Americans are losing their homes at a rate not seen since the Great Depression. Prices continue to fall sharply despite the reassurances of just a few years ago that all was rosy on the housing front. Many factors have been blamed for this crisis, but who is really responsible? And perhaps more importantly, why was everyone so taken by surprise?
In Chain of Blame, acclaimed financial reporters Paul Muolo and Mathew Padilla go behind the headlines to tell the inside story of why Wall Street's established investment banks bear much of the blame for the events that have cost millions of Americans their homes. They show in detail how, from 2000 to 2007, executives from Merrill Lynch, Bear Stearns, Lehman Brothers, and others financed non-bank mortgage lenders that eagerly sold their mortgages to consumers through loan brokers. Wall Street then sold bonds backed by subprime mortgages to overseas investors in Europe and Asiawhich led to financial difficulties there as well.
The authors build their compelling story around the key players in this tragedy, first and foremost being Angelo Mozilo, founder and CEO of Countrywide Financial, America's largest home mortgage lender. From Mozilo's July 2007 conference call with a group of top Wall Street equities analystswhich marks the true beginning of this fiascoto his congressional rebuke in 2008, Chain of Blame chronicles the crisis in detail, showingreaders what happened, who is responsible, and what lies ahead.
As the dust settles around these life-shattering events, the blame game has begun. But as Muolo and Padilla show with stunning clarity, there is really no single entity or individual to point the finger at. It was a mix of factors and participantsthe world's largest investment banks, homeowners, lenders, credit rating agencies and underwriters, and investorsthat precipitated the current subprime mess.
Chain of Blame ultimately reveals how human behavior and greed drove the demand, supply, and the investor appetite for these types of loansand how Wall Street was all too willing to satisfy the desires of those who should have known better.