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By Charles Gasparino, 2009. Harper Business. Pp. 553, $27.99 hardcover.
By Gregory Zuckerman, 2009. Broadway Books. Pp. 295, $26.00 hardcover.
There have already been a half-dozen or more books published about the global credit crisis of 2007-09, in an age when retrospectives of crises appear at the speed of thought. Of these two, Gasparino's is the far more carefully researched and compiled work. Former Washington Post editor Ben Bradlee famously said journalists write history's first draft; and, as first drafts go, Gasparino's is a fine one. Should anyone have been stranded on Mars while Earth's credit markets imploded, this would be a good catch-up.
Gasparino offers more than facts. Of these two authors, by dint of a longer work history, Gasparino offers much more perspective on our recent times. He also does a better job of cutting through Wall Street rhetoric. His biography highlights his working-class roots, and he is a talking head on CNBC. Imagine Oliver Stone's Wall Street from the perspective of the Martin Sheen character (the father) rather than the Charlie Sheen character (the son).
America's succumbing to its subprime sirens is by now a well covered story, but both books add their share of delicious detail. Zuckerman reports that when a large investor called Countrywide Financial to ask how stated-income mortgage loans work, he was told that lenders were not always allowed to ask for proof of salary--"So we just go to salary.com, look up a job," and put the highest salary found on the loan application. When the same investor later on called Hope Now (a U.S. government program set up to help struggling homeowners), pretending to be a homeowner in trouble, he was advised to stop making payments: "[S]ave your money and just buy another place."
Gasparino reports how, following the departure of CEO Hank Greenberg, AIG's risk-taking mushroomed as the insurer doubled issuance of credit default swap (CDS) protection (selling insurance) against collateralized debt obligations (CDOs), in just the last nine months of 2005 alone. But the more bizarre stage, when observers might say Wall Street drank its own Kool-Aid, came in the first half of 2007, when Merrill Lynch Lynch packaged $34 billion of CDOs, even as other firms held back. By that stage, AIG was no...