When good ideas go bad

All The Devils Are Here The Hidden History of the Financial Crisis. Bethany McLean and Joe Nocera, Portfolio Penguin paperback €£10.99; Kindle £4.99

WHEN anybody talks about “sub-prime mortgages,” the phrase carries the whiff of sulphur. Or worse. In the beginning, however, the sub-prime mortgage was seen as being as positive for society — specifically American society — as was social and affordable housing here at home.

The sub-prime mortgage, we now know, was one of the good intentions which paved the road to financial hell, in America and right across the globe. Other slabs on the road were crafted by some of the cleverest people in the financial services business, who bundled bad products with good and persuaded themselves and everybody else that the housing and every other market would A) continue to grow indefinitely, and B) would grow best if regulators kept their punitive paws to themselves and allowed markets to effectively regulate themselves. The end result was an unfurling of a disaster which has changed the lives of millions of diligent, careful people for the worse.

Just about the only positive factor emerging from half a decade of dire financial and economic news is the publication of a plethora of excellent books about it that has happened in Ireland and overseas.

One of the best of a good lot is All the Devils are Here written by Bethany McLean (joint writer of an earlier offering entitled “The Smartest Guys in the Room” about Enron) and Joe Nocera.

The two writers live up to the promise of their blurb, focusing mostly, although not exclusively, on profiles of mostly male figures within organisations, including banks like JP Morgan, insurance giant AIG and global powerhouse Goldman Sachs.

One after another, they emerge from the pages, the men who gambled on an unprecedented scale. Few were introverts. Some were grossly overconfident arrivistes given to personal display and corporate bullying in roughly equal measure. And that’s before we get near to the regulator, such as Alan Greenspan.

Greenspan and some of his laissez faire peers were canonised if not deified during the boom years, and now look like going down in history as key contributors to The Great Recession.

Although some of the financial products explored by the book are eye-glazingly complex, the general thrust of the book is one of straightforward investigation and accusation, pointing the finger at banks, investors, regulators, lenders and ratings agencies and finding them individually and severally responsible for a chronic financial crisis. It is as exciting as thriller and as educational as an MBA course.