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on July 4, 2011
Gretchen Morgenson and Joshua Rosen have dug through all the mounds of conflicting information, "All's well" press releases, investigative reports that hit the problems of the time head on, and were subsequently buried, and research reports that were little more than home-grown "Atta boy" analysis, which were widely distributed, to find the dirt behind the economic mess we are in today. In going back to the beginnings, all the way to the '80's in some cases, they bring us the true foundation of the homeowner crisis. Important contributors are clearly identified in "Reckless Endangerment" including names, dates, times, and places.

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.
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on May 29, 2016
Gretchen is a mainstream author from New York Times, but I really liked her book. If you take all the books on the financial crisis there is a lot of overlap; in other words, authors talking about the same thing. But her book has less overlap than any other book on the crisis like regarding the Basel capital requirements and how asset backed securities came with lower capital requirements which created a feeding frenzy of demand because these asset now freed up capital. It shows the insanity of banks. If sewage lowered capital requirements these guys would be in the porta john business tomorrow morning. These people are insane about their capital set asides. So, I learned a lot reading this book because it does have some depth. I read this thing about 2 mph; it's slow readin' -- took me about a week, but for me it was worth it. I had this book on my shelf for over 4 years from time I bought it til I actually read it. I dreaded reading it; it's not an easy read, but she sure did her homework. Very informative book. One thing I didn't like about it is no chapter titles. No table of contents. Never seen that before; maybe they are getting lazy over there at Henry Holt. Chapter titles ..... I thought that was the fun part. Also, she spends a lot of time talking about Fannie and Freddie. I think if F&F never bought one shoddy mortgage, you still would have had a financial crisis. But they certainly added fuel to feeding frenzy. I'm a financial crisis junkie - this is one of the better ones. Don't bother buying Too Big To Fail, it's a book that lost its editor; they're still lookin' for him. This book is just the right size; Well done, Misses Gretchen.
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on February 29, 2016
Most accurate description of the Great Recession I have read.
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.
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on July 7, 2011
It is a sad commentary on the current state of our nation that the literary world is leading the way in uncovering the truth behind the largest American financial disaster in nearly 100 years. There has been a steady stream of books about the debacle of the early 21st century, in which millions of Americans lost their homes. Nowhere, it seems, is there any sign that our public authorities - the politicians, the federal government, including the regulatory agencies, and law enforcement authorities - have tried to find the truth behind this financial disaster, and bring some justice to the matter.

The latest book to uncover details of the 2007-2009 housing collapse is RECKLESS ENDANGERMENT: HOW OUTSIZED AMBITION, GREED AND CORRUPTION LED TO ECONOMIC ARMAGEDDON, by Gretchen Morgenson and Joshua Rosner.

Previous invaluable books that have performed this service include The Big Short by Michael Lewis, Too Big to Fail by Andrew Sorkin, and Money and Power by William Cohan. Each of these books (and others) has provided the public with details of the scandals - details that should have been uncovered by the U.S. Justice Department, the Securities and Exchange Commission and the U.S. Federal Reserve.

To date, federal authorities have brought no successful criminal charges, and regulatory agencies have levied on a few fines for the misdeeds of Wall Street and mortgage bankers - all of whom walked away with, literally, billions of dollars in salary, bonuses and golden parachutes.

This lack of proper oversight and successful prosecution is simply astounding, given the enormous toll on ordinary Americans. To be sure, many of those ordinary Americans were also guilty of overreaching in a white-hot real estate market. But they were led to their demise by American investment bankers and mortgage brokers.

This sorry house of cards is especially well described in RECKLESS ENDANGERMENT which details the events of the housing boom that led to the bubble that started to break midway through the first decade of the 21st century.

The principal culprits in the Morgenson and Rosner book are the management officials at the two government-sponsored housing agencies, Fannie Mae and Freddie Mac, including James A. Johnson, who was Fannie Mae CEO from 1991-98, and his successor, Franklin Delano Raines, who was forced to step down in 2005. Both Johnson and Raines, who refused to talk to the authors, walked away with hundreds of millions of dollars.

Morgenson and Rosner also don't overlook the regulatory authorities, the ratings agencies and members of Congress who fed the frenzy through legislation that encouraged the steady stream of highly fragile mortgages that should never have been issued in the first place. The list of high profile personalities who dropped the ball includes Timothy Geithner, now Treasury Secretary, Thomas Donilon, a Fannie Mae lobbyist for six years and now President Obama's National Security Adviser, and former Treasury Secretary (and Goldman Sachs alumni), Robert Rubin. Chief among the devious politicians,according to Morgenson and Rosner, were Massachusetts Congressman Barney Frank and Connecticut Sen. Chris Dodd, who had the chutzpah to accept favorable mortgages from his friends in the mortgage banking industry.

If anyone has an inclination at all to find out what happened in America's housing collapse, Reckless Endangerment is truly the place to go. A caveat should be made, however: at the conclusion of the book, which contains very few footnotes, the authors concede that it was difficult to identify many of their sources because their sources feared of the consequences of being publicly identified. This lack of detailed footnotes takes some of the steam away from the disclosure of such a squalid story.

On the other hand, it is the job of the regulatory authorities to detail this kind of information, and bring the culprits to justice. So far that doesn't appear to be happening to the degree that it should. For that lack of "oversight," shame on our current public authorities.
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on September 17, 2013
Gasp. When I saw that in the headlines it reminded me to review this book. I read Reckless Endangerment a while ago but I remember some of the names of the key players in the collapse. Mr. Summers was one of the bad guys. For years people had been hypothesizing what disastrous things the special government sponsorship of Fanny and Freddy could lead to and so a movement had been underway to privatize them and insulate the American taxpayer from backing all the toxic risk these government behemoths had launched. In 1996, after prolonged study, a Treasury report was finally drafted and that draft report concluded that serious thought be given to privatizing Fanny and Freddie. This draft report even outlined a plan for how it could be done. Lawrence Summers was the Deputy Secretary of the Treasury at the time and due to pressure from his friends at the GSE's he demanded that the report be scrubbed of these conclusions.He was one of many who used his position to suppress vital information that could have been used to remedy the moral hazard that eventually cost so many so much.
This book explains what went on, and what is (sorry to say) still going on. Lawrence Summers has withdrawn his name from consideration for Chairman of the Federal Reserve because he thought it would stir up too much controversy. If anybody wants to know what kind of person Obama thinks is a good choice to hold the financial fate of millions of Americans in his hands read about the numerous other things Lawrence Summers did that caused or exacerbated the financial crisis and how he even profited personally from the very companies he was regulating. Mr. Summers has not done time in prison, but guys like Summers don't get sentenced; they get promoted by even higher malfeasants. See exhibit B, one Lois Lerner as further evidence.
Oh well, nooooooobody is paying attention to the man behind the curtain and the Federal Reserve continues to gin up wars and monetize debt. Death of a nation by a million (or should I say 17 trillion and counting?) cuts.
Summers is just one scoundrel the book exposed. There were many others. I decided to write about him in this review to illustrate how those responsible continue to play key roles in our nation's monetary policy.
I can't say I enjoyed reading it, as most if not all of it made me feel ill. I recommend it to those with a strong stomach and no inclination toward insomnia,if they really want to know what happened.
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on May 12, 2013
Morgenson and Rosner covered the map with villains of all stripes. Once I read the book, I wondered who in high places can be trusted. When regulators, banks, lobbyists, agency heads, boards of directors and concresspeople cannot be trusted, who is left? It is no wonder that I cannot get a simple mortgage refi today; the lenders are under such scrutiny that Bill Gates and Warren Buffett would probably be turned down, all as a backlash from the outrageous actions of people in power in industry and government from the late 1990's until the 2008. I thought I knew who the bad guys were, just from reading similar books covering the era. Gretchen and Josh beat the bushes and found even more crooks under the rocks than I would have imagined. Any other books they co-author will go to the top of my wanted list. The work reads like a novel, containing just enough humor to keep the flow of sordid events lively and not a totally depressing book. For contemporary works, it is a novelty; it is engaging without being melodramatic. Some of the books critical of the period paint the villains as evil as Robert Hanssen or Aldrich Ames, but even the bad guys in this book are at least interesting, however avaricious they may be. Like most government and industry scandals, it is clear that few people, if any, will ever be behind bars for their abuses, but at least their deeds have been made public for those of us care about integrity in leadership roles to see. A great book, should be on the reading list of anyone who wonders how and why the mortgage/housing bubble of the 21st century came to be and to burst.
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The information in this book is well researched. The authors do a great job of detailing legislative changes that encouraged businessmen to forget about all they understood about building a sustainable business. The government would bail them out. Risk was pushed off to tomorrow, warnings that this was unsustainable were ignored, people at the top wanted yet more deregulation yet get government guarantees to back their bad business decisions. And, I am not talking about the people who took out these mortgages. These big, smart firms were certain that if they ignored important criteria about a person's ability to pay, people would still be able to pay mortgages they couldn't afford. Somehow these ballooning interest rates would be ok. There would always be another dope to take on the risk of these mortgages.

I did tire of the overall angry tone. It dwarfed the content for me. I would of appreciated a calmer book - I actually skipped a few chapters because I tired of rage. I don't listen to angry people so it was difficult to cut through this to get to the information.

But it is there. You will get the names, the deals, the legislative changes (under Dems and GOP so not totally partisan) that you may be interested in.
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on July 11, 2013
Morgenson's and Rosner's account of the events leading up to the 2008 housing bubble that nearly destroyed the global economy fingers those responsible, none of whom have suffered for their bungling and folly. In fact, many of the most notorious serve or served the Clinton, Bush, and Obama Administrations, and are or were Washington or Wall Street insiders.

A partial list of the notorious and the heroic as described in the book:

Under the heading "Fannie Mae and Friends", essentially notorious:

James A. Johnson, chief executive officer, Fannie Mae, 1991-1998, director Goldman Sachs; former chairman of The Brookings Institute and the Kennedy Center for the Performing Arts.

Franklin Delano Raines, former director, Office of Management and Budget, chief executive officer, Fannie Mae, 1999-2005.

David O. Maxwell, chief executive officer, Fannie Mae, 1981-1991

William Jefferson Clinton, forty-second president of the United States

Barney Frank, Democratic congressman from Massachusetts

Robert Zoellick, executive vice president, Fannie Mae, 1993-1997

Thomas Donilon, head of government affairs, Fannie Mae, 1999-2005, later National Security Adviser to President Barack H. Obama

Larry Summers, deputy secretary, United States Treasury, 1995-1999, Secretary of the Treasury, 1999-2001

Robert Rubin, Secretary of the Treasury, 1995-1999

Richard Holbrooke, co-founder with James Johnson of Public Strategies consulting firm

Leland Brendsel, former chief executive, Freddie Mac, 1987-2003

Timothy Howard, chief financial officer, Fannie Mae, 1987-2003

Thomas Nides, executive vice president, human resources, Fannie Mae, 1998-2001

Herb Moses, community affairs official, Fannie Mae, 1991-1998 and former partner of Barney Frank

R. Glenn Hubbard, Columbia Graduate School of Business

Peter Orszag, senior economist, Council of Economic Advisors, 1995-1996

Bruce Vento, Democratic representative from Minnesota, 1977-2000

Robert Bennett,Republican Senator from Utah, 1993-2010

Kit Bond, Republican Senator from Missouri, 1987-2003

Stephen Friedman, former director, Fannie Mae and former chief executive, Goldman Sachs

Maxine Waters, Democratic representative from California

There also are lists of "Doubters and those who pushed back", "Subprime Lenders and their Enablers", and "Feckless Regulators".

Although Democrats seem to have been in the majority, members of both political parties are implicated in this scandal, as well as the Washington and Wall Street establishments. Yet many have been rewarded and promoted for their corruption and their folly. Read this, learn, and weep.
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on August 2, 2011
I looked at the one star reviews of this book, and I cannot believe they actually read it, or at least carefully. Deregulation (not just Republican but Democratic too,) Wall Street greed and malpractices, S&P and Moody's, and many others are all covered and treated with severe criticism. So are Fanny May and Freddie Mac, and their protectors. But the latter two are hardly blamed for everything, or even most of the problem. When the head of HUD under President Clinton (now NY Governor Andrew Cuomo) threatens, with the president's strong approval, to levy fines of $10,000 a day if banks do not meet arbitrary quotas of lending to people who did not have the means to meet their obligations, and when the banks and ideologues such as former Senator Phil Gramm (R) and President Clinton (D) push the dropping of standards for lending to ludicrous levels, one cannot only blame Wall Street or the banks (though they deserve the blame they get in this book.) What I took away from the book was that the ideologically-driven policies (degregulation by conservatives; profligate lending by liberals) created an atmosphere where the greed inherent in human nature was given full play. With a few notable exceptions, there is not a major figure in American politics or political or financial institution that comes off in this account as anything but deeply irresponsible. The one star reviews want to blame it all on conservatives and the five star reviews on liberals. May both ideological groups be damned for what they have done to this country. Anyone seeking a balanced, angry criticism of that process should read this book.
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on February 18, 2014
This book provides a lot of background informaiton on the characters and events leading up to the financial crisis in 2008 and 2009. However, there seems to be some strange omissions --- here are two that come to mind.

The book takes the reader up to the time frame close to the financial meltdown, but does not provide any details on what actually triggered the crises. According to my understanding, the various investment banks started entering into credit default swaps after they became seriously concerned about the collapse of the mortgage securities packaged and sold to investors. They eventually became concerned about the financial condition of the counter-parties to these credit default swaps --- notably American International Group (AIG). Eventually, the investment banks became so concerned about the situation that they, in effect, triggered early termination of these credit default swaps. This situation led to questions about AIG and other counter-parties being able to meet their obligations. So AIG received billions in government bailout funds to meet these obligations. Eventually, AIG's original position about financial viability was confirmed when AIG repaid all of the bailout funds back to the government.

Also strangely missing is any mention and discussion about Jamie Gorelick who was appointed Vice Chairman of Fanne Mae although she had no financial background. During her term in office is when the serious accounting irregularities occurred. For her services during this time period, she received compensation of around $26.5 million.

In summary, the book confirms that there were many people involved in this massive scheme to increase home ownership without any regard for the overall risk to the country's financial system. It reminds me of the saying back in the 1970's and 1980's during the California housing boom --- somebody will always come by and pay a higher price for this house (known as the "greater fool theory").
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