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. Read the rest