Reckless Endangerment

Mona Charen reviews a book written by a New York Times reporter, Gretchen Morgenson, and a financial analyst, Joshua Rosner titled Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon. The authors explain how the financial collapse of 2008 came about, and though there's lots of blame to go around, the lion's share falls squarely on the shoulders of, well, let's let Charen tell it:

In Reckless Endangerment, Morgenson and Rosner offer considerable censure for reckless bankers, lax rating agencies, captured regulators and unscrupulous businessmen. But the greatest responsibility for the collapse of the housing market and the near "Armageddon" of the American economy belongs to Fannie Mae and Freddie Mac and to the politicians who created and protected them.

With a couple of prominent exceptions, the politicians were Democrats claiming to do good for the poor. Along the way, they enriched themselves and their friends, stuffed their campaign coffers, and resisted all attempts to enforce market discipline. When the inevitable collapse arrived, the entire economy suffered, but no one more than the poor.

Jim Johnson, adviser to Walter Mondale and John Kerry, amassed a personal fortune estimated at $100 million during his nine years as CEO of Fannie Mae. "Under Johnson," Morgenson and Rosner write, "Fannie Mae led the way in encouraging loose lending practices among the banks whose loans the company bought. A Pied Piper of the financial sector, Johnson led both the private and public sectors down a path that led directly to the credit crisis of 2008."

Fannie Mae lied about its profits, intimidated adversaries, bought off members of Congress with lavish contributions, hired (and thereby co-opted) academics, purchased political ads (through its foundation) and stacked congressional hearings with friendly bankers, community activists and advocacy groups (including ACORN). Fannie Mae also hired the friends and relations of key members of Congress (including Rep. Barney Frank's partner).

There's more in Charen's column. Reckless Endangerment sounds like a book that every voter interested in knowing why the economy is suffering its current woes should read. I certainly plan to.