Pulitzer Prize Winning Journalist Discusses 2008 Financial Crisis with Students and Teachers
By Hazel Millard and Savannah Pees
History teacher Vincent Dennie first opened Reckless Endangerment, by Gretchen Morgenson and Joshua Rosner, a few years ago, during the time of the Occupy Wall Street movement. After reading the book, which outlines the causes and results of the 2008 financial crisis, Dennie decided to attend the on-going rally and show his support for Reckless Endangerment, with a poster in the style of a lesson plan on Morgenson’s book.
Dennie encouraged his students to read the book and many of them did. Shortly thereafter, Dennie sent Morgenson an email inviting her to come speak to his students about Reckless Endangerment.
Tuesday, March 19th, 2013 was the second time Morgenson spoke at Tech. At the beginning of her talk, she brought up the variety of groups she has spoken with during her promotional book tour, including corporate businessmen and Capitol Hill officials. However, Morgenson says that her first talk “here at Brooklyn Technical High School was one of my highlights.”
Morgenson and Rosner wanted “to tell the story of what went wrong.” Morgenson realized that many of the books about the recent financial crash and the subsequent recession that had already been written were “tick-tock” stories, just reporting on what happened and when. Morgenson wanted Reckless Endangerment to fill in the gaps created by these books.
Morgenson noted that a second goal was to provoke an honest debate with Washington about the 2008 crisis in order to prevent similar problems in the future. Throughout her presentation, Morgenson expressed concern that too little is currently being done to stave off a reoccurrence of the problems highlighted in her book.
During her talk, Morgenson emphasized three main themes of the recent financial crisis. The first is the Washington-Wall Street revolving door that mixes private and public interests. The 2008 crisis was in part a result of the failure of the government to regulate and reform a negligent private sector, thus allowing corporation profits to fraudulently balloon in size.
The second theme is the lack of corporate accountability. Despite the criminal actions of the banking and insurance agency executives, they received no punishment from the federal government. There was no penalty for their failure.
In comparison, during Savings and Loans Crisis of the 1987 recession, 830 executives faced jail time for their actions.
As Morgenson pointed out, even Attorney General Eric Holder admitted that the financial sector has become too big to prosecute. Now the banks are “not only too big to fail, but also too big to jail,” says Morgenson.
The third theme is what Morgenson calls the “paradox in a story full of paradoxes.” The government’s goal in establishing these mortgage and loan programs was to help individuals at a disadvantage achieve the “warm and fuzzy American dream” of home ownership. However, because of the lack of regulation provided by the said government, these individuals felt the effects of the crisis the most. According to Morgenson, it isn’t clear whether the $137 billion given in bailout to Fannie Mae and Freddie Mac will be returned to the taxpayers.
Jan Michael Vicencio ’14 agrees “with her opinion about the paradox of this problem. To think that it all started with pure intentions, by helping people, only to be corrupted by a few, is sickening. It is a shame that the few people that these financial deregulations were supposed to help, instead, became the victims hit the hardest during the recession.”
This system of “privatizing gains” and “socializing losses” is not what Morgenson believes capitalism should be. During her talk, Morgenson emphasized the fact that the crisis placed a “spotlight on what capitalism has become,” a “perversion” of what it should be.
The final segment of Morgenson’s hour-long talk was the role of government during the 2008 crisis and the following recession. Morgenson centered this segment on Washington’s weak and ineffective legislative response: Dodd-Frank. This act was proclaimed to be the end of too big to fail, however, as Morgenson says, the concept “is still alive and well.” This lack of regulation is sending a dangerous message to corporations: the bigger they are, the more government support they will have when they fall.
Now, whenever reform is discussed, officials receive a strong pushback from the enormous “buzz saw” of corporate lobbyists in Washington.
For Morgenson, the issue isn’t more regulation, but rather finding “regulators who are willing to regulate.” With officials at the will of the PACs of the moneyed interests, there is little incentive to work for an effective policy change.
If this trend continues in Washington and on Wall Street, Morgenson remarked, she might have to write a sequel: Reckless Re-endangerment.
In an ideal world, Morgenson says her solution to fix America’s damaged economy would be to cut banks down to a manageable size and specialize them.
However, in the real world, the large banks that fostered the 2008 recession are still taking part in reckless behavior. While the big corporations succeed, the small banks struggle. While Wall Street begins to climb to its previous status, Main Street remains stuck at the bottom.
After laying out the basic premise and principles of Reckless Endangerment, Morgenson took questions from students and teachers on her book and her writing process.
According to Mary Cao ’14, Morgenson “really took the time to answer each question and explained her point of view well in each answer.” Cao ’14 decided to attend the talk because “of my A.P. U.S. History teacher, Mr. Dennie. He talked and commended Ms. Morgenson in class, which got me really interested in her. Plus, I wanted to take advantage of such a rare opportunity to have a Pulitzer-winning journalist speak in my school.”
Andrei Moraru ’14 “went to the talk because the topic was one that I was not particularly familiar with and one that I felt was always sort of avoided.”
Moraru ’14 said, “The talk gave me a simple way of understanding how things happen and encouraged me to do more research on the topic. It showed me that the problem was similar to someone putting small Band-Aids on a giant gash in the hopes that it won’t become infected and it will go away. No one with the ability to give us a permanent solution took that initiative.”
Dennie was happy with the turnout, “I was pleased to see over thirty students interested in advancing their education beyond what is included in their textbook. The questions that students and teachers asked Ms. Morgenson were edifying.”
At the end of her talk, Morgenson expressed her good fortune throughout her writing process, in that she and Rosner maintained a healthy writing friendship and continue to do so today. Furthermore, she claims to have never experienced writer’s block or the need to take a break from her “day job” at The New York Times.
Quickly after saying this, Morgenson knocked on wood.