Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon

Tea Party Nuclear weapon ...

In Reckless Engagement, the latest book about the financial crisis, co-authors Gretchen Morgenson and Josh Rosner do what many of their high-profile counterparts failed to do: Name names for those responsible for the crisis.

"Instead of it seeming like it was an 'act of god' that couldn't have been prevented, we try to single out some of the people who were crucial at the center in the years leading up the crisis, not just when it struck," says Morgenson, a Pulitzer-prize winning journalist with The NY Times.

While familiar culprits like Alan Greenspan, Robert Rubin, Barney Frank are cited in the book, front and center is a name most Americans probably don't know: James Johnson, the former chairman and CEO of Fannie Mae.
Johnson ran Fannie for most of the 1990s and, according to Morgenson and Rosner, was instrumental in expanding the company's size and influence.

"It might seem like he left the scene well before everything started to collapse but what he ended up doing was really building the company up and really imperiling the taxpayers," Morgenson says. "[Johnson was] learning and teaching others how to manipulate Congress and get [Fannie's] regulator to be a 98-pound weakling."

In essence, Morgenson and Rosner view Johnson as the man who wrote the playbook Wall Street would follow in the late 1990s and early 2000s, when it scored a series of deregulatory victories.

Fannie Mae also showed Wall Street the path to riches via the securitization of mortgages.

"There's plenty of bad guys here," says Rosner, a partner at Graham Fisher, an independent research firm. "It is [Fannie], it is Congress, it is the regulator. It's the borrower for not taking responsibility for their financial literacy, but they were certainly taken advantage of also."

Wall Street firms and other non-bank mortgage lenders were certainly among those taking advantage of borrowers and the national obsession with home ownership in the 1990s and early 2000s.

"There was a symbiotic relationship" between Wall Street and the GSEs, Rosner says. "Fannie and Freddie were the largest buyers of...subprime securities the street was bundling, packaging and selling themselves."

While the extent of Fannie's and Freddie's role in the crisis is debatable -- no one forced Bear Stearns and Lehman Brothers to leverage themselves 50 to 1, or AIG to write $3 trillion wroth of credit default swaps — there's no debating the huge costs taxpayers have incurred to rescue the GSEs.

Recalling that Congress "did not deal with [Fannie and Freddie] at all in Dodd-Frank," Morgenson says "job one this year" should be figuring out how to deal with Fannie and Freddie.

But Morgenson has little confidence there will be an intelligent resolution of the situation anytime soon: "It's unfortunate [but] I think we are still very, very far from having an honest discussion about these issues," she says.

BUT: They glosses over the CRA 1977 and what ACORN had to do with it all.

The Meltdown: Democrats In There Own Words

Democrats knew, the media knew, the public was unaware of the ticking time bomb in the mortgage business.




Timeline shows Bush, McCain warning Dems of financial and housing crisis; meltdown




Democrats in their own words Covering up the Fannie Mae, Freddie Mac Scam that caused our Economic Crisis.

At a 2004 hearing see Democrat after Democrat covering up and attacking the regulations to protect Fannie Mae and Freddie Mac (their Cash Cows) that are now destroying our economy because the Democrats let them cheat.

Corrupt Democrats

Did you know that these Government Sponsored Enterprises, Freddie Mac and Fannie Mae, did that ??

Even the reliably-liberal BBC says that deregulation wasn’t the cause of the financial crisis. Other liberal journalists like Washington Post columnist Sebastian Mallaby have made the same point. The government-sponsored mortgage giants Fannie Mae and Freddie Mac played a big role in spawning the mortgage crisis. Lawmakers like Rep. Barney Frank blocked crucial reforms that might have reined them in. Now, Frank is trying to change the subject, claiming that critics of Fannie and Freddie are, you guessed it, racist. Fannie Mae also engaged in fraud and political bullying of uncooperative Banks.

Who Done It

This clip from Special Report with Brit Hume tonight shows exactly why we're in the mess we're in right now with Fannie Mae and Freddie Mac. In 2005, Greenspan warned us that F&F were heading off a cliff, and the Republicans sponsored legislation to force regulation on both agencies. Who voted and how? All Republicans voted for the regulation, and ALL Democrats voted against it. Including the no More..w-chairman of the oversight committee that oversees that, Chris Dodd.

It should be mentioned that Dodd was the highest paid recipient of Fannie Mae contributions, so is this truly a surprise? What a bunch of hypocrites the Democrats are - and now they are all trying to blame Bush and/or the Republicans

It's a ponsie scheme. Just wait until Social Security goes bust.

Who Done It ??

A stunning example of the incredible disconnect between the mainstream media and the blogosphere is this video of the interim Fannie Mae CEO, Daniel Mudd, addressing the Congressional Black Caucus, including Barack Obama, at their swearing-in ceremony in 2005. Although this video is spreading quickly in the blogosphere, you have yet to see or hear anything about it in the MSM. As you can see in the video, Mudd talks about the problems of Fannie Mae yet that didn't keep Obama and other Democrats from taking large contributions from that organization or doing anything to try to fix it.

Here is a transcript of CEO Mudd

Good morning members of the Congressional Black Caucus. I am humbled to come here today to reaffirm the friendship and partnership between Fannie Mae and the Congressional Black Caucus. Fannie Mae is determined to keep tearing down the barriers to deliver on the American dream and that means we need to work together with the CBC. So many of you have been good friends to Fannie Mae and our mission. You've been friends through thick and thin. We have indeed come upon a difficult time for Fannie Mae. There is much to be done inside my company and I humbly ask you to help us and to help me. If there are areas where we are missing. If there are areas where we could do better, we'd like to hear it from our friends and I'd be so bold as to say our family first.

It is true that Fannie Mae has lent more money to more minorities and more underserved individuals than any single company in history.

We will work hard inside our company to resolve the serious matters before us to put our house in order and to forge a new future. And all the while you will see Fannie Mae reaching out and listening to the caucus. Over a century of endeavor you have earned the reputation as the conscience of Congress. In many ways I want to tell you today you are also the conscience of Fannie Mae. Keeping us on course to serve those who need serving the most.

Read the rest, this was borrowed from Newsbusters.