Chain of Blame: How Wall Street Caused the Mortgage and by Paul Muolo, Mathew Padilla

By Paul Muolo, Mathew Padilla

An up to date and revised examine the reality in the back of America's housing and loan bubbles

In the summer season of 2007, the subprime empire that Wall highway had outfitted all got here crashing down. On usual, fifty creditors a month have been going bust-and the folks chargeable for the predicament integrated not only unregulated mortgage agents and con artists, but additionally funding bankers and residential personal loan associations normally perceived as thoroughly trustworthy.
Chain of Blame chronicles this very good catastrophe, with a particular concentrate on the avid gamers who participated in the sort of essentially incorrect fiasco. In it, authors Paul Muolo and Mathew Padilla display the reality in the back of how this drawback happened, together with what members and associations have been doing in this severe time, and who's finally chargeable for what happened.* Discusses the newest revelations within the housing and loan situation, together with the SEC's charging of Angelo Mozilo
* well-regarded monetary reporters conversant in the occasions that experience taken position chronicle the quandary intimately, displaying what occurred in addition to what lies ahead
* Discusses how the world's biggest funding banks, owners, creditors, credit standing enterprises, underwriters, and traders all grew to become entangled within the subprime mess

Intriguing and informative, Chain of Blame is a compelling tale of greed and avarice, one within which many are accountable, yet few are prepared to confess their error.

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Two weeks earlier, Bruce, who was in his late 40s, had told Merrill Lynch’s institutional and retail clients to buy Countrywide shares. ” Bruce wasn’t just any old equities analyst. He had worked at Countrywide for five years, under Angelo’s new successor-in-waiting, David Sambol, Countrywide’s president. In two weeks’ time, Bruce had abruptly changed his opinion about Countrywide. indd 16 6/3/08 8:46:54 PM Angelo Speaks, the Worldwide Contagion Begins 17 roiled the markets, sending Countrywide’s shares into a nosedive.

2 “They were giving each other the high fives,” said Ostendorf. 3 billion. The price—almost $1 billion more than what National City had paid back in 1999 for the subprime lender—was for First Franklin and two affiliates. Despite the sale (and the celebrating in the corporate suite), the bank would not escape entirely unscathed from the mortgage crisis. In the fourth quarter of 2007, National City posted a $333 million loss, tied in part to delinquencies and write-downs on alt-A mortgages and second-lien home equity loans held on its books.

Indd 38 6/3/08 8:47:45 PM The Repo Man Meets the Bald Granny 39 Associates, but the smaller firms such as Aames weren’t as fortunate—at least not yet. Aames, McMahon discovered, was making second deeds of trust to credit-impaired consumers at 14 percent. These home equity loans averaged $15,000 or so. Where did Aames get the money to lend out to the consumer? From “doctors and dentists,” McMahon discovered. Rich professionals who were looking to put their extra cash to work were the backbone of the subprime industry in the 1960s, 1970s, and early 1980s.

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