Many professionals and analysts in the industry have talked about the events that led to a massive financial crisis in the United States in 2008. In his review, Madrick looks at several publications about the mortgage implosion. The author argues that, although the system initially had some potential value for society, the increasing desire to personal profit became the driving force behind the economic collapse.
The writer starts the review by describing the reaction of Robert Rubin. Rubin, a former director and adviser of a prominent investment bank, argues that the mortgage implosion could not be anticipated, including his company. This statement is provided as an example of how many financial specialists presented the problem. Instead, the blame was often transferred from businesses to the federal government, which also advertised the availability of mortgages to its citizens.
However, the idea that the system was faulty from the start is challenged by other analysts. One of them is the author of The Trillion Dollar Meltdown, Charles Morris. He claims that the “unquenchable thirst for easy profits” is what led to the eventual collapse of the system (Madrick). It encouraged companies to exploit mortgage deals and take risks, which resulted in the credit system’s fall.
Thus, greed and the ability to manipulate the mortgage system were at the core of the problem. Nevertheless, the system itself had potential and value to society. Packaged mortgages spread the risk among different types of investors and gave people more chances to purchase a home (Madrick). Thus, this project could have brought home and business owners more prosperity and led to research and entrepreneurship development.
This system was used by banking and other financial organizations without regard to this potential for economic growth. The writer argues that the advisers and directors could foresee the oncoming crisis but chose to ignore the risks in favor of reaching their own goals (Madrick). As a result, the vulnerable system became a tool for personal profit and collapsed due to the lack of care and caution from organizations that advertised packaged mortgages.
Madrick, Jeff. “How We Were Ruined & What We Can Do.” The New York Review., 2009.