My reviewRating: ★★★✩✩
One of those books that make me wish there were 1/2 stars, Chain of Blame tells an important story, yet does it in a very dry and by-the-numbers fashion. Muolo and his co-author, Padilla, are financial reporters close the the mortgage industry and obviously know their stuff, yet the book lacks compelling human drama. The closest it comes is in the description of how many of the long timers in the mortgage industry, like Angelo Mozilo, head of Countrywide, got started.
But the book tends to devolve into a headspinning web of who bought who, who borrowed money from who, tranches, wholesalers, and the ilk, some of which is explained and some of which isn't. The amounts of money are staggering, especially in terms of real money lost. Yes, there were paper losses of value when the stocks tanked, but even more incredible are the stories of banks buying lenders for billions of dollars, only to just shut them down a year later.
I think the real story of the house & mortgage crisis has yet to be told. I still would like to know why, beyond sheer pigheaded greed, some of these mortgage veterans would agree to such crazy lending practices. I had never heard of "payment option ARMs" before this book, which are adjustable rate mortgages (ARM) where the option of what to pay comes up every month and you can choose to even go negative and move actual money owed to the end of the mortgage! It's all insane, and I'd love an insiders view of why these guys, who should have know that house prices weren't going to keep going up 25% every year, thought they could get away with it. And why the people taking out the loans thought they could as well.
I still say that This American Life's Giant Pool of Money and its follow up show, Another Frightening Show About the Economy are the best reporting done so far on this financial meltdown and many of the characters mentioned in these shows are featured prominently in Chain of Blame.