Book Review: Reckless Endangerment
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Is the love of money in fact the root of all evil? Perhaps. It was overwhelming greed and overreaching ambition that led to one of the greatest economic downturns of our time, the 2008 Recession, also dubbed the "Great Recession".
This recent financial crisis resulted in a mass demand for literature which details the facts surrounding the financial meltdown. Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led To Economic Armageddon is the best book on the roles of major mortgage companies, Fannie Mae and Freddie Mac, who intensified the housing boom through the pursuit of loans and agressive lobbying.
The prime movers in this operated under the "affordable housing" that originated from the Clinton administration. What appeared to serve the public good ended up serving the greedy and corrupt. The "Golden Key" was the implicit guarantee of the Federal Government.
Financial reports were obscured or hidden so the top players could pretend these practices existed to help deserving home buyers. Shockingly, the investment banks employed due diligence firms which gave them timely warnings on the deterioration of the mortgage pools they were selling, all ignored in the name of greed. Unfortunately, the public may never know whether those involved realized the full extent of the disaster they were creating.
Authors Grethen Morgenson and Joshua Rosner also delve into the practices of other major players responsible for the Great Recession, including executives of Countrywide Financial, Goldman Sachs, and the Federal Reserve. These agencies played a blind eye to prudent lending practices and used the political system coupled with their knowledge of Wall Street to vastly expand their agencies and make personal fortunes.
Ultimately, many of the top Fannie Mae executives ended up in some of the most senior goverment jobs. My career advice to young people is shoot for the top; there you are protected, and can move on to good situations. As Senator Byron Dorgan concluded in a speech to the Senate in 1999,"I think in 10 years time we will look back and say, 'We should not have done that,' because we forgot the lessons of the past." These lessons [which lead to the Recession] will be remembered for a while, but eventually be forgotten.
**Editorial Note: Author Gretchen Morgenson will speak at NYSSA in October.