
18. The fascinating inside look at the investigations of predatory lenders and the outcomes.
19. The realization that in the banking industry, crime may in fact pay...
20. Fascinating facts throughout book. The dollar amounts are mind-blowing.
21. The fact that the lenders portrayed in the book seldom lowered people's rates and almost always put them in worse positions.
22. The rise and fall of Alan Greenspan.
23. Mr. Hudson makes the compelling argument backed by strong examples that the main blame of the subprime crisis falls on Wall Street and the institutions that designed the evil schemes that defrauded millions of borrowers.
24. How the subprime predatory practices impacted us all.
25. The main culprits of the subprime mortgage catastrophe.
26. How Richard Fuld and other top executives of Lehman represented the predatory lending fraud and paid themselves handsomely while their companies deteriorated.
27. A where are they now closing chapter that neatly ties everything up at the end.
28. An interesting read throughout.

Negatives:
1. Notes are not linked!
2. With so many players involved, it's easy to get lost at times.
3. Charts or illustrations would have added value.
4. I would have liked a little more on CRA and the political blame game.

In summary, I thoroughly enjoyed this book. It provided much needed education on this important topic of subprime mortgages and in doing so changed my perception on who was mainly to blame. A very accessible and enlightening book, I highly recommend it!

Further suggestions: "Perfectly Legal..." by David Cay Johnston, "War on the Middle Class..." by Lou Dobbs, "Screwed: The Undeclared War Against the Middle Class" by Thom Hartmann, "The Fifteen Biggest Lies About the Economy" by Joshua Holland, and "The Looting of America..." by Les Leopold.

Wow! I had no idea that fraud constituted such a big part of the subprime problem. Before reading this book, I figured it was homeowners with easy access to money... too easy, and the fact that they just took on too much debt. I also had no idea of the fees and interest rates the subprime players were charging or how much the securitization process caused a bad situation to go totally out of control.

The best part of the book was the personal accounts by employees of these subprime lenders relating to their "boiler room" training, falsified documents and how to get the homeowner to sign the contract without explaining the terms. One manager recalled how a loan submitted was secured by a duplex. However, the duplex was not even a house! It was a greenhouse. The borrowers' stories were all pretty much the same, with the same result - foreclosure.

It's pretty sad, and it's worse than very little is being done to help these people, while the entities that caused or contributed to the meltdown either got away with it or got government bailouts.

Very well done! It was all noise before I read this---I just did not understand what happened and who did it. Now I do. All those news stories, all that noise, and no one explained it. Michael Hudson does. Now you too will know who did it and how. Thanks, Mr. Hudson, for taking the time.

This is an interesting history of the development of the sub-prime mortgage bubble. Compelling narratives and good information, told in a series of character profiles. It is an excellent start for anyone wanting to understand how we got into our current financial mess, and for anyone questioning whether Lehman should have been bailed out.

While this is an excellent micro perspective, it is weak on the broader perspective. There is little explanation of how broader economic issues affected or were affected by subprime mortgages. Although Hudson explains in exquisite detail how individuals were defrauded by hard-sale techniques, he does not explain how the supbrime securitization system could have run for so long (over 10 years), if so many people were put into mortgages they could not afford to pay and thus would have quickly defaulted on. All bubbles burst, as the housing bubble did, when interest rates rise and running debts cannot be turned over. Hudson provides virtually no discussion of this aspect of the history. For that, one is better off reading "This Time Is Different."

Hudson also simplistically paints all republicans as villains and all democrats as dupes at worst. That is lazy and inaccurate. Also, in Hudson's telling, free-market advocates are nothing but shills for evil corporate interests who are just looking for another way to screw the unsuspecting poor out of their pittances. That is cartoonishly simplistic. Those weaknesses are easy to skip over, however, and they do not interfere with the heart of the book, which is a well told narrative of the characters involved.

The Kindle version works well, although the publisher decided not to use footnotes or any other indication of what material is included in the endnotes. Use hyperlinked footnotes!

This book reveals the astounding criminal practices that were (are) so commonplace (and profitable) in the lending industry. Clearly written, the "games" played by lenders to encourage borrowers to "ease their financial problems" will make your hair stand on end.

This is a "must read" for every person who has wondered about the cause of the recent financial catastrophe (and who hasn't?). I guarantee that you will want to loan it or recommend it to your friends.

On target, no holds bared account of the origin of the financial debacle. The author provides a bone chilling account of the origins and growth of predatory, subprime home lending with all its hype and all the destruction it wrought over millions of families and ultimately brought down the world's economy. The interplay between the subprime lenders and Wall street was a toxic concoction that ultimately we could not stomach. A page turner every citizen who has witnessed the Great Recession should read this book to ensure that we never again allow scoundrels to masquerade as legitimate business men.