Most explanations of the financial calamity have been indecipherable to people not fluent in the language of "credit default swaps" and "collateralized debt obligations."
The calamity has lacked human faces. No more.Or ...look to the left. So to speak.
Put on asbestos mittens and pick up "Reckless Endangerment," the scalding new book by Gretchen Morgenson, a New York Times columnist, and Joshua Rosner, a housing finance expert. They will introduce you to James A. Johnson, an emblem of the administrative state that liberals admire.
Government having decided to dictate behavior that markets discouraged, Lenders promoted reckless borrowing, knowing they could offÂload risk to purchasers of bundled loans, and especially to Fannie Mae. In 1994, subprime lending was $40 billion. In 1995, almost one in five mortgages was subprime. Four years later such lending totaled $160 billion.
Shocking! The government's hope to change to universal home ownership started the housing collapse!
Back in those days it was assumed that the money-well would never dry up...
"Reckless Endangerment" is a study of contemporary Washington, where showing "compassion" with other people's money pays off in the currency of political power, and currency.
That's the problem with Washington - it's always "other people's money."
Although Johnson left Fannie Mae years before his handiwork helped produce the 2008 bonfire of wealth, he may be more responsible for the debacle and its still-mounting devastations -- of families, endowments, etc. -- than any other individual. If so, he may be more culpable for the peacetime destruction of more wealth than any individual in history.
Morgenson and Rosner report. You decide.