Holy Cow

I came across a book today titled Chain of Blame: How Wall Street Caused The Mortgage and Credit Crisis, and I started reading it almost immediately. The subject fascinates me and I have been meaning to read something that promises to explain just what happened, and why. So far, Chain of Blame appears to be delivering.

The reader is introduced to Countrywide Financial Corporation, and it's co-founder and CEO Angelo Mozila, at the very beginning of the book. Mozila's reputation today is not much better then that of Bernie Madoff, yet not so long ago Mozila, and the company he ran, dominated the home mortgage lending business. Then came the fall, but unlike Madoff, Angelo Mozila managed to emerge from the wreckage a free, and very wealthy, individual. However, that happy state of affairs may not last for too much longer, although I have been unable to find any updates on the current status of the indictments against Mozila.

The opening chapters set the stage for the meltdown to come by introducing the other players, besides Countrywide, and by explaining how the business of home lending evolved over the past 4 decades. And then, on page 34, a name that I hadn't heard in years jumped off the page at me. I grew up watching the Yankees on WPIX, and that meant listening to Yankee announcer, and former player, "The Scooter" Phil Rizzuto pitch The Money Store during commercial breaks.

I never gave much thought to The Money Store back then other then to suspect that, despite Rizzuto's endorsement, it seemed kind of shady. Turns out that The Money Store was a pioneer in The Consumer Finance Industry that sprang up in the 1960's to meet the needs of borrowers who were likely to get turned away by banks. Starting from humble roots, this new industry took off once President Ronald Reagan, and his philosophy of "taking the shackles off of business", took over in Washington. The biggest favor that Reagan did for these lenders that were not banks, was to destroy The Savings and Loan Industry. That had the wonderful effect of eliminating the competition.

Since I am only some 50 pages into Chain of Blame, I don't have much else to add at this point. I will try and return to it at a later date...