The New York Times' Pulitzer Prize-winning columnist reveals how the financial meltdown emerged from the toxic interplay of Washington, Wall Street, and corrupt mortgage lenders.
In Reckless Endangerment, Gretchen Morgenson, the star business columnist of The New York Times, 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, the FDIC, 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, this is the one account of the financial crisis you must hear.
©2011 Gretchen Morgenson & Joshua Rosner (P)2011 Audible, Inc.
"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)
Disappointing – I expected more from the NYT columnist. The book begins with what can only be described as a rant attack on the GSE’s specifically Fannie Mae. The evidence? Large spending on lobbying efforts. No mention of the large amount of money spend by financial industry to eliminate the GSE’s. They then point out the capital requirements advantage held by Fannie Mae due to the assumption of credit risk and the implied backing of the US government. Ok, but that advantage was eliminated with the passing of the 2002 financial reforms. They mention the huge percentage of mortgage market held in portfolio but more importantly guaranteed by the GSE’s. True, but that share was dropping fast after the 2002 reform and the replacement private mortgages did not offer credit risk protection. As a result the majority of the mortgages issued by private lenders held significantly higher risk levels. They mention the financial restatement required by their regulator resulting in $9 billion in losses for Fannie Mae. True. But they don’t mention that the restatement was required because of FASB 133 and the assumption of no ineffectiveness and that KPMG, their auditor, felt that the accounting for hedge trades was correct. The restatement did not change the earnings over time, just the timing of the revenue by understating the value of the hedge transactions. They did not mention that a review committee for FASB 133 has since upheld the interpretation Fannie Mae used by issuing further clarification of the rules. They did not mention the billions in fines assessed to banks and financial institutions due to sales of mortgage pools to Fannie Mae and Freddie Mac containing fraudulent underwriting data. Nor did they mention the underwriting restrictions placed upon the GSE’s by charter.
I am disappointed in the lack of analysis, the lack of supporting data, the overwhelming use of unnamed sources, the heavy reliance on opinion and the personal attacks on individuals. This book has very little to do with the causes of the 2008 financial collapse. I expected more from Gretchen Morgenson.
Jumps on his bed while licking the bottom of one foot. He persists in this life affirming act despite interference from the head nurse.
This is a worthwhile read for those of us who brood over the meltdown of 2008. It’s written for people who are not stupid but not well informed about the dodges of high finance. Admittedly, a few bank/government machinations are difficult to follow in the text, so that a reader must back up a bit and re-read, but that does not happen often; the authors set most of it down in clear English. They explain “derivatives” formulas well, when they pop up, so even I can understand them. The text begins in the 1980s, works its way forward, dumb move by dumb move, enabler legislation by enabler legislation, to the day when seawater floods over the gunnels of gigantic economic ships and they plummet to the ocean’s bottom. The books contention is that business and government manufactured their own submerged mines—out of greed, power and influence, ideologies, and bureaucratic ineptitude—strewing them as they went because it gained them political advantage and (in the case of the finance boys) because they just didn’t give a damn in their rush to make millions. Sound familiar? Ecce Americanus. Financial “wizards” and Washingtonian “public servants” played paddy-cake and you-scratch-my-back for twenty years before the fleet sank. The mines didn’t go off until the original ships’ officers were safe, dry, retired, and very rich. The crew drown, of course. God bless you Bill Clinton, George W. Bush, Barney Frank, and James A. Johnson. May history give it to you up the wazzu, like the events you precipitated did to so many of us.
The story was good but the book kept turning itself off. It performed poorly. I've listened to many books and this is the second time overall this has happened. Guess I just picked the wrong book. I'm returning this one.
The authors believe that individuals (that they name and blame in "Reckless Endangerment") are the cause of systemic failures. If this were true, then by stopping a single person, or small group of people, a system failure could be avoided. Who have we killed/arrested/detained recently? Has that stopped the problem? System problems are caused by culture - "Boomerang" is a much better book describing the cultures that promote economic problems. Laying the blame on a small group of people, without describing the conditions that allowed and promoted them to misbehave is not very prescriptive.
A good analysis of the real estate meltdown, which is overall in line with how I remember things going down.
Well written and read. Reveals history of the 2007-8 real estate collapse in detail exposing the people in power and how they used it to enrich themselves at the expense of everyone else. Nobody has gone to jail and those involved really think they did nothing wrong.
They Robbed the Bank and Nobody Went to Jail
Interesting read, but was a rehash of so many other books about the meltdown. Not much new information - was interesting how many of the old Barney Frank cronies that got us into the mess are now saying it was somebody else's fault (EG: "Bush's fault") Vote 'em out of office, now......
Both format are good.
Thanks to the author to dig out the stories that strongly linked to the financial crisis in 2007 - 2008. We might ask a bigger question. If the actors are changed, would the financial crisis occur sooner or later? Is the political/economic environment encourage such behavior even the actors are different? In fact, since 2009, whenever there is a lack of bad economic news, the bubbles continue to blow. It is some of our fundamental believes that need adjustment. We are waiting for next real clear minded economist or philosopher to provide the guidance with some simple metaphor such as invisible hands to move the society to next level.
I wasn't previously familiar with the author's work, but I figured that a Pulitzer prize winner would make an effort to maintain some semblance of journalistic integrity. I knew from the title that the book would have a point of view, but I wasn't expecting it to be blatant spin.
I don't even necessarily disagree with the premise--Fannie and Freddie were indeed a big part of the problem--I just resent the fact that the book is being sold as something other than partisan hyperbole. The facts that the narrator presented are, from what I can tell, actual facts, but they're not being reported, they're being sold. It's even narrated in a sort of preachy, outraged tone. I got about three hours in, then gave up.
If you're looking for a more balanced examination of the same general events, I recommend The End of Wall Street. If you're just killing time until Glenn Beck comes on, this will probably be to your taste.
Can I have my credit back?
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