第1章
The Financial Predators Among Us
When the 2008 financial crisis hit, most Americans were shocked to discover just how corrupt our banking system had become. Yet what's truly astonishing isn't that the crisis happened, but that no one was held accountable. Not a single financial executive faced criminal prosecution despite overwhelming evidence of fraud that destroyed millions of lives. Charles Ferguson's "Predator Nation" isn't just another financial crisis book-it's a devastating expose of how America has transformed into an oligarchy where economic crimes go unpunished and only the well-connected thrive. The book won critical acclaim for its unflinching examination of systemic corruption, with Nobel economist Joseph Stiglitz calling it "the definitive account of the crisis." Ferguson, who won an Academy Award for his documentary "Inside Job," brings the same investigative rigor to this work, which has become required reading in economics programs nationwide and a touchstone for financial reform advocates.
第2章
America's Canopy Economy: The View from the Top 1%
The 2008 financial crisis wasn't just a temporary setback-it revealed a fundamentally transformed America. While the recession officially ended in 2009, the "recovery" proved jobless and weak. Corporate America hoarded $2 trillion in cash while government services were slashed due to ballooning deficits. The crisis increased America's national debt by 50%, while even during the 2001-2007 bubble, average American wages declined as the wealthy prospered spectacularly.
By 2007, the top 1% captured 23% of taxable income-the same percentage as in 1928 and triple their share during the more prosperous 1950s-60s. The wealthiest 1% now own about a third of America's total net worth and over 40% of its financial wealth, more than twice the share held by the entire bottom 80% of the population combined.
This extreme concentration of wealth has created what Ferguson calls a "canopy economy"-like ecosystems at the tops of tall trees that block sunlight from reaching below, America's super-elite lives in a world disconnected from the nation beneath them. The wealthiest executives and bankers earn eight-figure pay packages, maintain multiple mansions worldwide, and indulge every whim while the middle class struggles.
This inequality both explains and causes America's tepid economic recovery. America has lost its high-technology manufacturing and increasingly its design capabilities to Asia. While the U.S. retains leadership in advanced research and software, it has become a net importer of high-tech goods. Canopy-economy executives see the world as both their market and source of cheaper labor, with no incentive to improve American education or infrastructure since they can personally avoid these problems through private schools and jets.
Rather than creating value, America's new elite has obtained extreme wealth through forced transfers from the rest of the population, enabled by government policies that reduced taxes on the rich, allowed industrial consolidation, protected inefficient firms, kept wages low, permitted financial frauds, and shielded corporate crime-policies essentially purchased by their beneficiaries.
第3章
Opening Pandora's Box: How Deregulation Unleashed Financial Criminality
The 1980s marked America's descent into financial criminality and economic decline. The Reagan administration, riding on politically popular tax cuts and deregulation, created budget deficits, widespread unemployment, and rising inequality. Rather than telling Americans hard truths about needed reforms in education, saving, and energy conservation, Reagan offered simplistic reassurance through tax cuts and deregulation-cutting taxes without reducing spending and appointing industry executives to regulatory positions.
When Reagan took office, America's financial sector still operated under New Deal regulations enacted after the Great Depression. The 1933 Glass-Steagall Act separated deposit banking from securities underwriting, while other laws required financial disclosure and created regulatory bodies. Commercial banking, investment banking, mortgage lending, and insurance remained distinct, tightly regulated industries with no dominant firms.
After the 1920s excesses and subsequent New Deal reforms, bankers' compensation moderated significantly. For forty years, financial sector pay averaged about double the typical American's income, with executives living comfortably but not extravagantly-no private planes or gigantic yachts. This created long time horizons and healthy risk aversion.
Three forces converged in the early 1980s to transform finance: economic upheaval, technological revolution, and deregulation. The S&L crisis emerged when inflation and interest rate volatility destroyed their traditional business model. Rather than shutting them down for $10 billion, the politically connected industry secured the Garn-St. Germain Act. Industry lobbyist Richard Pratt, appointed as regulator, gutted self-dealing restrictions.
The result was massive theft-Charles Knapp ballooned assets from $1.7B to $10.2B before collapse, Vernon Savings grew 22-fold with 96% delinquent loans, and Charles Keating manipulated the "Keating Five" senators through $300,000 in contributions. The Resolution Trust Corporation's cleanup cost taxpayers $100B, though several thousand executives were criminally prosecuted and hundreds imprisoned-a mild foreshadowing of later financial criminality.
Michael Milken and Drexel Burnham Lambert revolutionized finance by creating the junk bond market for unrated companies. Initially helpful for midsize businesses, the innovation quickly turned predatory as investment firms used junk bonds to finance hostile takeovers. This era transformed Wall Street from a tradition-bound enclave to a transaction-fee driven casino, shattering old notions of ethics while radically inflating compensation and inequality.
第4章
The Clinton Era: When Democrats Embraced Wall Street
Despite gloomy forecasts after the LBO bubble collapse, the 1990s delivered remarkable economic performance driven by the Internet revolution. America dominated this space, producing every major Internet company from Amazon to Google. While the Clinton administration supported this growth through Internet privatization and telecommunications reform, it simultaneously created the regulatory environment that would spawn the financial crisis.
Under Robert Rubin, Larry Summers, and Alan Greenspan, the financial sector became highly concentrated, increasingly criminal, and systemically dangerous. Four critical changes occurred: sweeping deregulation, industry consolidation into oligopolies, development of the complex "securitization food chain" for mortgages, and proliferation of unregulated financial instruments. Most fatally, compensation throughout the system rewarded short-term gains with no penalties for losses, eliminating incentives for ethical behavior.
The mortgage-backed security began as a sensible innovation allowing S&Ls to sell mortgages to banks, who packaged them for investors. Larry Fink's 1983 invention of collateralized mortgage obligations (CMOs) with different risk tranches revolutionized housing finance. Securitization's fatal flaw was severing the connection between credit decisions and their consequences, allowing bad loans to become someone else's problem.
The Clinton administration aggressively drove financial deregulation with support from Greenspan and Congress. Despite numerous derivatives scandals and the 1998 collapse of Long-Term Capital Management that nearly triggered a systemic crisis, Greenspan remained steadfast in opposing regulation. The administration also normalized revolving-door hiring, with officials like Robert Rubin (Goldman Sachs to Treasury to Citigroup), Laura Tyson (to Morgan Stanley), and Larry Summers (to hedge funds) moving between government and lucrative financial sector positions.
By 2000, the financial sector was dominated by oligopolies across every segment. The ten largest investment banks grew from $1 billion combined capitalization in 1960 to $179 billion in 2000. By 2000, five firms dominated investment banking, five banks controlled 90% of derivatives trading, three agencies dominated securities ratings, and a handful of giants controlled asset management.
第5章
Manufacturing a Housing Bubble: The Subprime Lending Machine
The dot-com bubble's collapse in 2000-2001 led to only a mild recession due to Bush's massive deficit spending and Greenspan's aggressive interest rate cuts from 6.5% to a fifty-year low of 1%. However, the resulting recovery was anemic and largely fake-driven by unsustainable behavior including federal deficits, housing speculation, and consumer borrowing.
The housing bubble provided political cover for structural economic problems, as rising home prices allowed Americans to borrow against equity and maintain consumer spending. Contrary to popular belief, fewer than 10% of subprime loans financed first-home purchases-most were refinances, second homes, consumption loans, or speculative investments. The Case-Shiller U.S. National Home Price Index doubled between 2000 and 2006, the largest increase in history.
After the S&L industry's collapse, unethical mortgage lenders flourished in the largely unregulated shadow banking sector. These lenders existed solely to feed Wall Street's securitization machine, getting their funding from the same investment banks that bought their loans. California-based "mortgage banks" like New Century and Ameriquest exploded in growth-New Century increased originations fivefold from 2000-2003, while Ameriquest's jumped tenfold.
Washington Mutual continued pushing dangerous loan products despite internal data showing delinquencies up 140% and foreclosures up 70%. WaMu sold virtually all forms of high-risk loans-80/20 piggyback loans, subprime loans, Option-ARMs, and subprime home equity loans-often combined with "stated income" verification. Fraud was rampant: two high-production centers in poor Los Angeles neighborhoods showed 58% and 100% fraud rates respectively, with managers actively participating.
New Century Financial Corporation, founded in 1995, grew from $3.1 billion in annual originations in 2000 to $51.6 billion by 2006, becoming the second-largest subprime originator. Three-quarters of its loans were purchased by Morgan Stanley and Credit Suisse, who also provided its financing. Internal emails from 2004-2005 show management was fully aware of the dangers: "Stated Income loans do not perform as well as Full Doc loans" and "a borrower's true income is not known on Stated Income loans so we are unable to actually determine the borrower's ability to afford a loan."
Countrywide's CEO Mozilo fraudulently used $2 billion to repurchase company stock while simultaneously selling over $100 million of his own shares in the year before collapse. Despite making dozens of false statements about Countrywide's lending practices and financial soundness, Mozilo walked away with total bubble-era compensation exceeding $450 million and an estimated $600 million net worth.
第6章
Wall Street's Fraud Factory: Engineering Toxic Securities
Wall Street's role in the housing bubble wasn't merely passive-they actively engineered the financial disaster through greed, dishonesty, and systemic corruption. The securitization machine transformed any type of loan into supposedly "safe" products, creating parallel bubbles in car loans, student debt, commercial real estate and more.
Wall Street bankers weren't innocent victims or merely oblivious-they knowingly dealt in financial "manure," often pressuring mortgage lenders to supply even worse products they could sell at a profit. Their behavior was completely rational despite destroying their own institutions. The system's perverse incentives made fraud profitable: huge annual cash bonuses based on short-term performance during a 5-7 year bubble meant participants got rich regardless of eventual collapse.
Charles Schwab's lawsuit revealed systematic fraud in mortgage securities. Their analysis found widespread misrepresentation of loan-to-value ratios, with substantial numbers exceeding 100% despite claims none did. When Clayton Holdings reviewed 911,000 mortgages for 23 banks, they found 28% failed even the securitizers' own guidelines, yet 39% of these failing loans were purchased and securitized anyway-a fact never disclosed to investors.
Bear Stearns continued its fraudulent practices even as the bubble was ending. Despite appearances of propriety, they systematically undermined due diligence-ignoring 65-75% of reviewer recommendations to reject bad loans. By mid-2007, as the subprime collapse became apparent, Bear Stearns conducted what one manager called "a going out of business sale," desperately trying to clear inventory.
Goldman Sachs created toxic mortgage securities like their competitors, as revealed in Allan Sloan's "House of Junk" article examining the GSAMP Trust 2006-S-3. This $494 million security from April 2006 (during Hank Paulson's final months as CEO) contained second mortgages from notorious subprime lenders Fremont and Long Beach. Despite borrowers having virtually no equity (average loan-to-value ratio of 99.29%) and 58% of loans having little or no documentation, 93% of the securities received investment grade ratings, with 68% rated AAA by both Moody's and S&P.
The debt securities rating business operated as an oligopoly of three firms-Moody's, Standard & Poor's, and Fitch. These agencies established remarkable legal protections, claiming ratings were merely "opinions" protected by the First Amendment. During the bubble, the volume of residential mortgage-backed securities ratings doubled between 2004-2007, while mortgage-backed CDO ratings increased tenfold, despite growing complexity. This assembly-line approach to ratings made the agencies incredibly profitable-Moody's outperformed even Goldman Sachs by a factor of ten and became the most profitable company in the Fortune 500.
第7章
Creating Weapons of Mass Financial Destruction
By late 2005, even the most fraudulent subprime mortgages were becoming scarce, yet naive investors remained hungry for toxic securities. Wall Street's brilliant solution was the synthetic CDO-a derivative that generated high-risk paper out of thin air without requiring actual mortgages.
Synthetic CDOs were essentially two-sided wagers. On one side, an investor purchased the "long side," receiving payments mimicking the performance of a reference CDO. But these payments didn't come from real mortgages-they came from the opposite side of the bet: someone betting the referenced securities would fail. This transformed "investors" into sellers of CDS insurance while their "interest payments" were actually bets being placed against those securities.
Documents gathered by the Senate Permanent Subcommittee on Investigations reveal that unlike clueless executives at other firms, Goldman's management was tough and competent-they closely monitored market conditions, accurately called the bubble's end, and shifted to shorting with remarkable discipline and speed. By December 2006, Goldman had conducted a full "drilldown" of their mortgage exposure, identifying $807 million in potential losses. Within days, they began aggressively reducing exposure while building their "big short" position.
Goldman's strategy wasn't just shorting-they also needed to offload their riskiest assets. Finding buyers in late 2006 required targeting what they called "non-traditional buyers" and avoiding "sophisticated hedge funds" who "know exactly how things work."
Their $2 billion Hudson Mezzanine CDO exemplifies their approach. The sales presentation claimed Goldman had "aligned incentives with investors" and that it wasn't a "Balance Sheet CDO"-a complete lie, as Goldman was specifically unloading bad inventory. When the deal closed, traders celebrated making "lemonade out of some big old lemons."
While some fund managers had been shorting housing since 2004, John Paulson took it further by convincing Goldman to custom-design securities specifically for shorting. Fabrice "Fabulous Fab" Tourre designed ABACUS 2007-AC1, a $2 billion synthetic CDO filled with bonds Paulson selected for their poor quality. Goldman hired ACA Management as the "independent" portfolio manager to legitimize the deal, but never disclosed that Paulson was betting against it.
Chicago hedge fund Magnetar refined Paulson's strategy with an even more devious approach. While buying massive short positions on toxic CDOs, they simultaneously purchased the long position on the "equity piece"-the lowest-quality, first-to-fail tranche that paid extremely high interest rates (often 20% or more). This brilliant strategy solved the problem that had plagued Morgan Stanley's Howie Hubler: the equity piece's high yields covered the ongoing costs of maintaining short positions until the inevitable collapse.
第8章
Crime Without Punishment: Banking as a Criminal Enterprise
Since deregulation, no major industry has broken the law as frequently and seriously as the financial sector, with criminal behavior rarely punished. For the past quarter century, even highly criminal behavior typically results at most in civil settlements where institutions admit nothing, pay trivial fines, promise not to repeat offenses-and then promptly do so again. Individual executives are rarely sued, fined, or criminally prosecuted.
The first major outbreak of deregulation-era financial crime occurred after Reagan's deregulation of the savings and loan industry. Since the early 1980s, financial sector criminality has sharply increased while prosecution has declined nearly to zero. Criminals at major, politically powerful banks are almost never prosecuted or imprisoned, creating a striking disparity in treatment compared to asset managers, hedge fund managers, or individual investors.
A 2011 New York Times analysis found 51 cases where major banks settled securities fraud charges after previously violating the same laws and promising not to do so again-and this only covered SEC securities fraud cases, not criminal cases, private lawsuits, or other financial crimes.
During the Internet bubble, investment banks engaged in widespread fraudulent practices that caused enormous losses when the bubble collapsed in 2000-2002. Jack Grubman switched his AT&T rating to "strong buy" after Citigroup won their investment banking business. The divergence between banks' public statements and analysts' private views was vast. "Chinese walls" between research and investment banking were a charade, as analysts' compensation explicitly depended on the banking revenues they generated.
Beyond tax evasion, banks have facilitated money laundering for kleptocrats, criminals, drug cartels, and rogue states developing nuclear weapons. Credit Suisse, Barclays, Lloyds, and seven other international banks laundered billions for Iran and other sanctioned nations, even creating instruction manuals to strip incriminating data from wire transfers.
Perhaps most shocking was Wachovia's role in transferring $378 billion, mostly cash, between Mexican currency exchanges and the United States without reporting suspicious transactions. The bank ignored internal warnings and marginalized compliance officers who raised concerns. These funds were traced to drug cartel activities, including the purchase of commercial jets used for cocaine smuggling.
Bernard Madoff operated history's largest Ponzi scheme for thirty years, causing $19.5 billion in losses. Despite numerous red flags that should have alerted financial institutions, many chose to profit from him without reporting suspicions. JPMorgan Chase was particularly culpable as Madoff's primary banker for over twenty years. They had access to accounts showing obvious irregularities yet took no action-Madoff had produced half a billion dollars in fee revenue for them over the years.
第9章
America as a Rigged Game: How Money Captured Our Democracy
America's dramatic fall from its status as the world's "hyperpower" in 2000 represents a profound transformation decades in the making. While the Bush administration's tax cuts, wars, and financial deregulation contributed significantly to America's decline, the problem runs much deeper than partisan politics. Over thirty years, under both Democrats and Republicans, America's political-economic system has fundamentally changed-with economic power becoming increasingly concentrated both structurally (in industries like finance, energy, telecommunications) and individually (with a small number of households controlling most wealth).
Beginning in the late 1970s, America's major industries discovered a critical weakness in the national system-buying people off was easier than performing competently. American politicians, academics, regulators, auditors, and political parties proved highly corruptible, their governance systems unprepared for systematic corruption.
By the 1980s, senior management in declining industries aggressively paid off boards of directors, hired former officials, contributed to campaigns, and employed academic experts as witnesses. They consolidated through mergers, offshored production, cut wages, and sought weaker antitrust enforcement, regulatory exemptions, tax breaks, and protection from foreign competition.
To accomplish this capture, businesses, banks, and wealthy individuals flooded American politics with unprecedented money through contributions, lobbying, revolving-door employment, and sometimes outright bribery. This funding is often bipartisan-many wealthy donors give to both parties, and companies like Goldman Sachs maintain equal numbers of Democrats and Republicans in top management.
The scale is staggering: Senate campaign expenditures grew from $28.4 million in 1974 to $568 million in 2010, while House spending increased from $44 million to $929 million. By 2010, just 0.01% of Americans-fewer than 27,000 people-accounted for 24% of all campaign donations, totaling $774 million.
For a trivial sum of perhaps $20 billion annually (1% of corporate profits), America's most incompetent and predatory industries have purchased favorable political and regulatory treatment. The financial sector evolved from follower to leader in this money-based political strategy, becoming the first major industry to use lobbying primarily for predatory rather than defensive purposes.
America has experienced a profound political realignment driven by globalization, economic decline, and the rising influence of money in politics. The two parties now compete for funding while colluding to hide this fact, creating what amounts to a political duopoly or cartel. This arrangement features fierce partisan conflict on social and "values" issues that matter to their bases while maintaining near-identical positions on issues critical to the financial sector and economic oligarchy.
第10章
The Ivory Tower Sellout: Academic Corruption and Financial Influence
Many viewers of Inside Job were shocked by the film's revelation of widespread conflicts of interest among academic experts in finance, economics, and regulation. This corruption of academia shouldn't be surprising given similar patterns in medicine, where industry-funded clinical trials are 3.6 times more likely to produce favorable results.
While medical schools have begun implementing disclosure requirements and compensation limits, economics departments, business schools, and policy schools have responded differently. When prominent economists testify in Congress, appear on television, or write opinion pieces, they're frequently being paid by interested parties-sometimes receiving up to $250,000 for an hour of congressional testimony. These conflicts rarely get disclosed, and universities typically look the other way.
Academic consulting for industry has grown into a multibillion-dollar business, with major firms like Berkeley Research Group, Analysis Group, and Charles River Associates employing hundreds of prominent academics. These firms don't help companies improve products or lower costs-they focus on helping them avoid regulation, influence legislation, and fight lawsuits.
As Columbia Business School dean and former Bush administration economic adviser, Glenn Hubbard has maintained extensive financial industry ties while advocating for deregulation. In 2004, he co-authored an article praising capital markets for enhancing stability and distributing risk efficiently-just as the housing bubble was inflating. Hubbard serves on multiple corporate boards (earning over $700,000 in 2010 alone), consults for major financial institutions, and received $100,000 to testify for Bear Stearns hedge fund managers.
The brilliant but arrogant Larry Summers has held numerous prestigious positions including Treasury Secretary under Clinton and director of Obama's National Economic Council. After resigning as Harvard's presidency in 2006, he earned over $5 million working one day a week at hedge fund D.E. Shaw. His 2009 federal disclosure revealed a net worth between $17-39 million, with nearly $7.8 million earned the previous year including $1.7 million from speaking engagements mostly for financial firms.
Frederic Mishkin, a Columbia Business School professor who served on the Federal Reserve Board from 2006-2008, wrote a glowing 2006 paper titled "Financial Stability in Iceland" for which the Icelandic Chamber of Commerce paid him $120,000. His report legitimized Iceland's catastrophic banking fraud, claiming Iceland had "excellent institutions" and "honest and competent" supervisors when in reality the country's banks were engaged in a massive Ponzi scheme that eventually collapsed with $100 billion in losses. After the crash, Mishkin dishonestly changed the paper's title on his CV to "Financial Instability in Iceland."
Academic corruption has become deeply entrenched despite some progress. While Stanford has excellent disclosure requirements and institutions like Wharton and Columbia have adopted new policies, most universities still have no public disclosure requirements or limitations on conflicts of interest. This contrasts sharply with journalistic organizations where reporters are strictly prohibited from accepting money from industries they cover.
第11章
Breaking the Cycle: Paths to Reform and Renewal
America needs fundamental reforms, though they'll be difficult to accomplish in the current economic and political climate. We must improve educational opportunity and quality, as a 25% high school dropout rate and education system that favors the wealthy undermines both fairness and economic competitiveness. The financial sector must be brought under control through compensation reform, breaking up large banks, strengthening regulation and criminal enforcement, taxing financial transactions, and closing legal loopholes.
We must control money's impact on politics through lobbying taxes, higher public sector salaries with revolving-door prohibitions, and mandatory public campaign financing. The tax system needs reform to increase fairness and prevent oligarchy formation. Antitrust policy and corporate governance require strengthening, and America needs universal high-speed broadband infrastructure comparable to Eisenhower's highway system.
America faces several possible futures. One is continued oligarchic rule by the top 1%, with reasonable conditions for the top 10% but increasing harshness for everyone else-a "Brazilian outcome" (though Brazil is actually moving toward greater equality). While the Internet revolution enables global corporate management from anywhere, this arrangement isn't sustainable long-term due to continued financial bubbles, unsustainable borrowing, and American restlessness.
History suggests internal reform requires either long-simmering frustration or major crisis. The 2008 financial crisis wasn't enough, but the European sovereign debt crisis could trigger another. With fragmented politics, weak economies, and depleted crisis-fighting tools, political instability may increase.
The rise of extreme political figures is worrying, as is America's failure to prioritize education. Yet the Occupy Wall Street movement, Warren Buffett's critique of billionaires, and Howard Schultz's campaign contribution boycott offer hope. Americans can take political action through protests, withholding donations from party machines, supporting reform organizations, and running for office.
In corrupt systems, three things inevitably happen: the worst people rise to power and wreak havoc; potentially productive people are incentivized to become destructive because corruption pays better than honest work; and everyone else pays both economically and emotionally, becoming cynical, selfish, and fatalistic. This creates a dangerous system where predatory, value-destroying behavior becomes more profitable than honest, productive work, threatening America's foundation of idealism and trust.
The question remains whether Americans will continue to accept a system that rewards the worst behavior while punishing decency and hard work. The answer will determine not just our economic future, but the very character of our nation.
