Bruce Bialosky

There have been many attempts – from every part of the political spectrum – to assign blame for the financial turmoil of late 2008. Judging from the recent New York protests and the reaction to the introduction of monthly fees for debit cards, there are still many people angry with bankers. Whether that blame is justified is addressed in a new book, by Gretchen Morgenson and Joshua Rosner, entitled Reckless Endangerment.

The economic downturn has affected almost every American, and, as you might expect, has inspired several books on the subject. Selecting the best one can be challenging, but, for my money, none is finer than Reckless Endangerment. In a little over 300 very readable pages, the authors explain exactly what happened and identify the people who really warrant responsibility for this disaster. The book is so clear and informative that when I was finished , I was puzzled how to synthesize so much valuable information into a single column – it truly is chock full of fascinating information, devious characters, and compelling events. When I spoke with Ms. Morgenson, she indicated that the reason they wrote the book was to set the record straight – and, hopefully, to prevent this calamity from happening again. Whether that can be done remains a mystery, as the actual reasons and the real culprits that caused these ill-fated events are barely known as evidenced by the protests.

Many pages are spent defining the role of James A. Johnson, the former head of FNMA (Fannie Mae) who disappeared from the company when his handiwork brought our country to the brink. Most people know him only as the temporary head of Barack Obama’s Vice-Presidential search committee, from which he was canned because of his shenanigans at Fannie Mae and because of his sweetheart loans received from Countrywide’s Angelo Mozilo for his multiple mansions. He subsequently slid back into obscurity, earning big bucks behind the scenes.

Mr. Johnson, a Democratic political appointee, revamped Fannie Mae (with Freddie Mac following right behind) from a sleepy quasi-governmental entity (called in Washington-speak a GSE – government sponsored entity) into a huge funder of loans that lined his pockets, along with those of his cronies. The book describes how his crew manipulated results to maximize bonuses for Johnson, his successor and right-hand man (Franklin Raines), and the rest of the people who were setting us up for a big fall. Johnson also established an expensive lobbying machine that immediately squelched any attempts to rein in the twin entities.


Bruce Bialosky

Bruce Bialosky is the founder of the Republican Jewish Coalition of California and a former Presidential appointee. Follow him on Twitter @brucebialosky or contact him at bruce@bialosky.biz.


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