Copyright American Library Association, used with permission.
Muolo (residential finance specialist and executive editor, National Mortgage News) and Padilla (a business reporter who has covered subprime lenders for the Orange County Register) describe the residential finance debacle that led to the housing and credit crisis. Although the authors' central premise is that the crisis was the result of "Wall Street's thirst for profits" and disregard for traditional loan standards, other agents are also faulted. Homebuyers were allowed "no-doc" loans; many mortgage brokers (who numbered 253,000 in 2006) were only concerned with making loans; wholesale lenders were anxious to supply brokers with funds; and investment bankers (often supplying the funds) wanted (subprime) mortgages to buy and market with insurance to cover high credit risks. As the subprime mortgage market grew, moral hazards existed at all levels. Plentiful funds for subprime mortgages aided housing price inflation and excessive earnings for many in the housing/mortgage industry. Home ownership, a frequently stated social and economic goal, has suffered a serious setback. As a narrative this book provides many insights to this still unfolding story. See related Robert Shiller's The Subprime Solution (CH, Dec'08, 46-2206) and Mark Zandi's Financial Shock (CH, Dec'08, 46-2210), which are more suitable for academic audiences. Summing Up: Recommended. General readers and lower-division students. E. C. Erickson California State University, Stanislaus