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The Sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System Hardcover – November 3, 2009
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“[A] splendid account of the financial meltdown.” (Wall Street Journal)
The most comprehensive anecdotal account to date of the crisis.... Gasparino cuts his way through Wall Street rhetoric and in the process uncovers in considerable detail how blind profit-making ambition led to the destruction of the markets. (New York Review of Books)
“Gasparino has consistently broken news on some of the biggest financial scandals of recent years, including the fall of Martha Stewart, Henry Blodget, and Jack Grubman. As anyone who reads the business pages knows, Charlie is one of the best reporters in the field.” (Mark Whitaker, former editor, Newsweek)
“Gasparino describes, in page-turning detail, a Wall Street world of ruthless financial titans.… No collection of courtroom documents will ever tell the story…as well as Mr. Gasparino does.” (Wall Street Journal, on King of the Club)
“A tough outsider willing to go to battle with anyone--colleague or contact-in pursuit of the story.” (Financial Times)
“An especially aggressive reporter.” (Vanity Fair)
“Gasparino is credited with breaking some of the more titillating tales of Wall Street misconduct.” (New York Post)
“Born in the Bronx to a construction worker and a housewife, Gasparino has risen from his working-class roots to become one of the most influential business reporters at work today.” (PR Week)
“Charles Gasparino sees the guts of Wall Street and the wreckage it leaves behind, day in and day out.” (San Antonio Express-News)
From the Back Cover
The definitive account of Wall Street's stunning collapse
From critically acclaimed investigative journalist and CNBC personality Charles Gasparino comes a sweeping examination of the most recent volatile, anxiety-ridden era in our nation's socioeconomic history. The Sellout traces the implosion of the financial services business back to its roots in the late 1970s when Wall Street embraced a new business model predicated on taking enormous risks. It shows how a backwater business involving the trading of risky bonds packed with mortgages showered countless billions in profits on the financial industry but sowed the seeds of its ultimate demise. Gasparino walks readers through Wall Street's three-decades' love affair with risk, revealing a trail of culpability—from the government bureaucrats who crafted housing policies that encouraged homeownership, to the Wall Street firms that underwrote and invested in risky debt, to the mortgage sellers who handed out loans to people without the financial wherewithal to pay them back, to the homeowners who became convinced they could afford mansions on blue-collar wages. The ongoing tumult in financial markets and the global economy began when some of our most esteemed financial institutions, our government, and even average citizens abdicated their collective responsibilities, eventually selling out investors and selling off the American Dream itself.
In the spirit of classics such as Barbarians at the Gate and Liar's Poker, this page-turning narrative captures how avarice, arrogance, and sheer stupidity eroded Wall Street's dominance and profoundly weakened the financial security of millions of middle-class Americans. Eye-opening and engrossing, The Sellout provides the most thorough investigation to date of this latest gilded era.
Top customer reviews
"The Sellout" identifies one of the key instigators for the crisis as the creation of high-risk bonds full of mortgages in the late-1970's. Traders began developing models that bundled these mortgages into bonds that were exponentially more risky as the years went on. Despite the risks, profits skyrocketed, so the brokerage houses and investment banks transitioned more and more away from diversification and became even more reliant upon these risk models. Mr. Gasparino details that, even with the crash in the 1980's - and other warning signs in the 1990's and 2000's - the infatuation with profits through high-risk bonds never diminished. In the meantime, government officials and regulators looked the other way, and then relaxed mortgage rules as a means of trying to get a larger portion of the American public into home ownership, regardless of the homeowner's ability to repay the debt. The result - as we know all too well now - is that a "perfect storm" of sorts developed, and the high-risk bonds and the models they were based on became untenable, to the point where Wall Street and the housing market imploded.
The financial world can be almost incomprehensible to the layman, but Mr. Gasparino excels at laying out the financial details and events in an way that is easily understandable. He avoids the "inside baseball" minutiae that could have bogged down the book and made it inaccessible to a large part of the reading audience. He also is about as objective as one can expect; he largely finds and assigns blame on all sides of the political spectrum as well as within the Wall Street heirarchy that has been in place over the past thirty years. The result is a fairly even-handed and compelling tale that is rather refreshing in the hyper-polarized and politicized environment that envelops the financial world in the present day. Mr. Gasparino probably could have provided additional detail, with perhaps additional research. But I doubt "The Sellout" would have been as compelling and enjoyable a read as it proved to be.
Mr. Gasparino does an excellent job in showing how the hubris and greed of the deal makers of Wall Street created a casino environment. Aided and abetted by former Wall Street deal makers in the Treasury Department, they tore down the walls separating commercial banking from investment banking, effectively allowing the deal makers to gamble with the deposits of Main Street at commercial banks. While the author offers some solutions to our economic problems he defines so well, he does not offer the most important solution, namely to put the walls up again which separate commercial banking from investment banking.
Until the walls go up again and give Main Street back commercial banks which are safe and sound with financial products that we and our regulators can understand, we will not have financial stability. Investment banking has always been a risky and loosely regulated business in which the Wall Street deal makers created products few understood, most notably the regulators and rating agencies. When the walls came down, the Wall Street casino brought risk to a new level because the Wall Street barons started gambling with Main Street's money that was put in commercial banks to be safe and sound.
The Glass-Steagall Act of 1933 created the walls to separate commercial banking activities from the investment banking activities that led to the Great Depression. This enabled us to recover from the Great Depression and build a banking system which was the envy of the world. When the Act was repealed in 1999, the walls came down, and so did our economy. Our banking system, once the envy of the world, became an embarrassment. If the walls don't go up again, the Great Recession we now find ourselves in could escalate to the Greatest Depression because there are still no controls in place to penalize the risky behavior that led to the Great Recession and because those in power are still extolling the virtues of less regulation instead of more regulation.
We should all be asking why our past three Presidents allowed this to happen and why it is not being discussed as the most important issue in the current Presidential debates? This isn't a partisan thing. It could be solved with a common sense solution such as separating commercial banks once again and make them safe and sound, and let the investment banks continue to compete in their culture of risk but with their money and not ours.
I highly recommend it