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Your Opinion: Response to Sampson on financial crisis

Your Opinion: Response to Sampson on financial crisis

November 7th, 2011 by Milton Garber, Jefferson City in News

Dear Editor:

In his letter of Nov. 1 Steve Sampson complains, somewhat vituperatively, that I have not read his recommended book, "Reckless Endangerment" by Gretchen Morgenson and Joshua Rosner concerning the financial crisis of 2008.

I have now looked at reviews of the book, one by Robert Reich in the New York Times and one by John Tamny in Forbes Magazine. Reich, a professor at the University of California and former Secretary of Labor under President Clinton, is somewhat left-leaning. Tamny, a staff writer at Forbes who is associated with the Cato Institute, is very much right-leaning.

Both reviewers agree that the book, insofar as it goes, is accurate but that it presents only part of the picture.

"The real problem, which the authors only hint at, is that Washington and the financial sector have become so tightly intertwined that public accountability has all but vanished." (Reich)

"Readers must continue to wait for the book that offers the true explanation of how we got here; an explanation that isn't credibly found in Morgenson and Rosner's Reckless." (Tamny)

Morgenson, a business columnist for the New York Times, is a journalist and, so, has an eye for personal anecdotes. Rosner is an expert on housing finance and, so, has an eye for, well, housing finance.

It is like the carpenter who only has a hammer. To him everything looks like a nail. To Morgenson and Rosner everything looks like a personal anecdote or housing finance.

There was more to the crisis than that. For one thing there was the role of sophisticated financial engineering, the development and use of collateralized debt obligations, credit default swaps, and other complex financial products.

For a more complete analysis of the crisis I recommend "13 Bankers" by Simon Johnson, an economic professor at MIT and former chief economist at the IMF, and James Kwak, formerly a consultant for McKinsey & Company and a software entrepreneur.

Mr. Sampson, you say you don't know where I got my information in my letter of Oct.16. This is either an oversight or a misrepresentation as I clearly cited four sources, including "13 Bankers," at the end of my letter.

You also jeer that I probably shy away from reading non-fiction. Having earned bachelors, masters, Ph.D., and law degrees, I think I have read as much or more non-fiction as you.