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And Then the Roof Caved In: How Wall Street's Greed and Stupidity Brought Capitalism to Its Knees
CNBC's David Faber takes an in-depth look at the causes and consequences of the recent financial collapse And Then the Roof Caved In lays bare the truth of the credit crisis, whose defining emotion at every turn has been greed, and whose defining failure is the complicity of the U.S. government in letting that greed rule the day. Written by CNBC's David Faber, this book painstakingly details the truth of what really happened with compelling characters who offer their first-hand accounts of what they did and why they did it. Page by page, Faber explains the events of the previous seven years that planted the seeds for the worst economic crisis since the Great Depression. He begins in 2001, when the Federal Reserve embarked on an unprecedented effort to help the economy recover from the attacks of 9/11 by sending interest rates to all time lows. Faber also gives you an up-close look at where the crisis was incubated and unleashed upon the world-Wall Street-and introduces you to insiders from investment banks and mortgage lenders to ratings agencies, that unwittingly conspired to insure lending standards were abandoned in the head long rush for profits. From regulators who tried to stop this problem before it swung out of control to hedge fund managers who correctly foresaw the coming housing crash and profited from it, And Then the Roof Caved In shows you how the crisis we currently face came to be.
208 pages, Hardcover
First published June 15, 2009
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Displaying 1 - 30 of 32 reviews
November 11, 2010
It may be because I'd already read THE BIG SHORT and THE GREATEST TRADE EVER, but as I listened to this book, I didn't really think I was learning much. This could have been my problem. Maybe I was distracted, but it doesn't add much where those better recognized books on the crisis leave off.
July 22, 2024
A "JOURNALISTIC" OVERVIEW OF THE CREDIT CRISIS OF 2007-2009
David Faber stated in the "Acknowledgements" section of this 2009 book, "This book is the product of my reporting about the financial crisis that has gripped the world over the past three years."
He begins the book by pointing out the various trends that would ultimately add up to create crises: e.g., homeowners refinancing their homes for cash (Pg. 18); more people "flipping" homes---that is, buying and then reselling a house in order to turn a quick profit (pg. 21); the rise of "no-income-verification" or "stated income" loans, which required no verification of the buyer's finances (Pg. 35); second mortgages/"piggyback" loans (Pg. 39-40), etc.
He also notes that some subprime lenders "were not concerned about being paid back," since they immediately sold the mortgage to an investment bank or someone else, pocketing their fee. (Pg. 60) Lehman Brothers investment bank began trying to control all aspects of the mortgage business, buying up originator companies, servicer companies, etc. (Pg. 73) Ultimately 80% of all subprime mortgages were being "securitized and sold to voracious investors around the world. The subprime mortgage had become a chief export of our country." (Pg. 78)
He casts heavy blame on the credit rating agencies: "There would have been no credit crisis and therefore no economic crisis if not for the complicity of the rating agencies... Their job was to protect investors from that machine. Instead they protected the profits they were making from it." (Pg. 81) He charges that they "turned their back on common sense." (Pg. 101)
He observes, "It is hard to understate the insanity that seemed to have crept into the CDO market in 2006-2007. Young structurers only a few years out of business school were working 14-hour days and making a million dollars a year... many of the participants in this market believe that with the proper examination, significant fraud will be found." (Pg. 106-107) Faber laments, "I have always found it maddening when people who are merely mediocre at their jobs are paid like kings..." (Pg. 128)
Not the most detailed telling of the story, this is still a very engaging and compact outlining of the crisis, by a reporter who's not afraid to "point fingers."
David Faber stated in the "Acknowledgements" section of this 2009 book, "This book is the product of my reporting about the financial crisis that has gripped the world over the past three years."
He begins the book by pointing out the various trends that would ultimately add up to create crises: e.g., homeowners refinancing their homes for cash (Pg. 18); more people "flipping" homes---that is, buying and then reselling a house in order to turn a quick profit (pg. 21); the rise of "no-income-verification" or "stated income" loans, which required no verification of the buyer's finances (Pg. 35); second mortgages/"piggyback" loans (Pg. 39-40), etc.
He also notes that some subprime lenders "were not concerned about being paid back," since they immediately sold the mortgage to an investment bank or someone else, pocketing their fee. (Pg. 60) Lehman Brothers investment bank began trying to control all aspects of the mortgage business, buying up originator companies, servicer companies, etc. (Pg. 73) Ultimately 80% of all subprime mortgages were being "securitized and sold to voracious investors around the world. The subprime mortgage had become a chief export of our country." (Pg. 78)
He casts heavy blame on the credit rating agencies: "There would have been no credit crisis and therefore no economic crisis if not for the complicity of the rating agencies... Their job was to protect investors from that machine. Instead they protected the profits they were making from it." (Pg. 81) He charges that they "turned their back on common sense." (Pg. 101)
He observes, "It is hard to understate the insanity that seemed to have crept into the CDO market in 2006-2007. Young structurers only a few years out of business school were working 14-hour days and making a million dollars a year... many of the participants in this market believe that with the proper examination, significant fraud will be found." (Pg. 106-107) Faber laments, "I have always found it maddening when people who are merely mediocre at their jobs are paid like kings..." (Pg. 128)
Not the most detailed telling of the story, this is still a very engaging and compact outlining of the crisis, by a reporter who's not afraid to "point fingers."
December 27, 2021
A concisely and clearly written book. Faber offers a relatively brief overview of the housing collapse of 2008 and the financial structures that led to it.
It doesn't cover everything. There are larger books with more details and deeper explanations/explorations than what is here. I would say, however, that the average person has no need for anything much more detailed than they will find here.
Unfamiliar with finance? Not sure what a CDO is, or a mortgage tranch? Unsure how one company sells a mortgage to another? Then you are no different than 99% of the population, and this book was written for you. You won't be an expert after reading it, but you'll have a firm understanding of the important developments that led to 2008.
My one criticism would be the lack of information about the government's response to the housing collapse. Nothing is provided about TARP (indeed it is never mentioned even in the epilogue). Part of that is due to when the book was written, so perhaps this book is a bit dated by now as the aftermath of the housing crisis is just as important as anything else.
Still, an informative, if prosaic, dive into the complicated world of collateralized debt/mortgage obligations...I promise it's more interesting than it sounds.
It doesn't cover everything. There are larger books with more details and deeper explanations/explorations than what is here. I would say, however, that the average person has no need for anything much more detailed than they will find here.
Unfamiliar with finance? Not sure what a CDO is, or a mortgage tranch? Unsure how one company sells a mortgage to another? Then you are no different than 99% of the population, and this book was written for you. You won't be an expert after reading it, but you'll have a firm understanding of the important developments that led to 2008.
My one criticism would be the lack of information about the government's response to the housing collapse. Nothing is provided about TARP (indeed it is never mentioned even in the epilogue). Part of that is due to when the book was written, so perhaps this book is a bit dated by now as the aftermath of the housing crisis is just as important as anything else.
Still, an informative, if prosaic, dive into the complicated world of collateralized debt/mortgage obligations...I promise it's more interesting than it sounds.
April 7, 2022
Fantastic read. I think this should be required reading in high school or college.
July 31, 2009
This is an excellent exploration of a very bad time. For its brevity, it has plenty of insights. David Faber does more with explaining synthetic credit default obligations (CDOs) than anyone else I’ve read, in book form or online. And I like to think I’ve read an awful lot since September 18, 2008 – the day the free market ended.
He is best when he is digging and reporting and trying, somehow, to explain inordinately complex derivative schemes, schemes about which former Chairman of the Federal Reserve Alan Greenspan admitted that, even with his background in mathematics and “a hundred PhDs” at his disposal, he couldn’t quite make sense of.
After a quarter century of covering Wall Street – and a whole lifetime living in New York City – Faber takes the collapse of the free market quite personally. He goes out of his way to exculpate the individuals who did this to the world, advising that they were all participants trying to feed their families, but he indicts the system ferociously.
He concludes like this, treating his day job of reporting at CNBC:
“On some occasions, I find myself suppressing a desire to stop my report and get up and shout at the camera, ‘Do you have any idea what has happened to our financial system? Do you realize it has been turned upside-down and inside-out and no one is quite sure of anything anymore?’”
For those who watch Faber’s measured delivery and quality reporting, this is quite a revelation. Nobody seems less likely to shout at a camera than David Faber.
He has other gems in this book:
“At the height of its credit-default-writing frenzy in 2005 and 2006, AIG would sell credit protection on virtually anything. And why not? It had a AAA credit rating and so an extremely low cost for borrowing money and it barely needed to keep anything in reserve for this insurance, which its computer models said it would never need to pay off.”
Ah yes, AIG: the crowned heavyweight champion of the no-claims-paid-insurance era. Thank heavens these companies were finally seduced by their own people, writing no-claims-paid policies for one another – as they’d been writing for the general public throughout a generation of robust deregulation and all the “innovation” it spawned.
Here’s more:
“Or, said another way, (Wall Street firms) had run out of actual mortgages to package up and sell and so started to create hypothetical ones. That’s how you get a synthetic CDO.”
And then there’s the ratings agencies, S&P and Moody’s:
“The reason triple-A credits never default isn’t because the initial credit rating is accurate. It’s because the ratings agencies always downgrade them before they default. Triple-A doesn’t mean triple-A for life – not even close.”
Betcha China wishes it had known that in 2005.
If you want a book that introduces you to the end of the free market and does it in an intelligent but not impenetrable way, Faber’s your guy.
He is best when he is digging and reporting and trying, somehow, to explain inordinately complex derivative schemes, schemes about which former Chairman of the Federal Reserve Alan Greenspan admitted that, even with his background in mathematics and “a hundred PhDs” at his disposal, he couldn’t quite make sense of.
After a quarter century of covering Wall Street – and a whole lifetime living in New York City – Faber takes the collapse of the free market quite personally. He goes out of his way to exculpate the individuals who did this to the world, advising that they were all participants trying to feed their families, but he indicts the system ferociously.
He concludes like this, treating his day job of reporting at CNBC:
“On some occasions, I find myself suppressing a desire to stop my report and get up and shout at the camera, ‘Do you have any idea what has happened to our financial system? Do you realize it has been turned upside-down and inside-out and no one is quite sure of anything anymore?’”
For those who watch Faber’s measured delivery and quality reporting, this is quite a revelation. Nobody seems less likely to shout at a camera than David Faber.
He has other gems in this book:
“At the height of its credit-default-writing frenzy in 2005 and 2006, AIG would sell credit protection on virtually anything. And why not? It had a AAA credit rating and so an extremely low cost for borrowing money and it barely needed to keep anything in reserve for this insurance, which its computer models said it would never need to pay off.”
Ah yes, AIG: the crowned heavyweight champion of the no-claims-paid-insurance era. Thank heavens these companies were finally seduced by their own people, writing no-claims-paid policies for one another – as they’d been writing for the general public throughout a generation of robust deregulation and all the “innovation” it spawned.
Here’s more:
“Or, said another way, (Wall Street firms) had run out of actual mortgages to package up and sell and so started to create hypothetical ones. That’s how you get a synthetic CDO.”
And then there’s the ratings agencies, S&P and Moody’s:
“The reason triple-A credits never default isn’t because the initial credit rating is accurate. It’s because the ratings agencies always downgrade them before they default. Triple-A doesn’t mean triple-A for life – not even close.”
Betcha China wishes it had known that in 2005.
If you want a book that introduces you to the end of the free market and does it in an intelligent but not impenetrable way, Faber’s your guy.
February 6, 2014
rating: 2.5
This book was okay. It's a basic overview of what caused the Great Recession. I don't think he did a great job explaining what happened, so this would be a bad book for people who don't know what happened, and it doesn't present any new information so there's that as well.
My biggest bone of contention was that he did the whole journalism balance thing that is particular to the USA. I'm not sure if there's a name for it but by balance, I don't mean telling both sides of the story.
There's this ... gah, I don't know how to say it. It's like the Trayvon Martin case where a kid was chased and gunned down, and the perp said he was just defending himself (I don't believe that BS but whatever.) Anyway, during the trial and even before, the media felt the need to include that some of his friends where gang bangers and he had pictures of himself dressed that way. That had nothing to do with the case whatsoever. He wasn't threatening anyone. He was going home from the corner store.
It's like, regardless of how innocent a victim may be, the media has to find a 'balanced' angle that in some way blames the victim. The major media hawks will start screaming if journalists don't do this.
This is what Faber did here. Regardless of the fact that these companies (and he acknowledges this) brought the roof down, he still felt like he had to blame the victims. The mortgage brokers were good men trying to put 'bread on the table', so to speak, and since they didn't check out the people they were giving these loans too, it must've been the greed on the part of the person taking out the loan.
Like, one example has a man and his family selling their house and buying a new one. When it was obvious that they couldn't pay their mortgage, they refinanced. This gave them a lot of extra money and so they built a pool. The homeowners later found out that this company gave them two mortgages.
Despite giving them two mortgages (and basically lying to them), he doesn't mention this again and in the end of the book, he mentions the greed of people who want to build a pool in their backyard.
Bleh. That's BS. Maybe some people did lie but I highly down that the financial world would fall down on their knees over this. The fact is that these banks and companies gave money to people they were betting couldn't pay the money back and they were right.
This book was okay. It's a basic overview of what caused the Great Recession. I don't think he did a great job explaining what happened, so this would be a bad book for people who don't know what happened, and it doesn't present any new information so there's that as well.
My biggest bone of contention was that he did the whole journalism balance thing that is particular to the USA. I'm not sure if there's a name for it but by balance, I don't mean telling both sides of the story.
There's this ... gah, I don't know how to say it. It's like the Trayvon Martin case where a kid was chased and gunned down, and the perp said he was just defending himself (I don't believe that BS but whatever.) Anyway, during the trial and even before, the media felt the need to include that some of his friends where gang bangers and he had pictures of himself dressed that way. That had nothing to do with the case whatsoever. He wasn't threatening anyone. He was going home from the corner store.
It's like, regardless of how innocent a victim may be, the media has to find a 'balanced' angle that in some way blames the victim. The major media hawks will start screaming if journalists don't do this.
This is what Faber did here. Regardless of the fact that these companies (and he acknowledges this) brought the roof down, he still felt like he had to blame the victims. The mortgage brokers were good men trying to put 'bread on the table', so to speak, and since they didn't check out the people they were giving these loans too, it must've been the greed on the part of the person taking out the loan.
Like, one example has a man and his family selling their house and buying a new one. When it was obvious that they couldn't pay their mortgage, they refinanced. This gave them a lot of extra money and so they built a pool. The homeowners later found out that this company gave them two mortgages.
Despite giving them two mortgages (and basically lying to them), he doesn't mention this again and in the end of the book, he mentions the greed of people who want to build a pool in their backyard.
Bleh. That's BS. Maybe some people did lie but I highly down that the financial world would fall down on their knees over this. The fact is that these banks and companies gave money to people they were betting couldn't pay the money back and they were right.
March 30, 2010
‘No-one seemed to ask what would happen if housing prices started to fall.’
This book, by CNBC’s David Faber, provides an analysis of the global financial crisis that commenced in 2007. The cause of this crisis, as written by Mr Faber, is a combination of greed and regulatory failure.
David Faber traces the lineage of the subprime mortgage industry, and tracks it back to the aftermath of the September 11 2001 attacks when interest rates were lowered to try to help the American economy to recover. The lowering of the interest rate apparently enabled a drop in lending standards which allowed people to take on mortgages they couldn’t afford.
The causes and consequences of this collapse are covered in this book. While reading ex post analysis may be cold comfort to many, seeking to understand the various factors involved is important in order to try to prevent such an occurrence in future. I think that this book provides a good starting point for those of us who seek to better understand what went wrong, and why. The subprime mortgage industry failure may have originated in the USA, but its impacts are global.
Jennifer Cameron-Smith
This book, by CNBC’s David Faber, provides an analysis of the global financial crisis that commenced in 2007. The cause of this crisis, as written by Mr Faber, is a combination of greed and regulatory failure.
David Faber traces the lineage of the subprime mortgage industry, and tracks it back to the aftermath of the September 11 2001 attacks when interest rates were lowered to try to help the American economy to recover. The lowering of the interest rate apparently enabled a drop in lending standards which allowed people to take on mortgages they couldn’t afford.
The causes and consequences of this collapse are covered in this book. While reading ex post analysis may be cold comfort to many, seeking to understand the various factors involved is important in order to try to prevent such an occurrence in future. I think that this book provides a good starting point for those of us who seek to better understand what went wrong, and why. The subprime mortgage industry failure may have originated in the USA, but its impacts are global.
Jennifer Cameron-Smith
September 12, 2010
"Greed is good" - so it's been said. Greed creates economic efficiency, but when there's no control or governance chaos ensues. This book clearly demonstrates what happens when logic and common sense are ignored in the pursuit of the "American Dream". David Faber explains this disaster so that the average reader may readily comprehend, which is something that no one who was involved in this mess could do.
I read this book soon after reading Harry Markopolos' "No One Would Listen" which described the Bernie Madoff scandal. Be warned! These 2 books contain information so eerie that they should be read with the lights on. Unfortunately, the reader may find there's really nobody out there.
I read this book soon after reading Harry Markopolos' "No One Would Listen" which described the Bernie Madoff scandal. Be warned! These 2 books contain information so eerie that they should be read with the lights on. Unfortunately, the reader may find there's really nobody out there.
September 30, 2011
What I found most interesting was Kyle Bass’s attempt to be forthright with Bear Stearns to alert them and other investment and financial institutions of their cataclysmic collision path with sure disaster. I guess to them Bass must have resembled some overly angst person with apocalyptic views about the world of finance. Bass had done his research, presented the facts, and still these institutions turned a blind eye and gave him the cold shoulder. They were so “high” on making money that they thought they would NEVER come down hard off of that high. In the world of Wall Street, greed is an especially terrible addiction to possess.
November 28, 2009
A failure at multiple levels in oversight. Fannie and Freddie accting problems----withdrawal from mortgage mart---lowered standards ---no accountability--decreased redlining--political motives--9/11--CDO--CDS--ninja loans
January 14, 2011
Good overview of the mortgage mess and how it lead to the last recession. Not a ton of depth, but it's written in such a way as to be accessible to anyone - even someone with no understanding of finance or economics.
February 28, 2012
This was a decent overview into how the most recent financial crises occurred. It is told in layman's terms and is easy to follow even if you are not a financial wiz. I found this read to be informative without be dry.
July 2, 2012
I think this is one of the better books on the subprime greed machine. It has personal anecdotes from main street and Wall Street as well as good explanations. It was interesting to see how Moody's took some fault in all this as well.
November 28, 2013
This was required reading for my Financial Markets class but I found that I enjoyed the book. It is not something I would pick out but a well written book for those interested in the events leading up to the financial collapse of 2008
April 27, 2014
I was interested to know how we got into this mess and all I was getting for an answer was, "it is complicated". Well, it is. David does a good job of explaining this in terms that a non-financial person can understand.
Want to read
June 26, 2009I am hoping to get to this book after I finish reading Seven Years in Tibet
July 8, 2009
Good read. Faber does well at the tough job of explaining just what those bankers built that caused so much trouble.
It's pretty amazing what these guys got away with for so long.
It's pretty amazing what these guys got away with for so long.
January 13, 2010
relatively short, but detailed enough not to lose anything.
February 20, 2010
Excellent book by CNBC anchor. If this doesn't convince you that those on Wall Street need a helluva lot more regulation, then you're not using the brain God gave you.
March 16, 2010
Extremely clear, and easy to follow.
May 9, 2010
This was a very readable discussion of our financial crisis by an excellent author. Kudos for making a complex subject understandable for the general public.
Read
June 7, 2010Easiest-to-understand book I've read about what happened on Wall Street and in the housing market.
January 12, 2011
Each finance book I read gets me a little closer to understanding risk and the collapse of the financial system.
March 9, 2011
Written in a manner that provided insight and clarity. Easy read. An excellant analysis of the problem supported by good intelligence and research.
August 2, 2011
Pretty concise book on how liar loans fueled by wall street greed led to the destruction of the world economy and the current despair that most of the world is in today.
May 4, 2012
very fast read..and interesting book...reminding us the true nature of what a bank should be...but we often forgot and often fooled by the banks..
July 11, 2012
After listening to Warren Buffet's interviews with Charlie Rose, this book served as an excellent resource of the financial history before the financial collapse in year 2008.
May 25, 2014
This book is too dated to be very useful at this point. It is clear that if you don't understand what you are investing in then don't invest in it.
August 22, 2015
If you want an overall view of what happened to the housing bubble, this is a good book to start.
February 1, 2016
Give details of crisis at the ground level. Suppliments television show
Displaying 1 - 30 of 32 reviews