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Book Review: Reckless Endangerment: A Wall Street-Washington Incestuous Legacy and A MUST READ

Posted by Larry Doyle on January 21, 2012 3:33 PM |

Years from now when people study what led to the greatest economic crisis since the Great Depression, they will have plenty of material to review. This is good.

Unlike our current era in which we clearly failed to learn from past crises, I hope future generations will not only study what led to our current crisis but then actually do something so it is not repeated. We have yet to begin that process.

On that note, let’s start right now to save our collective future. How so?

If we are to save our future, then let’s be brutally honest about our past and our present

As a first step towards our future, Sense on Cents endorses and STRONGLY recommends that every American read Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon by Gretchen Morgenson and Josh Rosner.

I loved this book for many reasons, but primarily because it took a wide-angled view of our political and financial past and more so because it names names. Like who? Those individuals most intimately involved and engaged in what we now know and define as the Wall Street-Washington Incest. (Please save, review, and share this Sense on Cents link of ~150 commentaries)

Morgenson and Rosner do fabulous work in highlighting the manner in which then Fannie Mae CEOs James Johnson and Franklin Raines curried favor with their cronies on both sides of Capitol Hill while bullying and intimidating those who dared send warning signals about growing risks within that organization. One does not need to read too hard to acknowledge that business practices utilized by Johnson and Raines and others within the mortgage origination industry were decidedly similar to those utilized within organized activities.

Was there fraud and corruption involved as well? Any rational layman would certainly maintain that there was rampant fraud, cooked books, and widespread corruption.

Where were the regulators and ratings agencies to police these activities and protect the American public? All too often those charged with protecting investors, taxpayers, and the American public at large were shown either doing the bidding or looking to profit along with the industry. The pungent odor of the incest is pervasive.

What is one of the greatest travesties of our crisis? As Morgenson and Rosner eloquently point out, there has been very little to no accountability for those whom were involved in practices and policies which have truly brought our country to its knees. While there has been little meaningful accountability, I do believe that Reckless Endangerment is both a public service and the ultimate legacy for a large number of individuals engaged in truly “incestuous” behavior.

Read Reckless Endangerment which identifies and indicts James Johnson, Franklin Raines and many others deeply embedded in the nefarious Wall Street-Washington Incest.

Having worked within this sector of Wall Street and now having written extensively on these topics here at Sense on Cents, I commend Morgenson and Rosner for a fabulous literary work. I could not put it down.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.

 

  • Rick

    just read it….she did nice work…hates the investment banks though, and i don’t know if a blanket indictment is warranted….places like Wertheim, my original alma mater, were fairly upright and ought not to have been consumed by the evil doers….

  • Rob

    Now on my “to read” list.

  • LD

    In regard to fraud within the mortgage origination industry, please see this post from Barry Ritholz at The Big Picture.

    Whistleblower Chantelle Nickson-Clark Outlines Allegations of Fraud at EMC

    – the “vast majority of the time the loans that were rejected [byWatterson] were still put in the pool and sold.”

  • coe

    LD – Having done a stint at the GSEs in the 70s (i.e. pre-stock/pre-outsized compensation packages/pre-systemic over-leverage), I find myself drawn to these chronicles like a moth to a flame…what Johnson and Raines perpetrated in the name of “mortgage policy” and with the air cover provided by agency debt spreads is absolutely criminal…throw in Tim Howard – then CFO of Fannie into the mix…I may be a bit off, but aren’t all of these financial geniuses and pillars of propriety part of the Obama economic and finance advisory team? What a travesty! They all should be boiled in oil. And what is worse, they don’t appear to believe they did anything wrong…fraud in mortgage origination, illegal servicing practices, false reps in securitizations, incentives designed to line their pockets at the expense of taxpayers…for pete’s sake, just when did a businessman become a rock star…are they really adding so much shareholder value? Here’s another pet peeve of mine – JPM retrenches on Jamie dimon’s salary and bonus for this past year to something like $15MM…meanwhile, JPM fires dozens of employees – regular folks who have families and need jobs and health benefits…sadly, would it not make sense for Jamie, who has more money than his family will need for generations, to volunteer to pass on his pay to keep some 100 people employed during these tough times? What is wrong with our leadership? What is wrong with our government? What is wrong with the media? Shame on the whole lot of blackguards…I’m sick to my stomach over these issues, LD

  • Peter S.

    “for pete’s sake, just when did a businessman become a rock star”

    Great observation.

  • Barry

    Thanks, Larry, am finishing this book currently.

    Incest, yes, but also special interest money/lobbying and congressional/regulatory incompetence.

    Solution – TERM LIMITS!!!!

    • Shervyn

      Incest, yes, but also special interest money/lobbying and congressional/regulatory incompetence.

      Term limits don’t work. All they do is make the un-elected and unaccountable staffer more powerful than ever. The only solution is a smaller government with a smaller remit so that there is less scope for corruption.






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