Reckless Endangerment

March 21, 2011
Pulitzer Prizeâwinning New York Times business journalist Morgenson and Rosner, a financial and policy analyst, turn the financial meltdown of 2008 into a whodunit as they cast about for motives and culprits. Their character-driven account even begins with a cast of craven characters (as in a mystery novel): Fannie Mae executives, subprime lenders, and regulators. Morgensen and Rosner dig into the wreck and come up with key momentsâPresident Clinton's 1994 landmark speech (and his embrace of a "corrupt corporate model") aggressively promoting home ownershipâand motives, chief among them the eagerness of subprime lenders to extend loans to people "based on their credit future, not their past," the laxity of regulators, and the timidity and cupidity of policy makers. The book ends with a withering look at current "reforms" (ironically enough "sponsored by the nation's most strident defenders of Fannie Mae," Barney Frank and Christopher Dodd) and a prediction that we'll "most certainly" have another 2008-style crash "because Congress decided against fixing the problem of too-big-to-fail institutions when it had its chance." A sobering account of some sordid recent history that's so clear and detailed that pros and novices will find its account rich and informative, and deeply depressing.

December 1, 2010

Morgenson, the Pulitzer Prize-winning business columnist of the New York Times, joins with Rosner to show how mortgage behemoth Fannie Mae resisted government oversight (never mind the subsidies) and how the Federal Reserve, FDIC, and more went right along with that game plan instead of protecting the public interest.

Copyright 2010 Library Journal, LLC Used with permission.

April 15, 2011
Respected journalist Morgenson and financial/policy analyst Rosner set out to investigate the financial crisis of 2008: how such a thing could happen in America in the new millennium. They name those involved, how they did it, and why. We learn about self-interested and politically influential people, particularly in Washington and on Wall Street, as well as those who tried in vain to warn of the impending crisis but were squashed or ignored. Originating with the 1994 directive to expand home ownership among Americans, the authors paint a picture of unintended consequences, greed, good intentions, and corruption; they report lies (involving politicians, corporate executives, bankers, and borrowers), laxity by most regulators, and the disappointing role of credit-rating agencies. Morgenson and Rosner base this book on interviews and conversations conducted on parallel paths, beginning in the mid-1990s, and a wide range of secondary sources. This excellent, thought-provoking book is a must-read.(Reprinted with permission of Booklist, copyright 2011, American Library Association.)

March 15, 2011

New York Times business correspondent Morgenson (The Capitalists' Bible, 2009, etc.) and investment consultant Rosner combine their expertise in a fresh look at the causes of the 2008 mortgage meltdown.

"Will a debacle like the credit crisis of 2008 ever happen again?" ask the authors, answering, "most certainly." They put a heavy blame on Congress, which failed to fix the problem when it could and now remains silent on how to resolve the insolvent mortgage agencies. They also set out to identify the "powerful people whose involvement in the debacle has not yet been chronicled" (many of whom are still active), and the "key incidents that have seemed heretofore unrelated." Morgenson and Rosner focus on the ties between government and private finance through James A. Johnson, chief executive officer of Fannie Mae from 1991 to 1998, and from 1999 to the present, a director at Goldman Sachs. Johnson transformed Fannie Mae into a political force and lobbying influencer, a strategy that "would be mimicked years later" by Countrywide Financial, Goldman Sachs, Citigroup and others, and by Bill Clinton's Secretary of the U.S. Treasury Robert Rubin. The authors show how changes in law and regulation unnoticed at the time--Sen. Chris Dodd's amendment to the 1991 FDICIA Act, Alan Greenspan's 1992 ending of Federal Reserve oversight of primary dealers, further regulatory changes in 2001--paved the way for the multitrillion-dollar disaster. The final chapter retraces the crisis and shows how the New York Fed and Fed Reserve tried to downplay what was becoming evident to some of its own makers.

Extremely timely given growing fears about the possibility of another financial crash.

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