|About the Book|
This book will remind you why Senator Elizabeth Warren said “The only way we get change is when enough people in this country say, Im mad as hell and Im fed up and Im not going to do this anymore…”. The author is a nationally recognized expertMoreThis book will remind you why Senator Elizabeth Warren said “The only way we get change is when enough people in this country say, Im mad as hell and Im fed up and Im not going to do this anymore…”. The author is a nationally recognized expert who spent more than five years studying the financial crisis, the collapse of the mortgage market and the rescue of Wall Street. What makes this book so unique is that the author takes extremely concept, arcane, recondite constructs designed by Wall Street to confuse and obfuscate-gets rid of all those big words and provides a simple explanation in plain English every intelligent reader will understand. If you are reading this, you have already demonstrated you too are an intelligent reader.In a nutshell, mortgages held in portfolios and paying income as fixed income securities to investors incurred an unexpectedly large number of defaults. The mortgage portfolios served as the foundation for a pyramid of investment and reckless speculation. When the base became unstable, the pyramid faced collapse threatening the complete collapse of global commercial credit. The U.S. taxpayer was forced to ride to the rescue essentially any paying of the bad debts of institutional investors and speculators.What very few realize is that the large financial institutions placed risky bets at what the author calls The Great Side Bet Casino using credit without the means of paying off losses. The financial crisis was triggered by mortgage failures but it became the Great Recession because of speculative side-betting, not because to many poor people got subprime loans they could not afford. AIG, which owned more than 80 insurance companies, did not fail because too many mortgages defaulted. AIG failed because management stopped selling insurance and engaged in speculative financial transactions. This book explains in plain English it all happened and how the taxpayers got stuck with the bill.The housing bubble exploded and triggered a financial run on liquidity that threatened to shut down commercial credit on a global scale. This is the story of how mortgage default in the United States on $600 billion threatened $19 trillion in global investment at the end of 2009 and almost brought world trade to a standstill. This is a story about how a sneeze became life threatening. According to CNN Money, as of 2012, more than 8 million homes have been lost to foreclosure over the past five years. As of this moment, there are still about 1 million homes in some stage of foreclosure. If one assumes that the average home had 3 residents, 24 million Americans were displaced.The government rescued the big banks and left struggling homeowners to drown. The rescue cost between 7-21 trillion dollars, most of which went to the banks. This undertaking by the federal government represented the greatest transfer of wealth from Main Street to Wall Street in American history.The author shows that the same result could have been achieved far more equitably and efficiently allowing for a more rapid recovery and at substantially less cost to taxpayers if the government had made temporary mortgage payments, upon all mortgages, on a recoverable basis, to temporarily postpone mortgage defaults buying the time required to enable banks and other financial institutions to financial reorganize.This book explains how Ben Bernanke and the Fed and Tim Geithner at Treasury made policy decisions to bail out the banks deemed “too large to fail” at the expense of taxpayers and in derogation of the well-being of the middle class. Better alternatives were readily available. More than half of these foreclosures were wrongfully conducted by companies falsely masquerading as the unpaid secured creditor for homes whose monthly mortgage payments had in fact been paid.