The Monster: the fraud and depraved indifference that caused the subprime meltdown

Michael W Hudson's book-length investigative journalism piece on the subprime meltdown, The Monster, is both a brilliant example of skeptical business journalism done right, and a brilliant example of the storyteller's art. Hudson combines his meticulous, exhaustively documented research with a novelistic approach to telling the story that strips away all the financial jargon and the cosy justifications and rationalizations and lays bare the heart of the story: greed, depraved indifference, fraud, and a howling moral vacuum that swallowed up people at all levels of finance and financial regulation.

The Monster starts with the S&L crisis, and the fraudsters who destroyed the finances of the ordinary people who'd trusted them, and shows how the worst of the S&L conmen moved on to subprime, founding companies like Ameriquest and FAMCO. People like Richard Arnall, who became a billionaire, was the prime financier behind George W Bush's 2004 presidential bid, and actually served as the US ambassador to the Netherlands, even as he built an empire built on outright, deliberate swindling.

And swindling it was. Hudson leaves no room for doubt here. You may have heard that the subprime collapse was caused by greedy homeowners fudging the facts about their income in order to secure easy credit, but Hudson shows that in the vast majority of cases, the "liar" in the "liar loan" was usually a banker, a mortgage broker, an underwriter, a bond-rater, an appraiser. These are the people who went into poor neighborhoods where vulnerable, poorly educated people had scrimped and saved all their lives to buy their homes and conned them into taking out brutal, lopsided second mortgages, lying to them, bilking them out of 20% (or more!) in upfront fees, lying some more, forging documents, and then handing off the mortgages to Wall Street to launder out as toxic bonds.

The depravity is bottomless. From small lies to big lies, from hiding documents to robbing developmentally disabled seniors. Stealing from widows by slipping in extra documents after their reading glasses were off. Using sexual harassment and even hired thugs to drive away anyone in the company with a shred of decency, anyone who raised the smallest objection. Coked up millionaires in SUVs, gouging good working people out of everything with a con designed and refined so ensnare people with so much debt that their houses were inevitably forfeit. The subprime outfits literally used the movie Boiler Room as a training film, requiring new hires to watch it in order to learn how to conduct their working lives.

But lest you think that the problem was just the con-artists at the bottom, Hudson shows you how regulators (all the way up to Alan Greenspan), Lehman and the other big Street firms, and politicians all the way up to the President of the United States were all in on it, that there was no way they couldn't have known that they were participating in a once-in-a-century scam that was destroyed millions of good peoples' lives as well as the planet's economy, and how they all sat idly by and collected their share of the wealth rather than speak up. From lobbyists to campaign contributions, dirty tricks and massive media campaigns, bribery and intimidation, the men behind the subprime crisis were not merely expressing some historical abstraction, playing a part in a nebulous "business cycle." They were deliberately, personally participating in something that they had to know would result in terrible consequences for innocents all around them.

Hudson's book is a model for excellent investigative journalism. It's a book that should be required reading for anyone who says that the economic crisis was caused by greedy mortgage-takers who spent too loosely with their credit cards.

The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America--and Spawned a Global Crisis


  1. “strips away all the financial jargon and the cozy justifications and rationalizations and lays bare the heart of the story: greed, depraved indifference, fraud, and a howling moral vaccuum”

    Yes. And no one went to prison, and now ordinary tax payers and the disabled are paying for it. Meanwhile banks continue to make record profits and pay out record bonuses during a global recession. Someone has to take some action – let’s hope it’s the government and not an angry mob…

    Couple of typos in that quote btw: cosy. vacuum.

    1. Yes, there are some perp walks needed, but we’re not going to get them. Just last month the DOJ decided not to pursue charges against Angelo Mozilo, for example.

      And the ratings agencies who stamped “AAA” on all that dodgy mortgage based crap are going on unquestioned, as if it all had never happened.

      I see no hope until we finally get Bush and his billionaire Rethuglican cronies out of the White House.

      1. Wally… Bush has been gone since Jan. 2009.

        And the book is misleading if the word “Politicians” is not included in the title and one of the author’s targets.

        It’s a bipartisan thing. Anyone who does not want Barney Frank (D-MA) and Chris Dodd (D-Conn. retired) doesn’t know what the hell they’re talking about. The subprime collapse took a decade or more to build so there is plenty of blame — Rethuglican and Dummycrat to go around.

        1. Floyd, check your sarcasm detector. It may need cleaning and oiling.

          All the best, we are on the same side.


    2. A little anecdote that may explain why there are few prosecutions.

      Years ago we caught a woman stealing from my company. $60,000. Open and shut, easy to prove. Furthermore, she was still on parole from doing it to some other company several years before in a different county (yeah, we learned about background checks the hard way).

      I quickly learned it wasn’t going to be practical to have her prosecuted. District Attorney is an elected position. They earn their gold stars and get re-elected by being hard on crime. Street crime. Crime that keeps granny scared at night. White collar crime is harder to prove, doesn’t show up in the crime stats, and only helps with re-election if it makes the news.

      The only way they will touch it is if they need publicity and someone else does all the work. They want a fall guy in case they fail. In our case, I would have had to do all the research for the prosecutor and the publicity would have involved dragging all of us into the newspapers.

      No, this story doesn’t correlate 1:1 with what you are talking about. Totally irrelevant in some ways. But it does show a bit of the politics and psychology going on.

      BTW, I got great, but frustrating advice. We were a small company. Someone I respect told me I could either get the business back on its feet or get revenge. Getting the company going again was tough, but we did it. We got her ownership back and all but $8,000. And it built up good karma. Years later when we were sued and she was subpenaed, she %100 backed us by being truthful. Unlikely any sup-prime scum would ever do anything upstanding.

    3. I like the idea of a mob, although I would prefer something more precise and surgical, repeated a few dozen times.

      Also agree with Floyd R Turbo. To get to the core of how these bubbles are formed and then pop, no discussion can occur without including our beloved leadership/corporate enablers. I can no longer vote for anyone without a sense, standing there in the voting booth, that it will be the very last time I have any illusion that that politician represents my political interests.

    4. TBH, throwing people in jail for the subprime is a short-term solution to a long-term problem. Something like subprime loans should have never been allowed to exist outside of a heavily regulated and strictly enforced environment.

  2. Once-in-a-century? Hardly.

    Seriously, this happens once a decade in some form, alternating between stocks (which are at least admittedly risky) and housing (which is much more of a fixed cost for the average buyer)

    2008 – Housing Crisis
    2000 – Dotcom bust
    1990 – Stock crash
    1982 – S & L (McCain)
    1973 – Oil Crisis

    That’s off the top of my head. Are the perpretrators evil? Maybe, but the system cannot function without these boom-bust cycles, so I say it’s the system that’s broken.

    1. Once-in-a-century? Hardly.

      Seriously, this happens once a decade in some form, alternating between stocks (which are at least admittedly risky) and housing (which is much more of a fixed cost for the average buyer)

      2008 – Housing Crisis
      2000 – Dotcom bust
      1990 – Stock crash
      1982 – S & L (McCain)
      1973 – Oil Crisis

      One (or perhaps two) of these things is not like the other.

  3. Thus are boingboingers likely to find their way to Carl Denninger, one of the original teabaggers who has blogged his raving heart out over these issues. Angry left, meet angry right.

  4. And no one went to prison.

    But one of them did get to become the White House chief of staff.

  5. In b4 “This is all a leftist plot to turn us into communists” =P

    But, seriously, the situation we’re in globally is pretty ridiculous. Even more ridiculous is how there seems to be a popular political/population response that tries to pin the blame on each other and create an environment where it’s easier for these things to happen. That and the apathy of the rest, the whole belief that it’s somehow only some peoples problem.

    It’s all rather depressing.

    But, glad it’s not all being swept away, looks like a good book to pick up.

    1. “the apathy of the rest”

      It isn’t so much apathy as it is that the details of this global economic morass are happening within a sphere of global activity over which most of us have no influence and no training to deal with. To proverbially storm the financiers’ gates would be no less absurd than the pictures we’ve all seen of kids chucking rocks at tanks over in the Gaza Strip. We’d know what the intention meant, but it would be an ultimately impotent effort.

      It doesn’t take much sense to see that we’ve been screwed and by whom, but unless the people resort to actually storming the financiers’ gates and lynching them, you’re not going to see any punishment meted-out to the crooks who took us because they’re the ones in power in the first damn place.

      1. Hrm, I can understand your perspectives and feelings pinehead…

        But, I’m afraid you might be trying to convince the wrong person about what futility is. I was born under the oppression of a dictatorship, Apartheid, it was replaced by democracy when I was 10 years old. Before it ended, I managed to get a nice collection of scars from those in power/their supporters. Didn’t get to throw any rocks at tanks, but I threw enough punches to protect some people, at least. The people in Egypt, Tunisia, Libya, etc, they don’t think it’s ultimately meaningless, neither did I or those like me. *shrugs softly*

        People, even individuals, have a lot more power than they give themselves credit for. If they have a strong enough will, if enough of them act, it’s not something any force can stop. And it need not be violent to enact change, or at least, that is the benefit I see (from living here) that North America has.

        Or to say it another way, the apathetic, the self centered and yes, those that admit defeat before having even tried… Are far more terrifying to me, than any weapon, tank, army… or banker. ;)

        1. Those countries didn’t have enough bread and/or circuses to keep the masses amused. The US has plenty of both to keep people from rioting. Although with the way things are going, I’m starting to wonder.

          1. I’m starting to wonder as well, but regardless, that’s why I mentioned the benefit I think North America has. There don’t need to be riots. There just need to be people working towards the same goal, even just talking about it and not letting it go silent, if you don’t let up, don’t accept the first scraps thrown… You do that long and loud enough, and they will be forced to change.

            I sometimes wonder if the belief that people can’t change anything, was encouraged in the culture here, specifically to prevent the realisation of that.

          2. We’re famous for our soft power here in the states, but don’t for a second think we wouldn’t be on the wrong end of hard power. If push comes to shove, the guns will come out.

  6. personally, I think the only important area where Marx was either wrong or just not able to process the reality of human behaviour is the extent to which people will allow this kind of thing to go on all around them, even nearly bringing the world economy to its knees, and not only not lift a finger to stop it or set things right but allow themselves to be duped into paying financial criminals a reward in the form of bailouts. if I could bring Karl back and let him see this utter travesty and failure of ‘developed’ society I’m sure it would be all we could do to not drown ourselves in our biers.

    1. People are lifting their fingers all over the middle east. In Marx’s time, it was not uncommon for people in the West to spend 30% or more of their incomes on food alone. It’s no coincidence that nations where we’re seeing revolution first are nations where that still holds true. Americans are still a long way from being that close to actual hunger. That seems to be the strongest motivator for change, historically. But we are also at record-high food stamp usage, so it’s not like we’re not feeling it at all. Still, as long as the American public can be bailed out with food, American bankers can probably rely on hundreds of billions worth of handouts.

      Throw in some American Idol and Charlie Sheen and you literally have bread and circuses.

  7. The wicked and greedy will always be with us. The question is, “Why do we let them be in charge?”

  8. Some of the credit must go to Fannie and Freddie and the politicians that wanted to subsidize home ownership for poorer voters.

    1. Man, what is with you right-wing trolls on this site ? This stupid meme has been circulating for years now, and it is complete and utter bullshit. Fannie and Freddie got into the game way late, long after the crap mortgage originations had skyrocketed in the private sector. They were not a cause, nor was the CRA, which has been around for 30+ years.

      1. Fannie and Freddie played a major part in creating and legitimatizing CDOs. It was in this way that they played a major role in the crisis.

        1. “Fannie and Freddie played a major part in creating and legitimatizing CDOs. It was in this way that they played a major role in the crisis.”

          Baloney…CDO’s were engineered exclusively by Wall Street firms. Do you know who Lew Ranieri is?

          Guess who he worked for… (hint: it wasn’t Fannie or Freddie).

          1. Sorry to deflate your efforts to blame the whole fiasco on one guy, but read the wiki page on MBS, and see how many times the names fannie and freddie come up.

            Fannie and Freddie might not have invented them, but they certainly legitimized them.


            “In the United States, the most common securitzation trusts are Fannie Mae and Freddie Mac, U.S. government-sponsored enterprises.”

            “In 1983 Freddie Mac issued the first collateralized mortgage obligation.[9]”

            “About $5 trillion of that is securitized or guaranteed by government sponsored enterprises (GSEs) or government agencies, the remaining $2.5 trillion pooled by private mortgage conduits”


    2. “Some of the credit must go to Fannie and Freddie and the politicians that wanted to subsidize home ownership for poorer voters.”

      Fannie and Freddie were minor players in the subprime meltdown. It was because F&F initially resisted moving into the subprime space that the Wall Street feeding frenzy gathered steam.

      Remember that F&F were originally in the business of buying up prime mortgages….ie: those that conformed to their rather strict credit standards. It was the Wall Street investment firms that built up the subprime market in the first place in order to profit in the lucrative trade of mortgage bonds (MBS- Mortgage Backed Securities and CDO- Collateralized Debt Obligations) – which eventually led to CDS- Credit Default Swaps and all kinds of exotic derivatives. These instruments were pure Wall Street designed alchemy. Government was purposely locked out of regulating this market.

      F&F got more into subprime only at the latter stages when they saw the enormous profits that the other firms were making. By that time the die had already been cast and it was too late to avert the crisis.

      The Right has so deperately wanted to lay the blame at the feet of F&F and a few Democrats (Barney Frank especially) on the banking committees and minority homeowners instead of recognizing the blatant truth that pure unadulterated and unregulated greed is the true root cause.

      1. The Washington Post reported on Fannie and Freddie back in 2004 (Report Slams Fannie Mae – U.S. Regulators Find Accounting Failures At Housing Financier):
        You mentioned Barney Frank and I must admit he did seem to encourage sub-prime mortgages:
        “”Fannie Mae and Freddie Mac have played a very useful role in helping to make housing more affordable . . . a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing.” (2003)
        Frank, also in 2003, said: “These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis…” “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
        None of this is new or startling and does not discount or excuse criminal and predatory actions by banks. However, the private actors in this crisis would have been fairly toothless without the enthusiastic backing of Congress.

        1. Yes, so Fannie and Freddie were cleaning house during the bubble, and had a very small roll in the bubble.

        2. I never claimed that F&F was blameless; they were however, just supporting actors…the lead perpetrators were the Wall Street investment banks and the credit rating agencies. They’re the ones that devised the subprime market and engineered all the toxic assets.

          Up until about 2005 or so, F&F had the strictest credit guidelines in the industry. It was the Wall Street firms (known in the industy as the secondary mortgage market) that continually pushed lending standards downward until all you needed was to fog a mirror to get a loan. In fact, these firms preferred bad borrowers; it meant larger point spreads and higher interest rates. Most subprime firms did not do prime loans on purpose for this reason.

          And trying to equate low income or minority borrowers to subprime borrowers is a false equivalency. Just because you are low income or a minority doesn’t automatically mean you a subprime borrower. Credit scores and credit history are not (entirely) dependant on income. You can be a hispanic single mom making $40,000 year and still have a 700+ credit score and otherwise be perfectly qualified to purchase a properly priced house in the appropriate market. Debt-to-income ratio, credit history, appraisal value are what determines risk. Sub-prime or Alt-A tyipically have worse credit but does not necessarily mean they are poor.

          This is what Frank and HUD meant by trying to make housing more affordable for minorities and low income. It wasn’t done at the expense of lowering lending standards – because Congress (and certainly not F&F) do not have the authority to mandate credit worthiness guidelines to lenders.

      2. “The Right has so desperately wanted to lay the blame at the feet of F&F and a few Democrats (Barney Frank especially) on the banking committees and minority homeowners instead of recognizing the blatant truth that pure unadulterated and unregulated greed is the true root cause.”

        Better than that. Remember Rick Santelli’s Tea Party “revolt” of “guys who pay off their mortgage” against proposed mortgage relief? Both groups were easily screwed, and both would have benefited from reform. But the “revolt” worked, because it turned the latter group against the former, and scared Obama and the Democrats away from forcing banks and other predatory lenders to deal with the consequences of sloppy finance.

        I’m not the only person watching events in Wisconsin closely.

      3. Many thanks to Cory for the review, and thanks to everyone for their incisive and passionate comments — and thanks especially to MikeKStar for helping put Fannie and Freddie in perspective.

        The evidence is clear that F&F played a role in creating the financial disaster, but that their role was secondary to role played by the Wall Street investment banks. The subprime MBS market was pioneered in the ’90s not by F&F but by Prudential, Lehman and other Wall Street firms.

        Here’s a coupla stats (among many others) that help tell the story:

        –Mortgages financed by Wall Street from 2001 to 2008 were 4½ times more likely to be seriously delinquent than mortgages backed by Fannie and Freddie.

        –Fannie and Freddie’s share of new mortgages fell from almost 55 percent in 2003 to less than 35 percent in 2006 — during the very years of the mortgage frenzy.

        For more data, see my recent Daily Beast piece:

        None of this should be interpreted to say that Fannie and Freddie were blameless–they bankrolled A LOT of bad loans, though at a significantly lower rate than Wall Street.

        For another perspective about Fannie — raising questions about its POST-CRASH conduct, see this piece I did about a whistleblower lawsuit alleging Fannie bungled its stewardship of the HAMP loan-mod initiative:

        All best,
        Michael Hudson

        1. Yes, your numbers are undoubtedly correct.

          What no numbers can tell is how much the conduct of the wall street banks was guided by a belief that, should the whole house of cards fall, Uncle Sam would ride to the rescue, sacks of cash in hand…

          1. As is common from people with a Conservative viewpoint, you are confusing cause vs. effect of F&F involvement in the subprime mess.

            CDO’s by themselves are neither good nor bad. They are simply financial instruments that are traded on bond markets. In fact, turning consumer mortgage debt into bonds was considered to be one of the greatest financial inventions in recent history. Of course F&F played a role in their development since they were (are) the largest single source of prime mortgages necessary to supply these bonds.

            The major difference up until about 2005 or so was F&F’s involvement in the subprime market. Again, their bread & butter was in prime mortgages – otherwise known as conforming loans. Loans from A+ borrowers who met their published credit guidelines. Remember that F&F’s purpose in life was (and still is) to provide liquidity to banks and thrifts – not to Wall Street firms.

            The subprime market grew and developed outside of F&F’s purview – by necessity because F&F wasn’t interested in buying them at the time. Wall Street investment firms became the largest source of subprime loans because they didn’t require the same credit qualifications that F&F demanded. This was done on purpose so that they could get as many loans as possible -didn’t matter how crappy they were- in order to fuel the insatiable MBS bond market. Growth was the directive- the borrower’s ability to repay the loan no longer mattered.

            Their success in developing this market eventually lead them to create CDO derivatives- synthetic CDOs where you didn’t even need to own the mortgages anymore to trade them; just options on them – and also began the buying and selling of Credit Default Swaps as hedges against risk. The ratings agencies put a big “AAA” stamp on all of this so everyone just assumed there was zero risk invovled. Wall Street successfully lobbied Congress to keep the regulators out (they argued that it was simply trades made between private parties so regulation wasn’t needed) and thus began the forming of the snowball that would eventually crash over everyone.

            Now, back to F&F – they are only quasi-governmental after all so they were also very keen to make money as well. Which eventually drew them into to the subprime market as well in order to share in the outrageous profits that the Wall Street firms were making. When they did jump in though, they jumped in big time buying up $$billions of loans in a short period of time. They did not lead the market – in fact, they only propped up the trailing end of things otherwise it’s quite possible the subprime market would’ve crashed much earlier than it did.

            So, trying to twist the facts to make F&F’s involvement the cause of rather than an effect of the subprime crash is simply disingenuous. We can also debate whether an implicit guarantee that Congress would rescue too-big-to-fail banks contributed to some of the reckless behavior but I am more inclined to believe that huge profits was far more motivating.

        2. Thanks Michael – I haven’t read your book yet but I plan to.

          As you can tell, I’ve done a lot of my own research into this subject and read many other books going back as far as Liar’s Poker and The Big Short by Michael Lewis and also more recently All the Devils are Here by McLean and Nocera.

          My personal interest in the subject stems from my own time as a subprime mortgage officer back in 1995-1997. I, myself was one of those predatory lenders that you hear about. A lot of the same abuses we are just now coming to find out about were just starting to show their heads back then and I quickly realized that my ethics and morals would be detrimental to my career.

          I know how the game was played and I saw the early signs of the reckless behavior firsthand dealing with the subprime funders who were responsible for packaging and reselling the loans I originated to the larger Wall Street firms. Back then we still had credit guidelines to follow and we really tried to avoid the truly deadbeat borrowers. But I watched lending standards degrade month by month as these funders enticed us with more incentives to keep the supply of loans rolling in.

          When the new crop of LO’s we hired turned out to be mostly used car salesmen (no joke. They really were used car salesmen!) and I watched a colleague gouge an old lady for 15 points on her refi (he personally made 15% in fees off this one loan), I decided that it wasn’t the life for me. Don’t get me wrong: I made some outrageous money for the brief time I worked there but I sleep much better at night now.

          It still amazes me that these guys were allowed to continue and flourish for a dozen more years before everything crashed.

  9. do we see a pattern here, yet?

    the problem is that our priorities are out of whack- on a societal, moral and spiritual level. now that there is no widely agreed upon “higher purpose” to life, materialism, narcissism and realpoliik are taken to their inevitable and unfortunate conclusions. as long as we base everything in our society around the pursuit of money, we will always and only harvest a bumper crop of shit.

  10. I see no hope until we finally get Bush and his billionaire Rethuglican cronies out of the White House.

    Erm… I think we’re rather running out of time. Do you think that anyone’s going to get punished during the next administration?

  11. The only money left for them (the guild of Thieves) to go after now is everyone’s personal savings / pensions / retirement funds. They’ve bilked the equity from our homes, taxed us to death at the State and Federal level, jacked gas prices and commodities and consumables through the roof, laid everyone off and shipped our jobs over seas. The only thing left for them to take is the meager funds people have tried to save for their futures. Be on the look out for some Federal usurpation of retirement benefits. It will get taken over (for our own protection) or some other reason, and that will be the last dregs of personal finance left that has been taken.

  12. “a once-in-a-century scam” — bless you for your naive optimism.

    I’m sure the guys who got rich out of S&L and subprime are busy working out their next trick right now.

  13. “The only money left for them (the guild of Thieves) to go after now is everyone’s personal savings / pensions / retirement funds.”

    In NJ, it’s been there, done that. The pols simply stopped paying into the public employees accounts to balance their budgets, and got away with it, both D&R, for years.

    It’s interesting what we teach our kids about how to live their lives. I had an interesting chat this weekend with my son’s fencing coach about sportsmanship and culture. How some people play by the spirit of the rules, and for others the game is to see how far over the line you can go and not get caught. Unfortunately our leaders and CEO’s mostly abide by the latter philosophy while the “American mythology” says we live by the former. What our kids learn if they pay attention is that rules are for suckers.

  14. How the hell do we get this message out! The only people hearing this are one’s who already know how corrupt the system is. We need to reach the ignorant drones sukcing up everything Fox News can feed them.

    THe lies being perpetrated by those in power are nauseating.

  15. I quite agree with jayarava as it is the most positive advice anyone can give. We used to advise ourselves to tout the good and ignore the bad too: if you can’t say anything good then don’t say anything at all. That does not seem to work outside of common sense. And, ultimately, that positive advice won’t be enough when strangers define a community.

    The Black Block people (the ski mask wearing hooligans that smash Mom & Pop shop windows) are the revolutionary answer. I hate to admit that. I do not like to see innocents get hurt. But until the criminals at the top are scared by something they cannot rationally control, like a Black Block, none of us are safe from the political machinations going on. And, shamefully, until Mom& Pop are awoken from their treadmill sleep, we all suffer under a mainstream media bought by command and control circus owners.

    The scary, wonderful people-power thing is no one can control it. It’s an anarchy born of righteous indignation and rests on the individual morality of little people without a shred of political connectedness to be a Madoff or a Greenspan or a POTUS. The chief culprit in all this mess is politics – government institutions, universities or corporations do not enable these criminals without it. Politics is when persuasion and influence overcome common sense for selfish ends, which by its very definition is an anti-societal agenda.

    All us nice people are held back by some form of politics, in deference to societal mores, which has become the weapon our sociopath aggressors use against us. Our emasculate feeling of powerlessness originate from our own cognitive dissonance realising that the Black Block are at once our catharsis, our salvation and our nemesis in the society in which we live today IMHO.

  16. I’m sure the book is great and all, but if you don’t have the attention span for long-form journalism, see Inside Job.

  17. Homework:

    Google up the 2002 and 2004 Republican party platform documents.

    Control-F to search for “homeownership.”

    Note the enthusiasm for homeownership, bragging that minority homeownership has increased dramatically during Bush’s first term, and support for “zero down payment mortgages” so het more minority Americans could afford homes, and also support for doing away with obstacles that kept developers for building more houses.

    Shocking, how Barney Frank was able to get that language in there.

  18. As a former banker, who left the industry and the country in 2007, out of disgust, I can honestly say that, at least in Southern California, greed had permeated every last molecule of society, from the President of my market, down to the borrowers with BMW and Mercedes signs in their eyes. Only, I dare say my former President is doing better than any of my old customers.

    Federal deregulation (allowing basically anyone to issue credit, and other banking services), and a culture of greed and hubris, are what lead to the crash. People did sign up for stupid loans, yes, and they were pushed every bit of the way to the edge of the cliff by people who had everything to gain by them jumping into the abyss. I know, because I was trained in how to push and shove them, by a major US bank. NEVER trust people who place their needs ahead of yours.

    1. No idea why you’re using the past tense. My friend just re-fied his ~$85K condo, bumping the loan from $120K to $140K. Lenders are still doing the exact same thing that caused the crash.

  19. I’d rather read Matt Taibbi’s new book. One incredulous investigative reporter with a flare for circumlocution and the dramatic is enough for me.

  20. I hate hearing events described as “once in a century” as if that implies they were something we couldn’t have forseen or prepared for. Even if something DOES only happen once a century that means there’s a probability that any given person will live to see it at least once withing their lifetime. So if you don’t build your cities, your levees, your financial institutions etc. to handle such events then odds are almost certain that either you or your children will get bitten in the a$$ for it.

  21. I’m neither stupid nor apathetic, but really, what can I, lowly taxpayer do about this immoral crap? My only power, the only leverage I have, seems to be my pitiful, almost meaningless vote. So, sure I vote and try to do so with blinders off, but is that really it? While I’m waiting for my next turn to say my piece at the ballot, big men in big suits behind big desks are raping our nation and getting even fatter for it. Boy, do I ever feel empowered.

    1. Your attitude is the easiest (and possibly the only) thing you can change. I’ve been seeing a lot of Emma Goldman’s quote lately: “If voting changed anything, they’d make it illegal”. Nothing in history has ever changed until rich people were threatened. The American “revolution” being a prime example.

      Society is the aggregate of the choices you and I and everyone else make. You influence people, and they influence you. you have all the power you could ever want, but, do you have the patience and the discipline to change anything?

      You vote with your wallet too ya know. That may well be the greatest power you have.

      1. I’m not sure how the voting with my wallet is doing. I smelled the stench of what was going on a long time ago and it made me nervous. I ended up doubling up my house payments and paid the house off in 11 years. That payoff happened just months before the banking thing imploded. I also nuked all the credit cards and only bought things I had the cash for. I moved my money out of Wells Fargo as soon as I started hearing about their scams, and moved it into a small local bank. I reluctantly got a credit card due to difficulties on vacation after someone skimmed our debit card number on vacation and I was held liable for a portion of the losses. The card is through our hayseed bank though. Finally bought a newer (2002) car with cash. It’s fun buying a $58,000 Cadillac for pennies on the dollar! For the price I paid, I don’t care it only gets 20 mpg!

  22. People who long to be rich are a prey to trial; they get trapped into all sorts of foolish and harmful ambitions which plunge people into ruin and destruction.

  23. pbs frontline did a good documentary on this called The Warning you can still watch it online.

    Most interesting is the excerpts from Greenspan testifying that his whole belief system was wrong..

    also look up Long Term Capital Investment – its collapse nearly brought down the world economies in 1998. (a hedge fund company founded by a couple of Nobel prizewinners and the cream from the investment banks. You had to invest 10million at a minimum, and leave it for 10years) They did great for the first 5 years or so but then everything went south when Russia defaulted on its loans.

    the funny thing is that if the nobel prizewinners had extended their data only back a couple more years to black tuesday in 87 they could have foreseen a lot more..

    many of the concepts learned after the 29 collapse and safeguards put in place – were dismantled Such as Glass STeagal and the deregulation of Credit default swaps by Phil (America is a nation of whiners) Gramm.

    and as much as the right wing trolls would like to put the blame on the current administration, it was Bush who turned communist by bailing out AIG. Ditto with TARP.

  24. It’s apt that they begin the narrative with the S&L bailouts.

    The S&L bailouts were a very important event. The bankers lost billions of dollars on questionable loans, but were deemed “too big to fail” and were bailed out.

    What lesson do you think they took away from this?

    Banks are profit seeking firms. Why would they go on a mad rush to GIVE MONEY AWAY, without any reasonable expectation that they would get much of it back? Is this called greed? On the part of the middle managers, yes – but on the part of the chiefs of the banks? No.

    Do you really think they were so dumb as to think these AAA CDOs that were full of garbage were good as gold? No. They are not dumb people.

    The assumption that, if everything blew up, the banks would be bailed out by the government and no one would lose their shirts was at the center of top level decision making – even if it wasn’t often stated. What a surprise! This assumption was 100% correct.

    This is the single most important role the government played in the crisis. While it does not explain all of it, to write the whole thing off as a failure of “free market capitalism,” and to hold the government blameless, is absurd.

  25. You know, while we on the non-rich Left and the non-rich Right keep bickering with each other about pretty much every bloody thing under the sun, the transfer of wealth from the non-rich to the rich continues unabated. The longer we fight about other things, the richer the rich get.

    Perhaps if we could find some way to work together to reverse this transfer, without having to pretend to agree about anything else, we’d be better off. You know? I can accept for the moment that you and I believe opposite things about abortion, gay marriage, immigration policy, climate change and so on. But if we can’t do anything to arrest the constant flow of money from us to those at the top of the food chain, we’re kind of fucked.

  26. There is no reason for that m-dash in the subtitle of this book. I see this again and again as a way to signal readers that something calamatous is coming up, but the emphasis is misplaced. Tired of this.

  27. There you librulz go again, blaming the poor CEOs. Everyone knows the teacher’s unions were behind the subprime meltdown.

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