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Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis



Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis

Paul Muolo, Mathew Padilla

ISBN: 978-0-470-29277-8 July 2008 352 Pages


An updated and revised look at the truth behind America's housing and mortgage bubbles

In the summer of 2007, the subprime empire that Wall Street had built all came crashing down. On average, fifty lenders a month were going bust-and the people responsible for the crisis included not just unregulated loan brokers and con artists, but also investment bankers and home loan institutions traditionally perceived as completely trustworthy.

Chain of Blame chronicles this incredible disaster, with a specific focus on the players who participated in such a fundamentally flawed fiasco. In it, authors Paul Muolo and Mathew Padilla reveal the truth behind how this crisis occurred, including what individuals and institutions were doing during this critical time, and who is ultimately responsible for what happened.

  • Discusses the latest revelations in the housing and mortgage crisis, including the SEC's charging of Angelo Mozilo
  • Two well-regarded financial journalists familiar with the events that have taken place chronicle the crisis in detail, showing what happened as well as what lies ahead
  • Discusses how the world's largest investment banks, homeowners, lenders, credit rating agencies, underwriters, and investors all became entangled in the subprime mess

Intriguing and informative, Chain of Blame is a compelling story of greed and avarice, one in which many are responsible, but few are willing to admit their mistakes.

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Introduction: Financial Ashes vii

Cast of Characters xiii

Chapter 1 Angelo Speaks, the Worldwide Contagion Begins 1

Chapter 2 The Repo Man Meets the Bald Granny: A Short History of Subprime 23

Chapter 3 The Death of the Bailey Building and Loan, the Rise of Millionaire Loan Brokers and Countrywide 47

Chapter 4 The Beach Boys of B&C: How Roland Arnall Became the Johnny Appleseed of Subprime 73

Chapter 5 Angelo Rising: The Son of a Bronx Butcher Makes Good 103

Chapter 6 The Holy Roller of REITs 127

Chapter 7 The End of the (New) Century 149

Chapter 8 A Conspiracy by Merrill? 179

Chapter 9 A Warning from Lewie: CDOs, SIVs, and Other Things No One Understands 205

Chapter 10 Deep in the Belly of the Bear 227

Chapter 11 Armageddon Times: The Tan Man Departs, Bye-Bye Bear 249

Chapter 12 What the Hell Happened? Ten Bad Years for Housing in America 277

Chapter 13 TARP, the Great Recession, and the Return of Stan Kurland 309

Afterword TBTF: A Mortgage Cartel Rises from the Ashes 335

Source and Interview Notes 341

Glossary 351

Acknowledgments 359

About the Authors 361

Index 363

"Chain of Blame is one of the first books to delve deeply into the central role that big banks played in the mess…for a juicy, name-dropping read, Muolo and Padilla’s book is hard to beat."--BusinessWeek

"Muolo and Padilla examine just who was to blame for the crisis and find that it is not just cowboy operators." (CEO Middle East, September 2008)

“…a level-headed book…the anecdotal style is easy-going...much the best book on the mortgage industry”.  Fund Strategy 1 September 2008

“…a ripping piece of reporting… The authors know their stuff.”Bloomberg News Monday 28 July 2008