Chain of Blame in the Mortgage and Credit Crisis

The mortgage and credit crisis was a perfect storm of bad decisions and flawed systems that led to widespread financial devastation. Subprime mortgage lenders like Countrywide Financial and New Century Financial issued millions of loans to borrowers who couldn't afford them.

These lenders then packaged and sold these loans as securities to investors, often with inadequate disclosure of the risks involved. This created a massive bubble in the housing market, which eventually burst in 2007.

The collapse of the housing market led to a sharp decline in housing prices, causing millions of homeowners to owe more on their mortgages than their homes were worth. This led to a wave of foreclosures, which further depressed housing prices and created a vicious cycle of economic decline.

The credit rating agencies, such as Moody's and Standard & Poor's, failed to properly assess the risks of these mortgage-backed securities, giving them high ratings that made them seem safer than they actually were.

Consider reading: Equity Market Risk Premium

The subprime crisis was a complex disaster that involved many players. Fifty lenders a month were going bust in the summer of 2007.

The crisis wasn't just caused by unregulated loan brokers and con artists, but also by investment bankers and home loan institutions that were traditionally perceived as trustworthy.

Chain of Blame, a book by Paul Muolo and Mathew Padilla, chronicles this disaster and reveals the truth behind how it occurred. The authors focus on the players who participated in this flawed fiasco.

The world's largest investment banks, homeowners, lenders, credit rating agencies, underwriters, and investors all became entangled in the subprime mess. This entanglement led to a crisis of epic proportions.

Here's a breakdown of the key players involved in the subprime crisis:

The SEC's charging of Angelo Mozilo, the former CEO of Countrywide Financial, is just one example of the consequences of the subprime crisis.

The subprime empire on Wall Street came crashing down in the summer of 2007, with an average of 50 lenders going bust each month. This catastrophic event involved not just unregulated loan brokers and con artists, but also reputable investment bankers and home loan institutions.

The crisis was a result of a fundamentally flawed system, and authors Paul Muolo and Mathew Padilla reveal the truth behind how it occurred in their book Chain of Blame. They focus on the players who participated in this fiasco, exposing their actions and decisions during this critical time.

The SEC charged Angelo Mozilo, a key figure in the crisis, which is just one of the latest revelations discussed in Chain of Blame. This book is a compelling story of greed and avarice, where many are responsible, but few are willing to admit their mistakes.

Here are the key players involved in the subprime mess:

These players became entangled in the subprime mess, contributing to the crisis. The book Chain of Blame chronicles the crisis in detail, showing what happened and what lies ahead.

The crisis that unfolded in 2007 was a complex web of blame, with multiple parties contributing to the disaster. Fifty lenders a month were going bust, and the people responsible included not just unregulated loan brokers and con artists, but also investment bankers and home loan institutions.

The Federal Reserve's decision to lower short-term interest rates to 1 percent in June 2003 made it cheap for subprime lenders to borrow money and lend it out. By late 2003, one-quarter of all new mortgages were "subprime", meaning not up to traditional standards.

The authors of "Chain of Blame", Paul Muolo and Mathew Padilla, point fingers at various parties, including borrowers who lied to get bigger houses, brokers who encouraged them to lie, and Wall Street investment bankers who designed and traded the liar loans. They also blame the rating agency that said liar-loan bonds were safe and the federal bank regulators who failed to act.

The book profiles company founders like Angelo Mozilo of Countrywide Financial and Roland Arnall of Long Beach Mortgage, as well as financial inventors like Lewie Ranieri, who created the financial instrument that spread the crisis to Europe and Japan. The authors also tell the story of poisonous products like "liar loans", where borrowers invented high salaries to get approved for mortgages.

Here's a breakdown of the parties involved in the crisis, as identified by the authors:

The crisis ultimately led to the downfall of many companies, leaving millions of Americans with ever-more-fanciful kinds of debt, treating their homes like ATMs.