In todays Inman News, 11/24/08, Patrick Duffy writes a book review of the book Financial Shock: A 360 degree look at the subprime mortgage implosion and how to avoid the next financial crisis by author: Mark Zandi
It is much more succinct than the article I posted of the NPR interview last week on my website blog.
Duffy states: "the book is so comprehensive, it still provides an excellent framework from which to understand the root causes of the crisis, from the mistakes made by Alan Greenspan to the rapid rise of irresponsible lenders who rewrote the rules of underwriting based on their own short-term interests.
And let's not forget a compliant political system and the home buyers eager to join the ranks of owners despite any potential long-term consequences of poor financial decisions.
Beginning with a chapter that explains just how subprime mortgages evolved, Zandi writes in plain English and manages to weave a story with its share of heroes-turned-villains, including politicians pushing for an "ownership society"; a Federal Reserve chairman enamored with deregulation; an enormous amount of global money in search of a big return; financial alchemists getting drunk on their own supposed genius; home builders who ignored the lessons of the past; and bond ratings agencies who kept the entire machine humming because the profits were simply too large to pass up."
Patrick Duffy further mentions Zandi's policies to address or prevent in the future:
"So now that we're in the midst of unraveling and deleveraging the system of subprime mortgages, complex securities and credit default swaps, how do we prevent a repeat of this ugly scenario? Fortunately, Zandi provides his own 10-step program of policies to address a host of issues: from tossing out shady brokers to providing basic financial education in high schools across the country. These steps include the following:
1. Adopt a voluntary mortgage write-down plan
2. Establish clear mortgage lending rules
3. License all mortgage brokers
4. Expand data collection by the government
5. Reform the fractured foreclosure process
6. Invest in financial literacy starting in high school
7. Modify mark-to-market accounting when price discovery is unreliable
8. Raise financial transparency and accounting
9. Overhaul and simplify financial regulation
10. Pay attention to asset bubbles and act accordingly
Seems to me this book would be a good read!