Did you know In Reckless Endangerment, Gretchen Morgenson exposes how the watchdogs who were supposed to protect the country from financial harm were actually complicit in the actions that finally blew up the American economy?
Drawing on previously untapped sources and building on original research from coauthor Joshua Rosner—who himself raised early warnings with the public and investors, and kept detailed records—Morgenson connects the dots that led to this fiasco.
Morgenson and Rosner draw back the curtain on Fannie Mae, the mortgage-finance giant that grew, with the support of the Clinton administration, through the 1990s, becoming a major opponent of government oversight even as it was benefiting from public subsidies. They expose the role played not only by Fannie Mae executives but also by enablers at Countrywide Financial, Goldman Sachs, the Federal Reserve, HUD, Congress, and the biggest players on Wall Street, to show how greed, aggression, and fear led countless officials to ignore warning signs of an imminent disaster. Character-rich and definitive in its analysis, and with a new afterword that brings the story up to date, this is the one account of the financial crisis you must read.
Review:
The information in this book needs to be known by as many citizens as possible. Morgenson and Rosner draw back the curtain on Fannie Mae, the mortgage-finance giant that grew, with the support of the Clinton administration, through the 1990s, becoming a major opponent of government oversight even as it was benefiting from public subsidies. They expose the role played not only by Fannie Mae executives but also by enablers at Countrywide Financial, Goldman Sachs, the Federal Reserve, HUD, Congress, and the biggest players on Wall Street, to show how greed, aggression, and fear led countless officials to ignore warning signs of an imminent disaster.
Today the conventional wisdom is that the recession was caused by unregulated Wall Street greed and some unspoken economic policy that Bush must have enacted, like the Bush Tax cuts. It is clear that this view will not stand the test of historical investigation. Wall Street was greedy, but that was always true and always will be true. That was never causal. Regulation was certainly a factor, but not the lack of it. Regulators pushed financial institutions to make large bets on housing and actively encouraged it--it was their mandate to do so. Flawed studies overstated the level of discrimination in the housing market. It is true that some regulations went ignored, but not regulations that could have or would have prevented any of this. Subprime mortgages were no secret. Relaxed lending standards were not regulatory oversights, they were policy. This policy regime did not start with Bush, and once in motion it's inertia was simply irresistable to any politician. Too many influential interests groups from across the ideological spectrum had too much staked on the inertia of the status quo.
This work will prove instrumental into reshaping this flawed conventional wisdom over time. Demagogues on both sides of the aisle will distort reality, but this book will be there for history. History will point to a cadre of ambitious and somewhat nefarious executives within the environs of the GSE's (Fannie Mae principally) who used the trappings of Government favor and political influence to create the conditions for crisis. The politicians alluded to (Barney Frank, Chris Dodd, and various members of the Clinton Administration) were important brokers who generally meant well, and undoubtedly had no clue of the Leviathan they were unleashing. Clinton-era officials certainly own the creation of the Housing Industrial Complex and the infrastructure that fuelled it, but it is the members of Congress who protected the insanity of it all to the last that deserve the treatment they get.
Morgenson and Rosner note Fannie Mae and how it became the publicly (tax payer funded) giant that work in unison with those gargantuan (and also publicly funded) so-called private banks such as Goldman Sachs and Countrywide (among others). We can also add the usual list of suspects: The Department of Housing and Urban Development, FDIC, Members of Congress and Congressional Committees. What this book enlightened me on (as a dabbler in this issue) is the mammoth and inimical institution that Fannie Mae became. Quotes and interviews from the former Fannie CEO James Johnson reveal that he's just a banker in the likes of JP Morgan, Bear Sterns, Lehman, GS, the SEC, Indy Mac, AIG etc. Public regulating institutions with the private institutions. Two peas in a pod. Same people, same institutions, in the same industry. Readers who interpret this book through their partisan lenses will once again, miss the main point of the book. These biased
partisan often can see a few trees, but not the entire forest. Character-rich and definitive in its analysis, and with a new afterword that brings the story up to date, this is the one account of the financial crisis you must read.
Also noted, are long-time and powerful Congressmen and women, and Senators. They too, also got loans. Interestingly but not surprisingly many sons and daughters of the private and public banks and lending institutions were appointed to lucrative positions high up in the lending food chain.
To summarize, an understanding of the economic crisis is incomplete without reading this book. It is not the whole story, but it is the part that matters most, because it focuses on what changed in housing. The Housing Bubble began in 1997, and most people do not know that. Other factors like low-interests rates driven by the Fed, excess savings from abroad had their role, but they were catalysts, not causes. Low interest rates did not cause housing bubbles in the past. Wall Street greed did not cause housing bubbles in the past. International currency flows did not cause housing bubbles in the past. Something changed in housing to help cause this.
Drawing on previously untapped sources and building on original research from coauthor Joshua Rosner—who himself raised early warnings with the public and investors, and kept detailed records—Morgenson connects the dots that led to this fiasco.
Morgenson and Rosner draw back the curtain on Fannie Mae, the mortgage-finance giant that grew, with the support of the Clinton administration, through the 1990s, becoming a major opponent of government oversight even as it was benefiting from public subsidies. They expose the role played not only by Fannie Mae executives but also by enablers at Countrywide Financial, Goldman Sachs, the Federal Reserve, HUD, Congress, and the biggest players on Wall Street, to show how greed, aggression, and fear led countless officials to ignore warning signs of an imminent disaster. Character-rich and definitive in its analysis, and with a new afterword that brings the story up to date, this is the one account of the financial crisis you must read.
Review:
The information in this book needs to be known by as many citizens as possible. Morgenson and Rosner draw back the curtain on Fannie Mae, the mortgage-finance giant that grew, with the support of the Clinton administration, through the 1990s, becoming a major opponent of government oversight even as it was benefiting from public subsidies. They expose the role played not only by Fannie Mae executives but also by enablers at Countrywide Financial, Goldman Sachs, the Federal Reserve, HUD, Congress, and the biggest players on Wall Street, to show how greed, aggression, and fear led countless officials to ignore warning signs of an imminent disaster.
Today the conventional wisdom is that the recession was caused by unregulated Wall Street greed and some unspoken economic policy that Bush must have enacted, like the Bush Tax cuts. It is clear that this view will not stand the test of historical investigation. Wall Street was greedy, but that was always true and always will be true. That was never causal. Regulation was certainly a factor, but not the lack of it. Regulators pushed financial institutions to make large bets on housing and actively encouraged it--it was their mandate to do so. Flawed studies overstated the level of discrimination in the housing market. It is true that some regulations went ignored, but not regulations that could have or would have prevented any of this. Subprime mortgages were no secret. Relaxed lending standards were not regulatory oversights, they were policy. This policy regime did not start with Bush, and once in motion it's inertia was simply irresistable to any politician. Too many influential interests groups from across the ideological spectrum had too much staked on the inertia of the status quo.
This work will prove instrumental into reshaping this flawed conventional wisdom over time. Demagogues on both sides of the aisle will distort reality, but this book will be there for history. History will point to a cadre of ambitious and somewhat nefarious executives within the environs of the GSE's (Fannie Mae principally) who used the trappings of Government favor and political influence to create the conditions for crisis. The politicians alluded to (Barney Frank, Chris Dodd, and various members of the Clinton Administration) were important brokers who generally meant well, and undoubtedly had no clue of the Leviathan they were unleashing. Clinton-era officials certainly own the creation of the Housing Industrial Complex and the infrastructure that fuelled it, but it is the members of Congress who protected the insanity of it all to the last that deserve the treatment they get.
Morgenson and Rosner note Fannie Mae and how it became the publicly (tax payer funded) giant that work in unison with those gargantuan (and also publicly funded) so-called private banks such as Goldman Sachs and Countrywide (among others). We can also add the usual list of suspects: The Department of Housing and Urban Development, FDIC, Members of Congress and Congressional Committees. What this book enlightened me on (as a dabbler in this issue) is the mammoth and inimical institution that Fannie Mae became. Quotes and interviews from the former Fannie CEO James Johnson reveal that he's just a banker in the likes of JP Morgan, Bear Sterns, Lehman, GS, the SEC, Indy Mac, AIG etc. Public regulating institutions with the private institutions. Two peas in a pod. Same people, same institutions, in the same industry. Readers who interpret this book through their partisan lenses will once again, miss the main point of the book. These biased
partisan often can see a few trees, but not the entire forest. Character-rich and definitive in its analysis, and with a new afterword that brings the story up to date, this is the one account of the financial crisis you must read.
Also noted, are long-time and powerful Congressmen and women, and Senators. They too, also got loans. Interestingly but not surprisingly many sons and daughters of the private and public banks and lending institutions were appointed to lucrative positions high up in the lending food chain.
To summarize, an understanding of the economic crisis is incomplete without reading this book. It is not the whole story, but it is the part that matters most, because it focuses on what changed in housing. The Housing Bubble began in 1997, and most people do not know that. Other factors like low-interests rates driven by the Fed, excess savings from abroad had their role, but they were catalysts, not causes. Low interest rates did not cause housing bubbles in the past. Wall Street greed did not cause housing bubbles in the past. International currency flows did not cause housing bubbles in the past. Something changed in housing to help cause this.
