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Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon Hardcover – May 24, 2011
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“Gretchen Morgenson is a national treasure. Year after year, she has dragged Wall Street miscreants out of the shadows, exposing their dirty secrets to the public that they bamboozled with schemes and deceits. Now, working with Joshua Rosner, she has trained her expert eye on the mortgage mess that pushed the American economy to the brink. In stunning detail, Morgenson exposes the truth behind the worst financial calamity of modern times, weaving a tale that is as mesmerizing as it is horrifying. Reckless Endangerment names the names and reveals the secrets of the plutocrats and politicians whose greed and recklessness threatened the foundations of capitalism. It is essential reading for anyone struggling to understand how America entered the new era of financial chaos.” ―Kurt Eichenwald, New York Times bestselling author of Conspiracy of Fools and The Informant
“Even before Reckless Endangerment, Gretchen Morgenson was my nominee for Reporter of the Decade for her forensic and prophetic coverage of Wall Street. Now, she and the equally talented sleuth Joshua Rosner, like Holmes and Dr. Watson, have pieced together the clues to a seminal mystery of the financial debacle: how American taxpayers were suckered by the shenanigans, greed, egos, back scratching, and guile of financial and political elites who swarmed like vultures around Fannie Mae, picking it clean of oversight and accountability while its executives gorged themselves on the spoils. Naming names and taking no prisoners, they drill deep into one of the most disturbing scandals of our time, perpetrated in the name of helping "the little guy." Read it and weep. Read it and vow: Never Again!” ―Bill Moyers, journalist, and President, Schumann Media Center
“Morgenson and Rosner have written the long-awaited volume that gets to the heart of the mortgage crisis. The fearlessness and breadth of reporting make the book as compellingly readable as it is exhaustive. Reckless Endangerment is a remarkable achievement--and should be required reading for all Americans.” ―Bryan Burrough, Vanity Fair special correspondent and bestselling author of Barbarians at the Gate and The Big Rich
“Gretchen Morgenson and Josh Rosner show us how, over the last fifteen years, the mortgage lending industry used money and political influence to escape regulation, enrich itself, and create a catastrophe. Particularly in its dissection of Fannie Mae, Freddie Mac, and their enablers, this book is unmatched in its depth and invaluable to anyone interested in the causes and lessons of the financial crisis.” ―Charles Ferguson, Academy award-winning director of Inside Job
“A chilling account of the reckless disregard for ethical or civilized values at the heart of our financial system. If this compelling history does not completely turn your stomach, that's good - because by bailing out these individuals, their attitudes, and their way of life, we have set ourselves up for another nauseating turn of the Financial Wheel.” ―Simon Johnson, co-author of 13 Bankers: The Wall Street Takeover and The Next Financial Meltdown
About the Author
Gretchen Morgenson is a business reporter and columnist at The New York Times, where she also serves as assistant business and financial editor. She was awarded the Pulitzer Prize in 2002 for her "trenchant and incisive" coverage of Wall Street. Prior to joining the Times in 1998, she worked as a broker at Dean Witter in the 1980s, and as a reporter at Forbes, Worth, and Money magazines. She lives with her husband and son in New York City.
Joshua Rosner is a managing director at the independent research consultancy Graham Fisher and Co. and was among the first analysts to identify accounting problems at the government-sponsored-enterprises and to warn of the coming credit crisis. He advises regulators and institutional investors on housing and mortgage-finance-related issues. He lives in New York City.
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Congressman Barney Frank's initial support for homeownership for all, following Clinton's push on this front, was enough of an excuse for the markets to loosen up their funds and buy mortgages. As the volume of mortgages picked up, Jim Johnson and his Fannie Mae realized that in order to keep their spot on this merry-go-round, they would have to loosen their purse strings. Not to be outdone, the "Too big to fail" banks piled in, each creating its own brand of mortgage investments, each more toxic than its predecessor.
As I was reading this wonderful book, I had a sense of dread for the future, just from the chain of events as provided by these two great authors. I know the outcome from my perspective of today, I believe I could have concluded the outcome had this work and information been available 5-10 years ago.
I would have liked just a bit more about the media in the chain of events, particularly the role played by CNBC. The network that advertises itself as "First in Business" was a cheerleader for the toxic loans, investment banks who sold the CDO's to unsuspecting customers, and Cramer's wildly supportive interview with Mozilo seemingly only a few months before the crash. Or Rick Santelli's famous rant of how it was all the homeowners fault.
Sadly, there was so much ill-gotten money that ended up in the lobbyist hands and congressional pockets, that little has changed. Jim Johnson and Frank Reines of Fannie should be in jail for fraud. Chris Dodd read the handwriting on the wall, and wisely left congress for a private sector job. Barney Frank is still in Congress, none the less for wear. Mozillo of Countrywide, one of the largest players in the fraudulent loan market, instead of being in a cell, got off with a $67 million fine, most of which Bank America paid. The leaders of the companies forced out of business or to the brink, like Fuld of Lehman or Thain of Merrill, received huge golden parachutes. Blankenship (We're doing God's work) of Sachs, and Dimon of Morgan continue at the helm, earning record salaries and bonuses.
And no amount of disdain is too much for Hank Paulson, GW Bush's secretary of the treasury and former Goldman Sachs CEO. He looked away far too long, and allowed this disease to grow uncontrolled for several years. At the last minute, when forced into an economic corner, he created the infamous TARP bailout for his "Too big to fail" friends on Wall Street. Only slightly less clueless were Bernake and Geitner of the fed, and their leader, Greenspan.These three held an absolute faith that the "Banks would always do the right thing." We now know how that worked out.
"Reckless Endangerment" is a hard book to put down for those interested in the roots of our current economic crisis. There are many good books out there about the crash, foreclosure crisis, and the resulting economic crash. I have read many of them. What this book does that no one else has clearly written about is the why's and wherefor's of how it all began. I found this to be a compelling read, and would recommend it to any serious reader of the times.
I have had a long career in financial services ending with executive positions. I lived through, and implemented, many of the mandated changes that started with CRA, and lead through regulators punishing bankers for not making loans to high-risk borrowers.... just the opposite of their approach for many decades.
There are many myths in the public perception of what happened and very few business reporters who are unbiased, interested, and smart enough to actually look for the truth. This is a good effort.
The lead author here is a former New York Times reporter, so she's culturally unlikely to be a cheerleader for business or especially banks. The research is thorough and her analysis seems to me to be honest and unflinching.
What I think is underemphasized is the level of unpunished political corruption and insider dealing that created the environment for this massive failure. In spite of this gap, I give it five stars for being more accurate and honest than anything else I've read on the subject.
As we get further from the events I expect there will be more comprehensive analyses written, but this is the book I give to people today.