Reckless Endangerment

Reckless Endangerment

How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon

Book - 2011/05/24
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"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 publicsubsidies. 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 read"-- Provided by publisher.
"TheNew York Times's 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 originalresearch 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 read"-- Provided by publisher.
Publisher: New York : Times Books, 2011/05/24
Edition: 1
ISBN: 9780805091205
0805091203
Branch Call Number: 332.72 MOR
Characteristics: 352
Additional Contributors: Rosner, Joshua

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StarGladiator
Feb 20, 2013

[Given the recent events, with the Blackstone Group stealthily planning to takeover Freddie Mac and Fannie Mae, a re-review was in order.]
A false narrative - - or an author who gets much wrong, while reporting some very interesting facts? When Vincent Buglioisi received a cool million dollars [plus any profits] up front for his false narrative on the JFK assassination, that was obvious. Here I am uncertain.
The NY Times financial reporter, Gretchen Morgenson, focuses on Fannie Mae and James Johnson, certainly players in the economic meltdown, but second tier types, albeit guilty as charged!
To discuss the meltdown without ever mentioning CREDIT DEFAULT SWAPS [one or two sentences about CDO insurance don't count!] is absurd!
The author does do a good job on trashing specious and disinformational papers from the Federal Reserve leading up to the meltdown, but then keeps claiming that the Fed missed this, or didn't understand that, when clearly they did: when FRBNY advisor, Prof. Shiller ["Irrational Exuberance"] suggested to newly appointed New York Fed chair, Timothy Geithner, that housing prices could drop --- Shiller was fired and replaced with yes-woman, Catherine Mann [is she Elizabeth Warren's sister-in-law?] and the Fed also hired yes-man Federic Mishkin, et cetera! A graph of interest rates clearly demonstrates that from 2000 to 2008 the Fed was bolstering the housing bubble at every opportunity!
James Johnson [CEO at Fannie Mae], Richard Holbrooke [a director at AIG], Chris Dodd [inserted the amendment into FDICIA to enable bailouts of investment banks and insurance companies even though not affiliated with FDIC], Martin Feldstein [not mentioned by the author, but a director at AIG/Financial Products] have a central nexus or connection: David Rockefeller!
[Blackstone Group was funded originally with Rockefeller seed money.]
They all belong to one or more of Rockefeller's outfits: Trilateral Commission, American Friends of Bilderberg, Inc., et cetera!
The author reports some interesting facts [FIN 46r, FDICIA amendment, Nancy Pelosi's son at Countrywide, illegal bookkeeping deals done between Washington Mutual and Fannie Mae], but misinforms about the overall structure of the global economic meltdown, and doesn't really name ALL the players involved [the top bankers, their money masters, Markit Group, et cetera.] and therefore misleads the reader. [With Blackstone Group pursuing the complete privatization of the two [Fannie & Freddie] the macro picture of the meltdown begins to sound like a long-range plan, all points leading to Rockefeller. Originally, the forces line up to prevent Fannie and Freddie from being privatized - - so that OPM, or the taxpayers' funds, could essentially be used and controlled by the bankers - - now, with the massive xfer of wealth, the obvious next stage would be privatization.]

r
richibi
Sep 17, 2012

how the wolves took over the chicken coop, and, outrageously, are still, without any compensating penalties or recriminations, solidly entrenched there, the meticulous text reads like a veritable thriller, it's hard to put it down, we need many more calls to arms like this

There is no better summary of how the housing / mortgage debacle in the USA happened. It is easy to read as it was written in the style of a whodunnit. It is also painful to read as the authors delve into the ego and corruption that exists throughout the mortgage industry, government agencies, politicians and regulators. You will find yourself shaking your head over and over again. How is this allowed to happen? The authors explicitly name names, many of whom are still treated as rockstars, courted by media, appointed to new, more powerful positions of influence and seemingly oblivious to the devastation their actions created. Highly recommended.

smellypugsley Dec 29, 2011

I really enjoyed this book. If you want to understand how the 2007 financial crisis started, why it started and how it unravelled, then this is a great book to choose.

The greed and stupidity of some of the best and the brightest in this country, some of whom at least, are in positions of power and chartered with protecting the taxpayer, is just unbelievably astounding. The fact that so many of them are still there is sickening, to be honest. The book covers the roles played by mortgage brokers and realtors, but is mainly focused on untangling the roles of Fannie Mae and Freddie Mac, mortgage lenders, such as Countrywide, and Wall St players such as Goldman Sachs, in setting up the havoc played on the global financial system through the mortgage stream.

The writing is accessible, whilst also managing to explain considerable detail. The authors do not assume familiarity with financial jargon beyond the most basic, and carefully explain the roles of regulators, and what some of the incredibly esoteric securities were comprised of. I learned a HUGE amount about the mortgage process in this country, and how a few players twisted it for their own ends, and in the process corrupted Congress and then laid the whole bill in the taxpayers' lap.

The book isn't particularly politically partisan (although it would have been easy to do that), and although at its core is the premise that owning a home is not in everyone's best interest, it doesn't push it - just lays out the facts and tells the story.

One thing I really took away from this was particularly apt for the political climate at present, with Republican primaries upon us for next year's presidential election. What is the role of regulators? Do they "get in the way" of free enterprise? Or do they have to work so closely with those they regulate in order to be relevant and effective, that they lay themselves open to corruption? Are they there to ensure a level playing field, or are they there to protect the stupid from themselves? I don't know the answer really, but it's sure given me something juicy to think about.

4 stars. Great read.

Got a great revies from Robert B. Reich, SecLabor in the Clinton Administration.

j
jrchase
Dec 03, 2011

greatly overrated - hints at regulatory failures but avoids specifics, blaming congressional corruption instead - disjointed chronology; possibly due to lax editing of multiple authors.
(Robert Scheer: 'The Great American Stickup' is a vastly better book.)

l
Lukeinvancouver
Aug 29, 2011

This is one of many excellent books written about the origins of the current financial crisis. I think it supplements other books because of its primary focus. The authors mention all basic reasons other writers have pointed out but emphases in different books vary.
Some suggestions for additional reading are:
Tett, Gillian, Fools Gold
Reinhart, C.M and Roggoff, K. This Time Is Different
Fleckenstein, Bill, Greenspan's Bubbles
Sorkin, Andrew Ross, Too Big To Fail.
Taleb, Nassim Black Swan is my next book to read, but I'm sure it is a must read given the critiques I have read.
Also on my reading list is Shiller, Robert, Irrational Exuberance. (I'm sure it's a must read.)

johnf108 Jun 28, 2011

A ringing indictment of not only the officers and employees at Fannie Mae and many in the mortgage industry but even more unsettleing is the behavior of Congress and the Executive branch of not only overlooking problems but making excuses and killing bills based on the best research---all the sake of gifts, Board seat of the very groups they were to watch over and of course to get campaign funds and votes.
A very good and daring book---which Harry Markopolos' effort to expose the Madoff fraud, the press and regulators will overlook the evidence.

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