Financial journalist David Dayen talks about the 2008 fiscal crisis and his new book, Chain of Title, which tells the story of three average Americans who faced foreclosure and fought back.
The financial crisis and its aftermath haunt the 2016 elections. The shattering dislocation caused by the Great Recession set the stage for political insurgencies that have shaken both political parties. Free trade without a safety net is one of several issues galvanizing the downwardly mobile white voters rallying behind Donald Trump. On the left, Bernie Sanders weaponized the issue of Wall Street’s duplicity, Hillary Clinton’s ties to it, and the stunning fact that no one went to jail for systemic fraud that plunged the world economy into chaos.
The story of how we got into this mess is well known. But many of the accounts have centered on New York skyscrapers and on the corridors of power in D.C. Early this summer, financial journalist (and Prospect contributor) David Dayen released his dramatic account of the disaster from the perspective of three people who lived through foreclosures. Chain of Title focuses on Lisa Epstein, a nurse; Michael Redman, a car salesman; and Lynn Szymoniak, an insurance fraud lawyer. All three live in Florida, one of the states at the heart of the bubble. All of them wound up in difficulties, but instead of submitting to the indignities of foreclosure they fought back.
Dayen’s account interweaves the personal stories of these citizens with a bird’s eye analysis of the machinations that allowed the bubble to form and the cottage industry that sprang up to paper it over. Over the course of the book, his heroes uncover a stunning fact: The entities foreclosing on them do not have the legal right to do so. In the process of packaging mortgages into complex financial products, banks lost track of who actually owns the titles to the houses. Not only that, but the lenders have tried to cover their tracks by doctoring the paperwork—often clumsily—to make it appear as though the foreclosures are legitimate.
Dayen’s protagonists uncover a fraud so pervasive that it seems to implicate the majority of mortgages dispensed during the bubble years. He portrays the weak penalties imposed on the criminals in question, which were limited to fines and stiffer regulations, as a signature failure of the Obama administration that explains the further degradation of public trust in our institutions.
The American Prospect caught up with Dayen in his hometown of Philadelphia to talk about the financial crisis, Chain of Title, and the whole ugly episode’s deleterious effects on American democracy. This is an edited transcript of that conversation.
Jake Blumgart: There have been a raft of books about the financial crisis. What sets yours apart from the rest of the literature on the housing bubble and its aftermath?
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