Saturday, October 04, 2008

Updated - NYT Series - The Reckoning

Better late than never, I guess. The New York Times has a series of articles out exploring the causes of the financial crisis - The Reckoning - which sounds like a bad slasher flick to me and has comparable levels of anti-social, risky and reprehensible behavior. The three I have read:
  • Behind Insurer’s Crisis, Blind Eye to a Web of Risk on AIG. This one delves int the heart of the shadow banking system Nouriel Roubini keesp discussing. To me, the key here is that Goldman Sachs was intimately involved with both the financial wheelings and dealing of AIG and with crafting the government response to the crisis that ensued, but refuses to come clean about its level of involvement.
    AIG Meltdown Graphic
  • Agency’s ’04 Rule Let Banks Pile Up New Debt on the deliberate acts by the SEC and the Treasury to refuse to impose the slightest bit of regulation or oversight. Cox and Paulson have a lot to answer for. This article is the smoking gun as to why things got out of hand. Anyone who wants to know where the primary blame (there's plenty to go around) for the financial meltdown belongs can just read this article.
    Narrated slideshow by Stephen Labaton.
  • Pressured to Take On Risk, Fannie Hit a Tipping Point on Fannie Mae (FNM). The slant on the article is not so good, but it does make clear that FNM has had a series of bad managers and is having two different crises conflated into one. There is the Raines/Howard problems into 2004, with accounting malfeasance and internal errors brought about by a grow-at-all-costs attitude. Then there are the Daniel Mudd problems from 2004 - 2008, when the housing bubble finished its expansion and FNM was caught between too many masters - infestors, the mortage industry and Congress.
    Graph of Fannie Mae's market share through the bubble.

These articles, particularly the first two, are must reads to get an idea of what the Bush administration allowed the financial sector to get away with since 2000 and especially since 2004 (when reading the articles, make careful note of events across the industry in that year, when it was not certain Bush would win reelection.). Hanky Panky Paulson has a lot to answer for, given that he lobbied for the deregulation when he represented Goldman Sachs and the oversaw the non-enforcement of what little regulation was left when he became Treasury Secretary.

As Bill Clinton said at the Democratic Convention, we are now seeing the effect of the Right getting to run things exactly as they wish - and look at the mess they've made.


PS - I adjusted the links to make the articles display in a single page format and have linked in some key support information. Be sure to check out the multimedia goodies in the left hand insert areas in all three articles. There's a lot of information buried in the supporting data.


Shainzona said...

INFESTORS! Wonderful!

And boy, do those infestors know how to do the Hanky Panky.

Anglachel said...

I got "infestors" from Corrente.


Unknown said...

Too damn bad the 'Democrat' Party is composed of co-conspirators and moral cowards, read Obama, and thus has nothing to say about the Republican policies which have come close to destroying the country.

Out here in CA we have assorted crooks, Don Perata, and gutless pols, Karen Bass, who can't seem to stand up and point out that the reason our society, at every level, is in such dire straits is that the citizenry has gone along with the ReThug Kool Aide fest for the last 40 years.

At least Bill Clinton has attempted to point out this quite obvious fact.

The big split is coming in the Dem Party between those the corrupt and immoral as represented by Pelosi and those who see that the party, the citizenry, the nation must change it's agenda.

It's change or die folks. The Big Shitpile is nothing compared to The Olduvai Gorge.

Get off the couch and start working to take the Dem Party back from the scum who are running it now or it might just prove to be... late.

YAB said...

This American Life has an excellent hour-long program on credit default swaps.

No political rants, just, as they say, the facts. Superbly done.

Anonymous said...

The AIG example is a great example of company's demand and Paulson responding in a totally irrational way.

Paulson never looked at AIG books; he never asked why didn't you declared a problem when they needed only $50 Billion.

In my view, AIG is swindling government money and Paulson collaborating with them probably knowingly.

My knowledge of finances and the economy is non existent, but the AIG maneuver is almost funny.