CNN: Top 25 people to blame for financial situation

[rhoenix]

Angelo Mozilo

The son of a butcher, Mozilo co-founded Countrywide in 1969 and built it into the largest mortgage lender in the U.S. Countrywide wasn't the first to offer exotic mortgages to iffy borrowers, but it popularized such products. In the wake of the housing bust, which toppled Countrywide, Mozilo's lavish pay package was excoriated by critics. He left Countrywide last summer after its sale to Bank of America, which later pledged to pay $8.7 billion to settle predatory-lending charges filed against Countrywide filed by 11 state attorneys general.

Phil Gramm

As chairman of the Senate Banking Committee from 1995 through 2000, Gramm was Washington's outspoken champion of deregulation. And he got it, by playing a lead role in the writing and passage of the 1999 repeal of the Depression-era Glass-Steagall Act, which had separated commercial banks from Wall Street. Then he inserted a provision into the 2000 Commodity Futures Modernization Act that exempted derivatives like credit-default swaps from regulation.

Alan Greenspan

He was the one who could have stopped it. As Federal Reserve chairman, Greenspan deftly managed the 1987 stock-market crash and presided over the 1990s economic boom, cementing his status as Washington's money wizard. But the low interest rates he sired in the early 2000s and his long-standing disdain for regulation underpinned the mortgage crisis. The maestro admitted in an October congressional hearing that he had "made a mistake in presuming" that financial firms could regulate themselves.

Chris Cox

The ex-SEC chief's blindness to repeated allegations of fraud in the Madoff scandal is mind-blowing, but it's his lax enforcement that lands him on this list. Cox says his agency lacked authority to limit the massive leveraging that led to the financial collapse. In truth, the SEC had plenty of power to rein in risky behavior by such investment banks as Lehman Brothers and Merrill Lynch, but it chose not to. Cox oversaw the dwindling SEC staff and a sharp drop in action against some traders. We could have used more.

American Consumers

We really enjoyed living beyond our means. No wonder we wanted to believe it would never end. But the bill is due. Household debt in the U.S. — the money we owe as individuals — zoomed to more than 130% of income in 2007, up from about 60% in 1982. We've been borrowing, borrowing, borrowing — living off and believing in the wealth effect, first in stocks, which ended badly, then in real estate, which has ended even worse. Now we're out of bubbles. We have a lot less wealth — and a lot more effect.

Hank Paulson

When Paulson left the top job at Goldman Sachs to become Treasury Secretary in 2006, his big concern was whether he'd have an impact. Careful what you wish for. He almost single-handedly ran economic policy for the last year of the Bush Administration. Impact? You bet. Positive? Not yet. Paulson was too late in battling the crisis, and letting Lehman fail was a pivotal mistake that rapidly eroded confidence. His attempt to fix the problem — a bailout that netted $700 billion from Congress — has been a wasteful mess.

Joe Cassano

Before the meltdown, few people had ever heard of credit-default swaps. They are insurance contracts — or, if you prefer, wagers — that a company will pay its debt. As a founding member of AIG's financial-products unit, Cassano knew them cold. In good times, AIG's massive CDS-issuance business minted money by essentially writing insurance against a financial Katrina. What were the odds? Those contracts were at the heart of AIG's downfall. So far, the U.S. has invested and lent $150 billion to keep AIG afloat.

Ian McCarthy

As CEO of Beazer Homes since 1994, McCarthy has become something of a poster child for worst builder behaviors. In 2007 the Charlotte Observer highlighted Beazer's aggressive sales tactics, including lying about borrowers' qualifications to help them get loans. The company has admitted that its mortgage unit violated regulations — like down-payment-assistance rules — at least as far back as 2000. It is cooperating with federal investigators.

Frank Raines

Raines was at the helm of Fannie Mae, the bastard offspring of politics and finance, when things really went off course. A former Clinton Administration Budget Director, Raines took over as CEO of Fannie in 1999. He left in 2004 with the company embroiled in an accounting scandal just as it was making big investments in the subprime mortgage securities that would later sour. Last year Fannie and rival Freddie Mac became wards of the state.

Kathleen Corbet

By slapping AAA seals of approval on even risky pools of loans, rating agencies helped lure investors into collateralized debt obligations (CDOs) that are now unsellable. Corbet ran the largest agency, Standard & Poor's, though Moody's and Fitch played by similar rules. These outfits are paid for their ratings by the bond issuer, an apparent conflict of interest that has not gone unnoticed, despite the agencies' denials. As one S&P analyst wrote in an e-mail, "[A bond] could be structured by cows and we would rate it."

Dick Fuld

The Gorilla of Wall Street, as Fuld was known, steered Lehman deep into the business of subprime mortgages, bankrolling lenders across the country that were making convoluted loans to questionable borrowers. Lehman even made its own subprime loans. The firm took those loans, whipped them into bonds and passed on to investors billions of dollars of what is now toxic debt. For all this wealth destruction, Fuld raked in nearly $500 million in compensation during his tenure as CEO, which ended when Lehman did.

Marion and Herb Sandler

In the early 1980s, the Sandlers' World Savings Bank became the first to sell a tricky home loan called the option ARM. And they pushed the mortgage, which offered several ways to back-load your loan and thereby reduce your early payments, with increasing zeal and misleading advertisements over the next two decades. The couple pocketed $2.3 billion when they sold their bank to Wachovia in 2006. But losses on World Savings' loan portfolio led to the implosion of Wachovia, which was sold under duress late last year to Wells Fargo.

Bill Clinton

He oversaw an era of great ­prosperity — and deregulation. ­Clinton ushered out the Glass-Steagall Act and signed the Commodity Futures Modernization Act, which exempted credit-default swaps from regulation. He also ­loosened housing rules, putting added pressure on banks to lend in low-income neighborhoods. None of it was an endorsement of permissive lending and risk-taking. But if you believe deregulation is to blame for our troubles, then Clinton earned a share too.

George W. Bush

From the start, the "ownership society's" No. 1 fan embraced deregulation and allowed federal oversight agencies to ease off on banks and mortgage brokers. True, he stumped for tighter controls over Fannie Mae and Freddie Mac and backed and signed the aggressively regulatory Sarbanes-Oxley Act after Enron blew up. But when SEC head William Donaldson tried to regulate hedge funds, he was blocked by Bush's advisers at the White House and quit. Plus, let's face it, the meltdown happened on Bush's watch.

Stan O'Neal

Merrill Lynch's CEO for nearly six years, ending in 2007, he guided the firm from its familiar turf — fee businesses like asset management — into the lucrative game of creating collateralized debt obligations, which were largely made up of subprime mortgage bonds. To provide a steady supply of the bonds — the raw pork for his booming sausage business — O'Neal allowed Merrill to load up on $41 billion of them. As the subprime market unwound, Merrill went into crisis, and Bank of America swooped in to buy it.

Wen Jiabao

If cheap credit was the crack cocaine of this crisis — and it was — then China was one of our primary dealers. Wen leads a China that is now the U.S.'s largest creditor, holding some $1.7 trillion in dollar-denominated debt. Its massive dollar holdings can be linked to determined efforts to control the value of the renminbi vs. the buck; China didn't want its currency to rise too rapidly against the dollar, in part because a cheap currency kept its export sector humming. And humming it was until U.S. demand cratered last fall.

David Lereah

When the chief economist at the National Association of Realtors, an industry trade group, tells you the housing market is going to keep on chugging forever, you apply the discount. But Lereah, who held the position through early 2007, did more than issue rosy forecasts. In his 2005 book, Are You Missing the Real Estate Boom?, and elsewhere, he regularly trumpeted the infallibility of housing. Lereah grew concerned about the market in 2006, but consider his January 2007 statement: "It appears we have established a bottom."

John Devaney

Hedge funds played an important role in the shift to sloppy mortgage lending, and Devaney was one of the cheerleaders. By buying up mortgage loans, Devaney and other hedgies earned fat returns for a while, which encouraged mortgage outfits to make ever sketchier loans. Devaney knew some of those products were ugly; in early 2007, referring to option ARMs, he told Money, "The consumer has to be an idiot to take on those loans, but it has been one of our best-­performing investments."

Bernie Madoff

His alleged Ponzi scheme could inflict $50 billion in losses on society types, retirees and nonprofits. The bigger cost comes from the notion that Madoff pulled off an epic fraud right under the noses of regulators. Assuming it's all true, the banks and hedge funds that neglected due diligence were stupid and paid for it, while the "feeders" were reprehensibly greedy. But if in fact Madoff depantsed the regulators, exposing them as grossly incompetent, then this downturn is that much tougher to take.

Lew Ranieri

Meet the father of mortgage-backed bonds. In the late 1970s, the college dropout and Salomon trader coined the term securitization to name a tidy bit of financial alchemy in which loans were packaged and sold to institutional investors. It was a terrific idea, as it allowed banks to shed risk and make more loans. But as home ownership exploded in the early 2000s, the mortgage-bond business inflated Wall Street's bottom line. So the firms placed ever bigger bets on ever riskier varieties of these securities. You know the rest.

Burton Jablin

The programming czar at Scripps Networks, which owns HGTV and other lifestyle channels, never made a subprime loan. But his shows pumped air into the real estate froth by teaching us how to extract value from our homes. ­Designed to Sell, House Hunters and My House Is Worth What? created addicted ­audiences. So did shows like Flip That House (TLC) and Flip This House (A&E). No one on these shows ever seemed to lose a dollar, giving the housing game a little too much glamour and gusto.

Fred Goodwin

The face of overreaching bankers everywhere, Goodwin got greedy. More than 20 takeovers helped him transform the Royal Bank of Scotland (RBS) into a world beater after he assumed control in 2000. But he couldn't stop there. As the gloom gathered in 2007, Goodwin's mouth watered over a $100 billion takeover of Dutch rival ABN Amro, stretching RBS's capital reserves to the limit. The result: the British government last fall pumped $30 billion into the bank, which ­expects 2008 losses to be the biggest in U.K. corporate history.

Sandy Weill

Who decided banks had to be all things to all customers? Weill did. Starting with a low-end lender in Baltimore, he cobbled together the first great financial supermarket, Citigroup. Along the way, Weill's serial acquisitions, (Travelers, Smith Barney, etc.) and persistent lobbying shattered Glass-Steagall, the law that limited banks' ambitions. Rivals followed Citi. The swollen banks are one of the nation’s major economic problems. Solution? Back to banking. Citigroup is selling Smith Barney and other noncore assets.

David Oddsson

In his two decades as Iceland's Prime Minister and then as central-bank governor, Oddsson made his tiny country an experiment in free-market economics by privatizing three main banks, floating the currency and fostering a golden age of entre­preneurship. When the market turned ... whoops! Iceland's economy is now a basket case. The three banks, which were massively leveraged, are in receivership, GDP could drop 10% this year, and the IMF stepped in after the currency lost more than half its value. Nice experiment.

Jimmy Cayne

No Wall Street CEO seemed more asleep at the switch than Bear Stearns' Cayne. He left the office by helicopter for long golf weekends. He was regularly out of town at bridge tournaments and reportedly smoking pot. (Cayne denies the weed allegation.) Back at the office, Cayne's charges bet the firm on risky home loans. Two of its highly leveraged hedge funds collapsed in mid-2007. That was the beginning. Eventually, Bear was sold for less than the value of its office building. "I didn't stop it. I didn't rein in the leverage," Cayne later told Fortune.

This rather comprehensive list was first posted at SD.Net, and I've reformatted it here similarly for ease of reading. Pictures of each of the 25 miscreants (including we, the American public) are available in the article.

[Derek Thunder]

Haha, America is actually a plutocracy and the capitalist machine must be dismantled rather than patched over with ineffective regulatory band-aids.

[rhoenix]

Haha, America is actually a plutocracy and the capitalist machine must be dismantled rather than patched over with ineffective regulatory band-aids.

Except nobody wants to admit it out loud.

This is going to be an interesting couple of years.

[General Havoc]

Haha, America is actually a plutocracy and the capitalist machine must be dismantled rather than patched over with ineffective regulatory band-aids.

And... and... and... it's like the man is trying to get us down... man! Amerikkka is run by the Fa$ci$t corporations! Read about it on my TOTALLY awesome blog, "Bu$hitler"!

[SirNitram]

It'd be hard to find a country that doesn't meet the definition of plutocracy these days. Mind you, the amount of money poured into Wall Street and their reciprocal near outright buying of political favor suggests a different name. Based on the sheer hallucinations required to create the current problems, I'm gonna call it Bongocracy. 'Cuz someone was high as a FUCKING KITE.

[The Minx]

Perhaps they don't want to admit that the "capitalist machine" must be out and out dismantled because that would be a disastrous decision to take? Unless you mean something other than what I think you mean.

[General Havoc]

Right, because disabling the capitalist machine worked so well the last sixty times we tried it, right? I feel like going for it again.

[SirNitram]

Right, because disabling the capitalist machine worked so well the last sixty times we tried it, right? I feel like going for it again.

Because discarding the current failed capitalism version immediately leads to communism? Good grief. Could you try something not a fallacy?

[General Havoc]

Someone please let me know when Nitram starts responding to my posts, and not the ones about Communism he apparently just hallucinated up out of thin air?

[SirNitram]

Someone please let me know when Nitram starts responding to my posts, and not the ones about Communism he apparently just hallucinated up out of thin air?

How droll. What were you referring to, then? I'm sure you desperately view this as clever, but failing to see that Capitalism guided by a Randian thinker failed with something of a loud crash is pitiful. Greenspan, like all the others who preached the good of greed, was wrong. At least he can admit it if you pin him down.

[General Havoc]

I was referring to the notion that "dismantling the capitalist system" (to use the words of the poster I was replying to) is a proven idiocy, whether the end-goal is communism or anything else. It is one of the best methods of ensuring that one's society degenerates into organized brigandage and thuggery. I invite counterexamples.

[SirNitram]

I was referring to the notion that "dismantling the capitalist system" (to use the words of the poster I was replying to) is a proven idiocy, whether the end-goal is communism or anything else. It is one of the best methods of ensuring that one's society degenerates into organized brigandage and thuggery. I invite counterexamples.

Ahhh. So your own words, right here...

Right, because disabling the capitalist machine worked so well the last sixty times we tried it, right? I feel like going for it again.

Were total bullshit? Because I wanted examples. If your response is 'Come on, counter example!!!' to such a challenge, you are clearly engaging in some nice dishonesty. Are you going to debate honestly? Because if not, there's simply no point in debating. As opposed to mocking you, which does have a point, and that's 'Amusing me'.

[General Havoc]

Um, Nitram?

What the hell are you smoking?

Those two quotes you posted... mean the same thing. Adjust your sarcasm detectors, and read them again. Once you have done so, please explain to me what in God's name you are talking about, because you appear to have diverged off into your own little world again. DT said that we should demolish the capitalist system, I said that that was a stupid idea, and then you just started making shit up again like you always do.

So um... since Nitram just publicly admitted that he comes here to mock people for his own amusement rather than actually debate, does anyone sane wish to say anything? Because I really have better things to do than humor someone who has nothing intelligent or even intelligible to say

[SirNitram]

Um, Nitram?

What the hell are you smoking?

Those two quotes you posted... mean the same thing. Adjust your sarcasm detectors, and read them again. Once you have done so, please explain to me what in God's name you are talking about, because you appear to have diverged off into your own little world again. DT said that we should demolish the capitalist system, I said that that was a stupid idea, and then you just started making shit up again like you always do.

Wow. So you stating there's been numerous times where dismantling capitalism came about, then object when I comment that you seem to mean communism... Then start declaring I'm off in my own world when I quote you and ask for an example.

So I'll take this as a failed attempt to divert attention away from the fact you refuse to actually specify even one example to be analyzed.

So um... since Nitram just publicly admitted that he comes here to mock people for his own amusement rather than actually debate, does anyone sane wish to say anything? Because I really have better things to do than humor someone who has nothing intelligent or even intelligible to say

'Cause 'Mocking you amuses me!' == 'I only come here to mock people' in your secret decoder ring?

[General Havoc]

'Cause 'Mocking you amuses me!' == 'I only come here to mock people' in your secret decoder ring?

Well you sure as hell don't come here to debate, Nitram, and I doubt you're here for the weather or the food, so... you tell me!

Anyway, you want examples? I was referring to, any of the various movements that arose in the last century or so to dismantle the free-market capitalist system and replace it with something else. There's a lot of variation in that regard. Communism is one such movement, yes, but so was fascism (in its original conception). But my point was that all such endeavors, be they in the form of self-reliant protectionism, practiced by various nations (some communist, some not, the most extreme example being Jurchin), radical societal reorganization (Nazism in its Rohmist conception, or the Khemer Rouge to take another extreme example) tends to lead to total societal breakdown and chaos, as well as totalitarianist domination of society. Now that may be because only totalitarians ever try to do something like that, or because only nations in advanced states of social disintegration ever get to that point, but the principle is the same. Dismantling the capitalist system is a proven "bad idea", in every example it's been tried in.

[SirNitram]

'Cause 'Mocking you amuses me!' == 'I only come here to mock people' in your secret decoder ring?

Well you sure as hell don't come here to debate, Nitram, and I doubt you're here for the weather or the food, so... you tell me!

Ah, but I do want to debate. You're just outright lying. I said I'd mock you if you refuse to engage in honest discussion.. Like responding when someone asks for an example, by not providing any. And just demanding counter-examples.

Anyway, you want examples? I was referring to, any of the various movements that arose in the last century or so to dismantle the free-market capitalist system and replace it with something else. There's a lot of variation in that regard. Communism is one such movement, yes, but so was fascism (in its original conception).

"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini.

I do note you're now moving from 'Capitalism' in general, to the variants of only 'free market' capitalism.

But my point was that all such endeavors, be they in the form of self-reliant protectionism, practiced by various nations (some communist, some not, the most extreme example being Jurchin), radical societal reorganization (Nazism in its Rohmist conception, or the Khemer Rouge to take another extreme example) tends to lead to total societal breakdown and chaos, as well as totalitarianist domination of society. Now that may be because only totalitarians ever try to do something like that, or because only nations in advanced states of social disintegration ever get to that point, but the principle is the same. Dismantling the capitalist system is a proven "bad idea", in every example it's been tried in.

Dismantling a Capitalist system and replacing it with fundamentally authoritarian ones is disasterous, yes. Dismantling capitalism and moving to a different form of capitalism is quite a different question. Adam Smith's Meritocratic Capitalism is wildly different from, for example, Randian Corporate Capitalism. As anyone whose read the works of both would know.

[General Havoc]

This is becoming farcical. I didn't even issue a declarative sentence, and he claims I'm lying. This is, as I said in another thread, like the Karl Rove school of debate. Call anything a lie, even a question! Even sentences that are grammatically incapable of being lies.

Anyway, in regards to Mussolini:

"All within the state, nothing outside the state, nothing against the state." - Benito Mussolini.

But I concede to you that we're talking about many different things here, and that there are different forms of capitalism. I note however that you've moved from the theory of Dismantling Capitalism to the theory of modifying capitalism in some way, which was not at all what I was objecting to, nor what you were arguing against. The original statement was that, and I quote: "the capitalist machine must be dismantled rather than patched over with ineffective regulatory band-aids." Dismantling the capitalist system is not altering it to look like Adam Smith's economy, at least not by my definition of the word.

[Derek Thunder]

Wow, I decide to go to bed early and this is what happens? Man, I really must have touched a raw nerve.

And... and... and... it's like the man is trying to get us down... man! Amerikkka is run by the Fa$ci$t corporations! Read about it on my TOTALLY awesome blog, "Bu$hitler"!

This forum definitely needs the option to ignore posters. You are a hopeless man-child with no sense of humor.

|>>

Now, to elaborate on a rather trollish statement made late last night, what I mean is this: We currently have a system which borders on laissez-faire capitalism based on the propagation of bubbles by irrational economic actors and fueled by monetary policy (with Greenspan's flogging of the real estate and .com bubbles being the most flagrant example). Trolling aside, I don't feel any particular attachment to the communist system, nor Juche self-sufficiency. However, I believe our system is much more sick than some people let on, and while some regulatory band-aids (caps on executive pay for companies that receive TARP money) are admirable, they do little to solve the underlying problems that lead to panics and collapses in the first place. For those at the top, the system essentially contains no risk, while for those at the bottom, bankruptcy and loss of health care are a constant companion.

I personally would advocate for a socialist democracy along the lines of the northern European countries, with reasonable corporate tax rates, higher personal tax rates, and a strong safety net that allows people to move about in the economy without sacrificing health care or basic needs.

[frigidmagi]

Dear Lord... Enough here to. Same drill, retreat to your corners. Yes this applies to you to Derek.