Although this 500+ page book could be called “Too Big To Read,” Andrew Ross Sorkin’s book, Too Big To Fail actually quite the page-turner and I completed it in a 3 day marathon session.
There’s obviously a HUGE amount of information here and, though you know my political leanings, I am by no means giving Wall St. a pass at all for their contribution to the mess, there’s one line, buried on page 184 which, it seems to me, is the pebble that kicked off the avalanche.
“In 1999, under pressure from the Clinton administration, Fannie and Freddie began underwriting subprime mortgages.”
A worthwhile goal…increasing home ownership in and of itself, but policy goals that confront sound business judgment have a cost.
And, either way, we as taxpayers, pay.
Look, Wall St. will take ANY opportunity to make money, so handing them the subprime business was just a disaster waiting to happen.
What’s also interesting in this book is how the vicitmization of American continues..on both sides.
On the one hand, you have people who had these subprime mortgages “foisted” on them (my gut says…sure, it happened, but that most of the time people knew what they were doing) and then, my personal favorites, the CEOs of Lehman Brothers and Morgan Stanley complaining about “short-sellers” who were destroying their stock value.
Uh, so it’s ok to short stocks when it’s other people’s stocks, but not your own?
Gimme a break.
Lastly, I’m not sure on my read on Hank Paulson after all this.
Michael Moore portrayed him as a villain, but I kind of feel like after reading the accounts of his vomiting and dry heaving from staying up all night that he genuinely believed that the welfare of the country was at stake and it wasn’t about helping his friends.
Maybe I’m wrong and Sorkin has his rep and sources to protect, but that’s my take.
Anyway, while I still don’t fully understand what a credit default swap is, I do feel like I have a better idea of what happened.
What isn’t comforting, however, is that I feel like we haven’t addressed the systemic issues and we may have band-aids on a big wound.
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