Edmund Andrews on Wall Street Crisis: 'There Really Were a Lot of Crooks Out There'
Former Times mortgage-industry reporter Edmund Andrews caused some controversy with what he left out of his 2009 book "Busted: Life Inside the Great Mortgage Meltdown,"about his own personal mortgage crisis. His book's denunciations of greedy banks left out vital information - his wife's previous two bankruptcies, making Andrews look a bit less of an innocent victim of subprime lenders.
Andrews took the New York Times buyout and is now contributing to the finance blog Capital Gains and Games, and has expanded his criticism to include all of capitalism, claiming in a Monday post that "the wanton recklessness on Wall Street that nearly wrecked the economy has exposed the limits of laissez faire thinking."
When I was in journalism school many years ago, a professor remarked that business reporters often go through three phases of maturation. At the start, the callous young reporter assumes that all business executives are rich crooks who need to be exposed. As the reporter enters the second phase, he gains access to top executives and discovers that they are much more open, hard-working and smart than they had seemed. In the final phase, the fully-seasoned journalist breaks through to the highest level of awareness: it turns out, there really are a lot of crooks out there.
That's the feeling I have now. In more than 20 years as a business and economics reporter for The New York Times, I liked nothing more than a good business scandal. But I also considered myself a fan of free markets, opencompetition and minimal government regulation. I like the dynamism of the marketplace - the constant turbulence, the risk-taking and the periodic drama of little-known start-ups toppling Goliaths. Microsoft over IBM in personal computers. Google over Microsoft in web-based services. Those things happen, and the public has generally benefitted.
But the wanton recklessness on Wall Street that nearly wrecked the economy has exposed the limits of laissez faire thinking. It's clear that banks and Wall Street firms played central roles in the catastrophe. There really were a lot of crooks out there. The free market did not self-correct; it essentially self-destructed. Rational self-interest did not save the day. What saved the day, if indeed it's been saved, was massive government intervention.
In joining Capital Gains and Games, I want to track these issues as Washington tries to overhaul economic policy and financial regulation.
After complimenting liberal Democrat Barney Frank for his regulatory pushing as chairman of the House Financial Services Committee," Andrews singled out a couple of left-wing non-profit groups for praise.
There is one encouraging development: an almost adhoc political action group called Americans for Financial Reform,backed by about 200 community groups, consumer groups, labor unions, the AARP and even some businesses. Yes, many of the groups are liberal or left-of-center. But some of them - the Center for Responsible Lending, the Center for Economic Policy and Research - provided the best and earliest warnings about the housing bubble and reckless mortgage lending.