Outrageous: Worst of America

There are plenty of people to blame for our current economic woes. Here, the miscreants who deserve special recognition.

By Michael Crowley

From Reader's Digest

• Joe Cassano
  As president of AIG's financial products division, Cassano pioneered the insurance giant's sale of credit-default swaps, which allowed investors to buy insurance on packages of risky subprime loans they didn't even own. In one 2007 investor conference call, Cassano boasted that "it is hard for us … to even see a scenario that would see us losing one dollar in any of those transactions."
  
  Cost so far to U.S. taxpayers: $180 billion. Cassano made $300 million before leaving AIG last year.

• Angelo Mozilo
  Under Mozilo, Countrywide Financial lured thousands of people into adjustable rate, subprime mortgages they couldn't afford and often didn't really understand.
  
  In 2007, Mozilo unloaded $121 million in options. That same year, the company announced it had lost $704 million, and the share prices tanked. The SEC has launched an insider trading investigation. (Mozilo has denied any wrongdoing.)

  Last fall, Countrywide's new corporate owner agreed to pay up to $8.7 billion to settle a massive predatory lending suit.
• Frank Raines and Daniel Mudd
  Government-sponsored mortgage giant Fannie Mae is supposed to help Americans purchase homes by providing?stability and liquidity to the mortgage industry. Today, banks are in lockdown mode, and many Fannie-backed loans are in default.
  
  Credit Raines, who was in charge from 1998 to 2004, for aggressively ?investing in risky subprime mortgages. Some?suggest he was trying to inflate profits—and thus the executive bonuses tied to them. In 2006, Fannie paid a $400 million civil fine to settle charges that Raines and others?overstated earnings. Raines admitted no guilt. Still, he walked away from his six-year tenure $91 million richer. Starting in 2005, successor Mudd continued the reckless policies. He left last year more than $10 million richer. Your bill: tens of billions.

• Senator Chris Dodd
  Chair of the Senate Banking Committee, Dodd was behind bailout language that protected bonuses for Wall Street companies—including that shocking $218 million given to AIG execs.
  
  But that's not his only qualification here. In 2003, he accepted two special "VIP" mortgages from Mozilo's Countrywide, reportedly saving up to $70,000. Dodd has protested that he wasn't even aware he'd gotten a VIP deal. Maybe so, but it sure looks bad.
  
  
• Phil Gramm
  "Some people look at subprime lending and see evil," Gramm, then the chairman of the Senate Banking Committee, said in 2001. "I see the American Dream in action." The Texas Republican, who has since retired from the Senate, fought to deregulate those infamous credit-default swaps that brought down AIG and other derivatives. He also blocked attempts to limit the kind of predatory lending that wiped out thousands of families. Today, Gramm is a well-paid executive at Swiss banking giant UBS.

• Federal regulators
  The Federal Reserve and the SEC failed to stem the reckless behavior of big banks—despite clear warning signs of potential collapse as early as 2006. That was the conclusion of a March 2009 report by the U.S. General Accountability Office. One problem: Regulators took at face value assurances from banks that they had enough capital to back up their financial gambles.

• Alan Greenspan
  The Federal Reserve's former chairman?dismissed the idea of a nationwide housing bubble as "most unlikely" while further fueling home sales with?low interest rates. In 2004, he even encouraged home buyers to pursue risky adjustable rate mortgages against the advice of other experts. And he opposed attempts to regulate the exotic financial instruments at the heart of the current mess. Greenspan recently admitted that he has "found a flaw" in his worldview, which strongly favored unrestrained markets. Now he tells us.
  
  
• Jim Cramer
  "Bear Stearns is not in trouble," the host of CNBC's Mad Money shouted on March 11, 2008. "Don't move your money from Bear!" The Wall Street bank collapsed days later. Cramer made similarly bad calls about Lehman Brothers and Bank of America.
  
  His excuse? He relied too heavily on personal assurances from insiders at those banks.

• Us
  Many of us borrowed too much and bought homes we knew we couldn't afford. And by not paying attention to and not participating more in our political system, we made it too easy for those in Washington to get in bed with corporations and special interests.
  
  It's time for all of us to wake up, live more responsibly, and put pressure on our leaders to have greater accountability. Naming—and shaming—some of the key culprits is only a start. Preventing another disaster will require us all to be more responsible—and vigilant.