Paying the Price: Ending the Great Recession and Beginning a New American Century

6. The Foreclosure Fiasco

The call with Bob Steele wasn’t going well. He was curt and growing increasingly annoyed as I laid out a plan to stem the accelerating housing crash. It was summer 2008, and it was clear that housing was the core of the economy’s problem, although it wasn’t yet clear that the problem was catastrophic.

Moody’s executives had arranged the call. They knew the Under Secretary for Domestic Finance in the Bush Treasury Department from his years working at Goldman Sachs. Two years earlier, Moody’s had purchased Economy.com, the firm I had cofounded in 1990, and I had gained some credibility within the credit rating agency by arguing that housing was a bubble and that Moody’s highly profitable mortgage securitization business ...