By the middle of 2008, Fannie Mae and Freddie Mac had taken onto their balance sheets $1.8 trillion in risky loans and securities. By September of the same year, Citigroup was leveraged 74 to 1, violating capital regulations that set the limit at only 12 to 1. Why didn’t Wall Street and Washington take steps to prevent the economic crisis we are still suffering through and paying for today?
Years after the economic crisis of the late 2000s, Americans still want to know what went wrong—and why. Black Box Casino: How Wall Street’s Risky Shadow Banking Crashed Global Finance provides an accurate and understandable explanation, compiling and interpreting mountains of evidence to provide clear analysis and insight into the crisis that traumatized people and institutions around the globe.
The book provides a thorough, in-depth examination of the multiple contributing factors. The author goes back as far as 15 years before the crisis to show how the well-intentioned idea of providing home ownership prompted a government led effort to steadily weaken credit standards. He assigns partial blame on regulators that were unaware of growing levels of risk, ignored mounting evidence of a housing bubble, and failed to grasp the unintended consequences of certain regulations. The origins of the overload of subprime collateralized debt obligations that led to concentrated risks on the balance sheets of many large banks around the world are also explained.
