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Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis Kindle Edition
|Length: 356 pages||Word Wise: Enabled||Enhanced Typesetting: Enabled|
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"Muolo and Padilla examine just who was to blame for the crisis and find that it is not just cowboy operators." (CEO Middle East, September 2008)
“…a level-headed book…the anecdotal style is easy-going...much the best book on the mortgage industry”. Fund Strategy 1 September 2008
“…a ripping piece of reporting… The authors know their stuff.”Bloomberg News Monday 28 July 2008--This text refers to an alternate kindle_edition edition.
About the Author
Paul Muolo is Executive Editor of National Mortgage News―which won a Polk Award in 1990 for its reporting on the S&L crisis―and is also coauthor of Inside Job: The Looting of America's Savings and Loans, which spent five weeks on the New York Times bestseller list. His freelance work has appeared in the New York Times, the Washington Post, and Barron's. Muolo has been a guest financial expert on numerous media outlets, including CNN, CNBC, ABC, and Fox Business Network.
Mathew Padilla is a business reporter for the Orange County Register. His work, and that of two other colleagues, on the implosion of the Southern California subprime industry was selected by the paper's editors as a submission for the Pulitzer Prize and recognized by the Society of American Business Editors and Writers.--This text refers to an alternate kindle_edition edition.
- Word Wise : Enabled
- Print Length : 356 pages
- Publication Date : April 28, 2009
- Publisher : Wiley; 1st Edition (April 28, 2009)
- File Size : 1048 KB
- Language: : English
- ASIN : B0096CTROS
- Text-to-Speech : Enabled
- X-Ray : Not Enabled
- Enhanced Typesetting : Enabled
- Screen Reader : Supported
- Lending : Enabled
- Best Sellers Rank: #1,328,845 in Kindle Store (See Top 100 in Kindle Store)
- Customer Reviews:
Top reviews from the United States
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Unfortunately, while my business has returned to record levels as banks need help with their bad assets, I also underestimated the risk level and some of my leveraged investments were the hardest hit. Not "Madoff" level hits but not far from it. So, have a good laugh at my expense. I deserve it.
This book does an excellent job explaining the series of events and working arrangements that led to this environment. Yes, mortgage brokers had every incentive to originate the loan and some false information sure wouldn't hurt their income. The Mortgage Companies became addicted to growth and stock levels. And Wall Street, the smartest guys in the world (just ask them), was the biggest crack addict to subprime mortgages.
This book specifically closes with a damning section of Wall Street, their involvement, and the specific people that made decisions to grow the business in some cases causing them their jobs and reputation.
A substantial amount of the book is about Mozilo, Chairman/Founder of Countrywide, the largest mortgage banking firm who was late into subprime as he was concerned about the credit. The book reports both good and bad and while I'm sure he wouldn't like how he is portrayed, it's a very fair picture. A "from the street guy" who grew nothing into a real giant and revolutionized mortgage banking. In the end, he has money but a tattered reputation having to attend a congressional hearing where he was told what a bad guy he was.
The only person not really faulted is the consumer. Consumers have overspent for over 10 years and as long as credit in the form of mortgages, home equity lines, and credit cards were available, they would use it. I recently talked to a relative over 70 with a minor retirement from 20 years of military service who was laid off his job. He disclosed he had $50,000 of credit card debt, all current as he is a solid American who would never knowingly make bad debts. But it really doesn't matter. He can't afford this debt and this is about to be a loss. NO WAY AROUND IT! That is the mentality in America now.
As I do lots of business with FNMA and Freddie Mac I am compelled to say that the recent political climate has made them the target of blame. Their A Credit mortgage machine has done more for housing in America than any other factor and I hope they are left to continue this process although I believe they should be government owned as their advantage is the cheap borrow costs of the implied government guarantee they enjoy. They have admitted to me during this period that they were challenging whether they were obsolete and the old rules didn't apply. So they stuck their toe in the A- credit market. FNMA currently has 11% of their portfolio in Alt A paper. 50% of their losses is from this lower grade of paper. The math does not work. Lower credit people will default and a higher interest rate will not compensate. It's been seen time and time again dealing with subprime auto paper since the 80s.
Bubbles happen and people become blinded by greed and the belief that there is money to be made. I certainly found myself caught in this "asset devaluation vortex". AND IT WILL HAPPEN AGAIN! For now we need to save, stop borrowing and return to values more simplisitic. At least that's what I'm attempting to do.
Read this book for an excellent BUT technical analysis of the subprime debacle. Very well written.
l. There was the network of personal cronyism that surfaces strongly in the emergence of the relatively new subprime markets. Major figures in the fiasco knew each other, played golf, discussed how they could profit from this or that policy and, of course, they contributed appropriately to compliant politicians and got the co-operation of the SEC and the revolving doors to Congress and Fannie Mae and Freddie Mac. Greenspan was a personal friend of Roland Arnall, whose Ameriquest was one of the first and largest subprime mortgage lender. Angelo Mozilo, of Countrywide, cavourted with lots of pols, etc.
2. Regulations were dumped or eased off or not enforced and, if they were still restraining, then they could be circumvented through the creation of new corporate structures, non-bank lenders, private equity firms, mortgage conduits, etc. which enlisted new financial instruments such as collateralized debt obligations (CDOs) or structured investment vehicles, etc. which were sold to Wall Street firms eagerly seizing the chance to make a fast profit. Uncounted loan brokers were hired whose income depended on origination fees.
3. No consideration was given as to whether or not these massive actions benefited the consumers or society as a whole. In fact, many participants knew that their activities were ultimately destructive. Hence, it is not incorrect to call the actors parasites and to characterize their activities as being highly parasitic. Ethics was totally disregarded and the cost of doing so is unprecedended in modern economic history. As was the case with the S and L imbroglio and the dot com fiasco, "slumerica" was again expanded instead of being eliminated.
4. Conclusion: those who get rich should get rich by producing products that serve the consumer instead of fleecing them, that raises the living standard which has never reflected America's vast resources and potential. Start with removing rundown trailerhomes and slum houses and build a far better infrastructure with a comprehensive nationwide public transportation system to catch up in all of these areas with Japan, Sweden, Germany, Norway, Denmark, France, Singapore, Austria, Switzerland, the Netherlands, Finland, and other nations, some of which have a per capita GDP 100 percent higher than the U.S. To do this, stopping the most massive national collectivizing stream of investment into Wall Street is absolutely necessary so that it can be re-directed locally and regionally to enact genuine and true diversification, an investment pattern spreading wealth more uniformly across the U.S. which is a sine qua non for raising the living standard even though no scholar, no pundit, no politician has yet discussed it.
Top reviews from other countries
Stupidity or greed? The book clearly shows a fair smattering of both. Although a few of the players involved in this whammy have fled the scene, mostly with fortunes adorning their bank accounts, an awful lot of other senior executives during this period remain in place, running the companies. How frightening is that?
Compulsive reading, well researched and written.
カントリーワイドのモッツィーロ氏がサブプライム危機後に「I didn't realize that they didn't know what they were doing」と語る言葉が重いです。「they」というのはウォールストリートの名門投資銀行のこと。「ちっぽけな人間に可能な限りの浅知恵を駆使して汚い商売をして、一時はお金持ちになって我が世の春だったけれど、つひに神様が怒りました」という学齢前の子供にさえ通じるだろう万古不易の教訓に満ちた米系投資銀行栄華物語でした。