All the Devils Are Here - The Hidden History of the Financial Crisis

1148 Pages·2012·2.75 MB·English

3/1148

Table of Contents

Title Page
Copyright Page
Dedication

Chapter 1 - The Three Amigos
Chapter 2 - “Ground Zero, Baby”
Chapter 3 - The Big, Fat Gap
Chapter 4 - Risky Business
Chapter 5 - A Nice Little BISTRO
Chapter 6 - The Wizard of Fed
Chapter 7 - The Committee to Save the
World
Chapter 8 - Why Everyone Loved Moody’s
Chapter 9 - “I Like Big Bucks and I Cannot
Lie”
Chapter 10 - The Carnival Barker
Chapter 11 - Goldman Envy

Chapter 12 - The Fannie Follies
Chapter 13 - The Wrap
Chapter 14 - Mr. Ambassador
Chapter 15 - “When I Look a Homeowner in
the Eye...”
Chapter 16 - Hank Paulson Takes the Plunge
Chapter 17 - “I’m Short Your House”
Chapter 18 - The Smart Guys
Chapter 19 - The Gathering Storm
Chapter 20 - The Dumb Guys
Chapter 21 - Collateral Damage
Chapter 22 - The Volcano Erupts

Epilogue: Rage at the Machine
Acknowledgements
INDEX

5/1148

7/1148

PORTFOLIO / PENGUIN

Published by the Penguin Group

Penguin Group (USA) Inc., 375 Hudson Street, New

York, New York 10014, U.S.A. • Penguin Group
(Canada), 90 Eglinton Avenue East, Suite 700,

Toronto, Ontario, Canada M4P 2Y3 (a division of

Pearson Penguin Canada Inc.) • Penguin Books Ltd,
80 Strand, London WC2R 0RL, England • Penguin
Ireland, 25 St Stephen’s Green, Dublin 2, Ireland (a
division of Penguin Books Ltd) • Penguin Books Aus-
tralia Ltd, 250 Camberwell Road, Camberwell, Victor-

ia 3124, Australia (a division of Pearson Australia
Group Pty Ltd) • Penguin Books India Pvt Ltd, 11

Community Centre, Panchsheel Park, New Delhi - 110

017, India • Penguin Group (NZ), 67 Apollo Drive,

Rosedale, North Shore 0632, New Zealand (a division
of Pearson New Zealand Ltd) • Penguin Books (South
Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Jo-

hannesburg 2196, South Africa

Penguin Books Ltd, Registered Offices: 80 Strand,

London WC2R ORL, England

First published in 2010 by Portfolio / Penguin, a

member of Penguin Group (USA) Inc.

Copyright © Bethany McLean and Joseph Nocera,

2010 All rights reserved

Library of Congress Cataloging-in-Publication Data

McLean, Bethany.

All the devils are here : the hidden history of the fin-
ancial crisis / Bethany McLean and Joe Nocera. p. cm.

Includes index.

eISBN : 978-1-101-44479-5

1. Global Financial Crisis, 2008-2009 2. Financial
crises—United States—History—21st century. 3.
Mortgage-backed securities—United States. 4.

Subprime mortgage loans—United States. I. Nocera,

Joseph. II. Title.

HB37172008 .M35 2010

330.973’093—dc22

2010032893

9/1148

Without limiting the rights under copyright reserved
above, no part of this publication may be reproduced,

stored in or introduced into a retrieval system, or

transmitted, in any form or by any means (electronic,
mechanical, photocopying, recording, or otherwise),
without the prior written permission of both the copy-

right owner and the above publisher of this book.

The scanning, uploading, and distribution of this book

via the Internet or via any other means without the
permission of the publisher is illegal and punishable
by law. Please purchase only authorized electronic
editions and do not participate in or encourage elec-
tronic piracy of copyrightable materials. Your support

of the author’s rights is appreciated.

http://us.penguingroup.com

10/1148

For Sean, and Dawn

CAST OF CHARACTERS

THE MORTGAGE MEN

Ameriquest
Roland Arnall Founder of ACC Capital Hold-
ings, the parent company of Ameriquest. A
subprime lending pioneer who became a bil-
lionaire. His first company, Long Beach
Mortgage, spawned more than a dozen other
subprime companies.
Aseem Mital Ameriquest veteran who be-
came CEO in 2005.
Ed Parker Mortgage veteran hired in 2003
to investigate lending fraud in Ameriquest’s
branches.
Deval Patrick Assistant attorney general
who led the government’s charge against
Long Beach in 1996, only to join
Ameriquest’s board in 2004.

Countrywide Financial
Stanford Kurland President and COO. Long
seen as Mozilo’s successor, he left the com-
pany in 2006.
David Loeb Co-founder, president, and
chairman. Stepped down in 2000.
John McMurray Countrywide’s chief risk
officer.
Angelo Mozilo Co-founder and CEO until
2008. Dreamed of spreading homeowner-
ship to the masses. Became a billionaire in
the process, but couldn’t resist pressure to
enter the subprime mortgage business.
David Sambol The head of Countrywide’s
sales force. Aggressively pushed Country-
wide to keep up with subprime lenders.
Eric Sieracki Longtime Countrywide em-
ployee who was named CFO in 2005.

Primary Residential

13/1148

Dave Zitting Old-school mortgage banker
who steered clear of subprime lending.

Ownit
Bill Dallas Founder of Ownit, a subprime
company in which Merrill Lynch held a 20
percent stake.

THE FINANCIAL
INSTITUTIONS

American International Group (AIG)
Steve Bensinger CFO under Martin Sullivan
from 2005 to 2008.
Joe Cassano CEO of AIG Financial Products
from 2001 to 2008.
Andrew Forster One of Cassano’s chief
deputies in London.
Al Frost AIG-FP marketer at the center of
the multisector CDO deals that put AIG on

14/1148

the hook for $60 billion of subprime
exposure.
Maurice R. “Hank” Greenberg AIG’s CEO
from 1968 to 2005. Forced to resign by Eliot
Spitzer.
Gene Park AIG-FP executive who noticed the
early warning signs on multisector CDOs.
Tom Savage CEO of AIG-FP from 1994 to
2001.
Howard Sosin Founder of AIG-FP. Ran it
from 1987 to 1993.
Martin Sullivan Succeeded Greenberg in
2005. Forced out by the board in 2008.
Robert Willumstad Sullivan’s successor as
CEO until the financial crisis hit four months
later.

Bear Stearns
Ralph Cioffi Bear Stearns hedge fund man-
ager. His two funds—originally worth $20
billion—went bankrupt in the summer of
2007 because of their subprime exposure.

15/1148