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Busted: Life Inside the Great Mortgage Meltdown | 
 enlarge | Author: Edmund L. Andrews
Publisher: W. W. Norton & Company
Category: Book
List Price: $25.95
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Rating:  44 reviews
Media: Hardcover
Edition: First Edition
Pages: 220
Number Of Items: 1
Shipping Weight (lbs): 1.1
Dimensions (in): 9.4 x 6.4 x 1
ISBN: 0393067947
Dewey Decimal Number: 332.720973
EAN: 9780393067941
Publication Date: May 22, 2009
Availability: Usually ships in 1-2 business days
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Product Description
The fiasco that sank millions of Americans, including one journalist, who thought he knew better. A veteran New York Times economics reporter, Ed Andrews was intimately aware of the dangers posed by easy mortgages from fast-buck lenders. Yet, at the promise of a second chance at love, he succumbed to the temptation of subprime lending and became part of the economic catastrophe he was covering. In surprisingly short order, he amassed a staggering amount of debt and reached the edge of bankruptcy.
In Busted, Andrew bluntly recounts his misadventures in mortgages and goes one step further to describe the brokers, lenders, Wall Street players, and Washington policymakers who helped bring that money to his door. The result is a penetrating and often acerbic look at the binge and bust that nearly bankrupted the United States.
Enabled by know-nothing complacency in Washington, Wall Street wizards used "collateralized debt obligations," "conduits," and other inscrutable financial "innovations" to put American home financing into hyperdrive. Millions of Americans abandoned the safety of thirty-year, fixed-rate mortgages and loaded up on debt. While regulators insisted that the markets knew best, Wall Street firms fragmented and repackaged unsound loans into securities that the rating agencies stamped with triple-A seals of approval.
Andrews describes a remarkably democratic debacle that made fools out of people up and down the financial food chain. From a confessional meeting with Alan Greenspan to a trek through the McMansion bubble of the OC, he maps the arc of the Frankenstein loans that brought the American economy to the brink.
With on-the-ground reporting from the frothiest quarters of the crisis, Andrews locates what is likely to be the high-water mark in America's long-term embrace of higher borrowing, higher risk-taking, and the fervent belief in the possibility of easy profits. .
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Showing reviews 1-5 of 44
 Convenient to leave things out June 12, 2010
Kelly Jensen (STACKED Books blog) (Wisconsin, USA)
1 out of 1 found this review helpful
Andrews is a journalist for The New York Times and more specifically, an economic reporter pulling in a 6-digit salary every year. In the midst of the housing frenzy, he chose to invest in a house on a low-doc mortgage well beyond anything he could ever imagine to afford. HE KNEW THIS going in, and yet, he followed his lust and jumped into it.
Busted does a little bit of what Alyssa Katz's book "Our Lot" does in unraveling the complexities of the housing collapse on the banking side, but what made this book stand out to me was that Andrews himself is a person facing foreclosure and the loss of his house. He gives us the background into how banks were misleading underrepresented groups with subprime lending, as well as how bankers and underwriters were approving (and even encouraging) applicants to lie or not even mention important things like income in their mortgage applications. Reading this after the hellacious experience I had getting a mortgage made me grateful again it was such a horrible experience.
That said, this book shows us the utter greed people like Andrews brought to the collapse of the housing market. He, with his 6-figure job, background in economics, and education, knew better than to do what he did, but because he was lusting after more (see the book "House Lust"), he chose to jump in anyway. And it doesn't work. This is his attempt to document it.
Unfortunately, while this book reads well and does a good job of putting a face to the crisis, I never once felt sympathetic for Andrews. I felt even less sympathetic when I found out later he omitted some pretty important details in his experiences (like the fact his new wife had filed for bankruptcy twice). Reading this in conjunction with Katz's title, though, was important because it emphasizes that there was no one cause for why real estate fell to pieces. It was a combination of greed from a number of sources, as well as deception from a number of sources. Bonus: he has a little report, too, in the NYT for your reading pleasure.
Yes, it's stupid, yes, it's shallow, but it does give insight June 10, 2010
Compleat Reader
1 out of 1 found this review helpful
Insight into what? Into the incredibly childish, blinkered, pig-ignorant "thinking" of so many of our population, including the people who really should know better. For goodness's sake, the author was a leading financial reporter for the New York Times! And this man couldn't see the writing on the wall? Couldn't curb his insane spending? I wouldn't call myself a person with any real economic knowledge, but in 2004 and 2005, while looking for my home (and having been offered a $250,000 pre-approved mortgage), I knew that one does not buy more house than he or she can afford. I knew that a mortgage payment should be around a quarter of your income, and that a mortgage that changes interest rates is going to mean trouble. I also saw clearly, while the reporters and financial sector were yelling at us to jump on the bandwagon, that we were looking at a major economic crash because of the housing bubble. Now, if I could figure that out just by reading a few articles and looking around and applying a little common sense, why the hey couldn't someone whose PROFESSION is analyzing the economy figure it out? (What I didn't foresee was how Hank Paulsen and Goldman Sachs would use this crash as the opportunity to wipe out their competitors and make themselves even richer. There's a reason people see conspiracies everywhere: because this sort of horror LOOKS like a conspiracy.)
The book is, of course, as shallow as its author. But it's still worth a read -- which won't take long -- because of what we learn about so many of those around us. If Mr. Andrews constitutes a "normal" American, then our fellow Americans need all the regulatory help they can get, because they're obviously incapable of managing their own lives in the real world.
 Transparent Fiction. Don't wast your money. May 17, 2010
D. Jankowski (Baltimore, MD)
3 out of 3 found this review helpful
I made it through about half of the book, before I really couldn't take anymore. The author clearly has a "not-my-fault" attitude about everything that happened in his upside-down life. I stopped counting his laying of blame on the Bush Administration after about the hundreth time metioned in the book. Apparently, he includes Senator Chris Dodd (Democrate, and head of the Senate Banking Committe) and Anthony Mazula (Head of Countrywide and CA Democratic Fund Raising Committee) as part of the Bush Administration.
In addition to displaying a transparent political bias, he clearly does not understand some of the basics of mortgage banking. His explanation of Mortgage Backed Securitites sounds like he looked it up on Google and took some internet posting as his defining basis. If he had any idea of how MBSs worked, he would have discussed the pass-through characteristics of the security instrument, and how lenders/servicers do have skin in the game based upon the pass-through responsibility, buy-back requirements, and MI claim denials.
I rented this book from the library. Thank God I didn't waste my money on it. When I return it, I will strongly suggest they move it from the Business Section to the Fiction or Fantasy Section.
If you want a real explanation, deviod of the political hatchet job, of what caused the mortgage market melt down, I suggest you consider "Confessions of a Subprime Lender" by Richard Bitner.
 Surprisingly refreshing April 6, 2010
N. Tuzov (Illinois, USA)
2 out of 7 found this review helpful
This book is surprisingly refreshing against the background of more renowned sources of economic analysis such as The Economist. I suspect that many financial columnists are no better experts than Mr. Andrews, but, to disguise that, they infuse their articles with annoying swarms of ifs, buts, and maybes. Another issue is that many journalists might not be allowed to speak ill of certain financial institutions and individuals, even those who deserve all the insult they can get. To his credit, Mr. Andrews does none of that smoke-blowing.
A good part of the book is dedicated to the issue of market regulation, which turned out of most interest to me. There is no doubt that Greenspan and other regulators have had a real difficulty with identifying asset bubbles. If that had been otherwise, they would've been successful hedge fund managers as opposed to relatively low-paid regulators. Moreover, even professional money managers who realize that the assets are way overpriced, find it difficult to go against the flow. To fend off impatient investors and/or maintain a losing position on margin, one has to be able to guess the bubble peak with a few months accuracy, which is far from simple. For instance, Stock Market Wizards: Interviews with America's Top Stock Traders contains an interview with a trader who lost by shorting Internet stocks during the dotcom bubble because his timing was off. A more successful example of Michael Burry (see The Big Short: Inside the Doomsday Machine) who managed to cash in on the mortgage collapse is an exception that only confirms the rule: as a contrarian, Burry got much abuse from his investors while he was losing and little gratitude when he succeeded. As Keynes used to say, for a money manager it is a lot more preferable to fail conventionally than to succeed unconventionally.
Andrews describes Greenspan as a firm believer in the "self-correcting power of free markets", which I find very odd. How can a person old enough to remember the default of Confederate bonds believe in something like that? Naturally, one can always point to alleged lobbyism and corruption, but I think there is more than that: preventing calamities is a very ungrateful job because, by definition, its results are not observable. If an American statesman engages in it, he subscribes to getting flogged every single day for every political and economical downside of regulation. The upside, on the other hand, is illusory because it's impossible to prove that one has avoided a disaster, unless a time machine is at hand. If that's the case, then no wonder that Greenspan preferred to avoid being a dislikable risk cop. Stepping aside and cleaning up the mess once in a while is a much happier occupation.
One may argue that regulation is easily justified based on the historical experience, but remember that people's short memory and instant gratification bias are at the core of what happened. No doubt, in 2010 the support for regulation is broader than ever, but give it a few calm years and the talks of "self-correcting power of free markets" are likely to reappear.
In the end, both personal and financial gambles of Mr. Andrews proved disastrous. His book, however, is a much better investment. Buy it and you'll learn more about economy and subprime crisis than from reading a $90 worth of The Economist.
 A Testament to Immaturity April 5, 2010
Olga Bezhanova (Edwardsville, IL)
11 out of 11 found this review helpful
This is a book that needs to be read, even though it will make you lose your faith in humanity for a long time to come. Andrews analyzes in great detail how the lending institutions gradually became more and more driven by the desire for instant profit without stopping to think for a second what will happen long term. The author also brings to light the incredible, mind-boggling stupidity of Greenspan, Bernanke, and Co. He demonstrates how corrupt and dishonest the Bush Jr. administration was.
None of this, however, is very new. At least not to me. From the moment I moved from Quebec to the US, it became obvious to me that the housing prices in this country were ridiculously over-inflated. I saw my friends and colleagues pay really insane, seven-figure prices for poky little apartments in Manhattan or run-down bungalows in Connecticut and immediately realized that this was the game I would never agree to pay. Mortgaging away your life for the next 30 years in hopes that the bubble will get even bigger and the price of your house would magically grow seemed like a genuinely stupid proposition even for someone like me, who at 27 was woefully ignorant about economy. Today, when I understand the workings of this country's economy and politics a lot better, I am even more reluctant to participate in this insanity.
What really bothered me in Busted: Life Inside the Great Mortgage Meltdown was not the story of the housing bubble. It was the story of a nearly fantastic immaturity. Immaturity on both sides, the lenders' and the borrowers'. Those who handed out completely unsecured loans to people incapable of ever paying them off and those who accepted loans they could never even imagine paying off. Andrews was one of those who accepted. And accepted. And accepted some more.
The immaturity and total intellectual impotence of this man - who, once again, writes for the economics section of The New York Times - is mind-boggling. He decides to take out a loan to buy a half-million dollar house. As a result, he knows that his entire paycheck will go towards his alimony payments and the mortgage with not a dime left over for the bills. Of course, he hopes that his new wife will make enough money to cover all of their living expenses. Nothing would be all that wrong about this picture, if it weren't for one tiny detail. His new wife has been a house-wife who hasn't worked a day in the past 20 years. Besides, she is accustomed by her former husband to living the life of luxury. She didn't even do any work around the house because her first husband paid for a housekeeper. On top of that, Andrews gets this woman to move to a completely different part of the country. Then, he expects her to find a well-paying job - with no skills, no connections, no experience of being an employee - and start paying all the bills: "We had both assumed she could earn enough for us to get by. We didn't have any idea how she would do it; we were both simply sure that she could do it." It is incredible to encounter such profound intellectual impotence from any one over the age of 12.
This is not the weirdest thing about Andrews's relationship with Patty, the woman who eventually became his second wife. He left his first wife and proposed to Patty before Patty and he had ANY kind of a relationship. They hadn't even as much as kissed, let alone had sex or lived together. And these are not some horny teenagers. These are people who are almost 50 at the time. During marriage counselling, Andrews and Patty discover that they do not see eye to eye on 90% of issues discussed. This, however, does not suggest to them that it might make sense to postpone the wedding until they actually get to know something about each other.
Andrews's path to penury begins when he takes out a sub-prime mortgage on his new house. Over the next few years he gets so far into debt that you couldn't dig him out of it with an excavator, just to keep the stupid super expensive house. And you know why? In his own words, "Even though it was all about buying a house in the suburbs, it felt vaguely exciting, edgy, and a little gangsta." When a balding, paunchy, white gentleman in his late forties is motivated to take out an impossible loan because he wants to feel "gangsta", of all the stupid things, you know that something is seriously wrong here. And this is supposed to be a well-educated upper-middle-class individual, who works as a journalist, for Pete's sake!
In order to climb out of the financial hole he has dug for himself, Andrews tries every crazy borrowing practice out there. He runs up a staggering credit card debt, empties his pension account, and even hits up for money his elderly mother. There is just one thing he doesn't do: try to cut down the costs. Andrews goes through his wedding to his second wife in throes of a panic attack over mounting bills and huge debt. After that, he proceeds to pay the caterers that were hired for the wedding. Of course, the idea that people who can't pay the electricity bill might be able to do without a catered wedding never crosses his mind.
For a while, Andrews's family income rises to $200,000 per year. I don't know about you, people, but for me this is a staggering amount of money. One could live like a king on half that amount. Still, Andrews cannot make ends meet. Even though the debt is growing and his interest rates become sky-high, he keeps spending on things that cannot possily be considered necessary expenses: cable telivision, HBO, beach house, Ipods, expensive clothes, the list is endless.
Andrews criticizes the irresponsible lenders virulently. He never stops to think, though, that those who criminally handed out unsecured loans were motivated by the same basic immaturity that got him into so much trouble: have fun now and assume that things will somehow work out in the end. These people, who are so immature that it makes my hair stand on end in horror, are the ones that got us into this mess. They mortgaged away our future, and their children's and grand-children's future because they wanted that Ipod, that house, that vacation right now and didn't want to pay for them. Now, we will all have to pay for their lack of responsibility and their inhuman immaturity for decades to come.
Showing reviews 1-5 of 44
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