TIME: 25 People to Blame for the Financial Crisis

1. Angelo Mozilo: founded Countrywide which egitimized the notion that practically any adult could handle a big fat mortgage

2. Phil Gramm: As chairman of the Senate Banking Committee from 1995 through 2000, Gramm was Washington's most prominent and outspoken champion of financial deregulation. He played a leading role in writing and pushing through Congress the 1999 repeal of the Depression-era Glass-Steagall Act, which separated commercial banks from Wall Street. He also inserted a key provision into the 2000 Commodity Futures Modernization Act that exempted over-the-counter derivatives like credit-default swaps from regulation by the Commodity Futures Trading Commission. Credit-default swaps took down AIG, which has cost the U.S. $150 billion thus far.

3. Alan Greenspan: the super-low interest rates Greenspan brought in the early 2000s and his long-standing disdain for regulation are now held up as leading causes of the mortgage crisis.

4. Chris Cox: SEC had plenty of power to go after big investment banks like Lehman Brothers and Merrill Lynch for better disclosure, but it chose not to. Cox oversaw the dwindling SEC staff and a sharp drop in action against some traders.

5. American Consumers: Household debt in the U.S. — the money we owe as individuals — zoomed to more than 130% of income in 2007, up from about 60% in 1982. We enjoyed living beyond our means — no wonder we wanted to believe it would never end.

6. Hank Paulson: The three main gripes against Paulson are that he was late to the party in battling the financial crisis, letting Lehman Brothers fail was a big mistake and the big bailout bill he pushed through Congress has been a wasteful mess.

7. Joe Cassano: a founding member of AIG's financial-products unit.. with its credit-default swaps (CDS) that urned out to be at the heart of AIG's downfall and subsequent taxpayer rescue. So far, the U.S. government has invested and lent $150 billion to keep AIG afloat.

8. Ian McCarthy: As CEO of Beazer Homes since 1994, with its aggressive sales tactics, including lying about borrowers' qualifications to help them get loans.

9. Frank Raines: presided over Fannie Mae, left in 2004 with the company embroiled in an accounting scandal just as it was beginning to make big investments in subprime mortgage securities that would later sour.

10. Kathleen Corbet: by slapping AAA seals of approval on large portions of even the riskiest pools of loans, rating agencies helped lure investors into loading on collateralized debt obligations (CDOs) that are now unsellable. Corbet ran the largest agency, Standard & Poor's, during much of this decade.

11. Dick Fuld: steered Lehman deep into the business of subprime mortgages, bankrolling lenders across the country that were making convoluted loans to questionable borrowers.

12. Marion and Herb Sandler: n the early 1980s, the Sandlers' World Savings Bank became the first to sell a tricky home loan called the option ARM. And they pushed the mortgage, which offered several ways to back-load your loan and thereby reduce your early payments, with increasing zeal and misleading advertisements over the next two decades.

13. Bill Clinton: signed into law Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act, also rewriting the Community Reinvestment Act, which put added pressure on banks to lend in low-income neighborhoods. It is the subject of heated political and scholarly debate whether any of these moves are to blame for our troubles, but they certainly played a role in creating a permissive lending environment.

14. George W. Bush: From the start, Bush embraced a governing philosophy of deregulation. That trickled down to federal oversight agencies, which in turn eased off on banks and mortgage brokers. When SEC head William Donaldson tried to boost regulation of mutual and hedge funds, he was blocked by Bush's advisers at the White House as well as other powerful Republicans and quit. Plus, let's face it, the meltdown happened on Bush's watch.

15. Stan O'Neal: Merrill Lynch's CEO for nearly six years, ending in 2007, he guided the firm into the lucrative game of creating collateralized debt obligations (CDOs), which were largely made of subprime mortgage bonds.

16. Wen Jiabao: If cheap credit was the crack cocaine of this financial crisis — and it was — then China was one of its primary dealers. China is now the largest creditor to the U.S. government, holding an estimated $1.7 trillion in dollar-denominated debt.

17. David Lereah: chief economist at the National Association of Realtors, regularly trumpeted the infallibility of housing as an investment in interviews

18. John Devaney: By buying up mortgage loans, Devaney and other hedge-fund managers made it profitable for lenders to make questionable loans and then sell them off. In early 2007, talking about option ARM mortgages, he told Money, "The consumer has to be an idiot to take on one of those loans, but it has been one of our best-performing investments."

19. Bernie Madoff: His alleged Ponzi scheme could inflict $50 billion in losses on society types, retirees and nonprofits.

20. Lew Ranieri: In the late 1970s, he coined the term securitization to name a tidy bit of financial alchemy in which home loans were packaged together by Wall Street firms and sold to institutional investors.

21. Burton Jablin: The programming czar at Scripps Networks, which owns HGTV and other lifestyle channels, helped inflate the real estate bubble by teaching viewers how to extract value from their homes.

22. Fred Goodwin: former boss of Royal Bank of Scotland (RBS). More than 20 takeovers helped him transform RBS into a world beater after he assumed control in 2000 and then $100 billion takeover of Dutch rival ABN Amro, stretching RBS's capital reserves to the limit. The result: the British government last fall pumped $30 billion into the bank, which expects 2008 losses to be the biggest in U.K. corporate history.

23. Sandy Weill: he cobbled together the first great financial supermarket, Citigroup, persistent lobbying shattered Glass-Steagall, the law that limited the investing risks banks could take. Rivals followed Citi. The swollen banks are now one of the country's major economic problems.

24. David Oddsson: In his two decades as Iceland's Prime Minister and then as central-bank governor, Oddsson made his tiny country an experiment in free-market economics by privatizing three main banks. The three banks, which were massively leveraged, are in receivership, GDP could drop 10% this year, and the IMF has stepped in after the currency lost more than half its value.

25. Jimmy Cayne: CEO of Bear Stearns Bear held nearly $40 billion in mortgage bonds that were essentially worthless.



http://www.time.com/time/specials/packages/article/0,28804,1877351_1877350,00.html

(and you can vote on each one innocent or guilty)

My question to them is: Do any of them seriously believe if I had been president, and my economic team had been in place the last eight years, that this would be happening today? I think they know the answer to that: No."

Clinton did allow that his administration could have done more to "set in motion some more formal regulation of the derivatives market," but he also vehemently denied that the repeal of Glass-Steagall or his administration's housing policies helped cause the financial crisis.

http://www.time.com/time/nation/article/0,8599,1879774,00.html

I keed...I keed, I love the Italians.

:rofl:

Cox is a RW ex-Congressman from Orange County. He could have regulated the crap out of the lenders, the hedge funds, the banks. All he had to do (and I'm indebted to Sen. Barry Sanders for pointing this out) was to issue orders prohibiting hedge fund overreaching.

And Big Bill, whom I dearly love, made a mistake in repealing Glass-Steagall. Would that it was not true.

from this list, which is published by the right-leaning Time magazine. Maybe he's not a one-man economic wrecking crew like some would have us believe :think:

I thought I read somewhere that Barney Franks had a Lover a few years back that worked at Fannie Mae. I often wonder why he wanted Fannie to back all those loans for people who couldn't afford a house.

If Anyone is trying to put the blame for all this financial misery that is just starting to hit this country/world on 25 people..They need to have thier typewritters taken away and fingers broken. There are several hundred people in Congress alone who are responsible for this mess. Not to mention the folks at the SEC, FED,DTC, FINRA, Brokers, Reporters, Bankers, Insurers, Rating Agencies, Mortgage lenders, etc ..etc..


But the public can't keep focused on that many people and the feds sure as hell arn't gonna investigate themselves.. so just put all the blame on a couple dozen folks and then change the medias attention to something else and get the public mob angry at the other party or something..

who all get to ripen in their own sewer of debt.

I don't owe anyone anything. Best thing I ever did for me and my family.

They're all responsible for this mess

harp about investing on a daily, no hourly basis...

All those day traders have had an effect on the market that has magnifies downturns.

I don't agree. The financial markets could have withstood the subprime loan disaster - and there's no proof that the Community Reinvestment Act contributed.

But that's not all it was. What banks did multiplied the bad housing debts beyond what financial markets could deal with. That's what built the coffin and added the nails. Greenspan played a very important role in looking the other way - expecting markets to self regulate, essentially allowing the top national banks to be "on their honor" (2004). HAH! There was no honor.

From what I read, there's good reason to believe there wasn't full disclosures made on a number of the ARMS loans. They trapped a lot of professional investors who weren't aware of everything.

This is why investigations need to be held - that way there's a national consensus of what happened. Without that, significant reforms can't be made and it'll happen again. Soon and worse.

Yes, it was Greenspan and the Bush administration who did not think that all this frenzy marketing of mortgages could be self regulated and self contained. "60 Minutes" last Sunday covered some of this, including mentioning the Sandlers whom I have never heard until a day earlier when we got the TIME.

And, welcome to DU.

:toast:

Barry Ritholtz tells us how he really feels about NAR chief economist David Lereah.

Regular readers of this blog know I think former NAR chief economist David Lereah is a lying jackass, a festering hemorrhoid on the fields of both economics and real estate. But he was merely a lying cheerleader. As much as I detest his syphilitic-addled unfunctional brain, I cannot blame him for what happened.

http://www.ritholtz.com/blog/2009/02/25-people-to-blame-for-the-financial-crisis/

wtf?

rating agencies, con arists, etc.

Who spent more than he made, borrowed more than he could afford, believed housing prices only go in one direction, fibbed on loan applications, accepted crap loans that he knew could be reset and jack up his payments, elected politicians who ignored (and promoted) the whole house of cards, and generally avoided all reality along the way.

Don't get me wrong. I think the bankers and the lenders and the Wall Street fat cats and the politicians also did their level best to screw things up. But the American consumer shares a BIG part of the blame...but will never own up to it.

Thanks for pointing out my lack of reading skills. :-)

the difference is that I read the whole story, copied and pasted and even saw the photo spread of the "line up."

:hi: