Republic, Lost_ How Money Corrupts Congress--And a Plan to Stop It - Lawrence Lessig [156]
8. Here, too, technology was critical. Technology not only enabled the crafting of complex mortgage-backed securities, but it also allowed mortgage lenders to lend on the basis of a portfolio of borrowers rather than the judgment about the creditworthiness of one borrower at a time. See, e.g., William R. Emmons and Stuart I. Greenbaum, “Twin Information Revolutions and the Future of Financial Intermediation,” in Y. Amihud and G. Miller, eds., Mergers and Acquisitions (1998), 37–56; and Mitchell Petersen and Raghuram G. Rajan, “Does Distance Still Matter? The Information Revolution in Small Business Lending,” Journal of Finance 57 (Dec. 2002): 2533–70.
9. Frank Partnoy, Infectious Greed: How Deceit and Risk Corrupted the Financial Markets (New York: Times Books, 2003), 110–13. The crisis was caused when the Fed surprised markets by raising interest rates.
10. Ibid., 145.
11. Gillian Tett, Fool’s Gold: How the Bold Dream of a Small Tribe at J. P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe (New York: Free Press, 2009), 39.
12. Kevin P. Phillips, Arrogant Capital: Washington, Wall Street, and the Frustration of American Politics (New York: Little, Brown, and Co., 1995), 97.
13. Tett, Fool’s Gold, 40.
14. Hacker and Pierson, Winner-Take-All Politics, 197.
15. Financial Services Modernization (Gramm-Leach-Bliley) Act of 1999, Pub. L. 106-102, 113 Stat. 1338 (codified in scattered sections of 12 and 15 U.S.C.).
16. Partnoy, Infectious Greed, 141.
17. Tett, Fool’s Gold, 40.
18. See SEC Rule 3a-7 [17 CFR 270.3a-7], adopted in 57 Fed. Reg. 56,256 (Nov. 27, 1992). For discussion of the Dodd-Frank Reform Bill, see “Elizabeth Warren, TARP Watchdog and New Deal 2.0 Contributor,” in Lynn Parramore, “Disappointing and Inspiring: Roosevelt Fellows and Colleagues React to FinReg,” Huffington Post (June 25, 2010), available at link #77; Marshall Auerback, “A Proposal for Genuine Financial Reform,” New Am. Found. (Feb. 2010), available at link #78.
19. Roger Lowenstein, The End of Wall Street (New York: Penguin Press, 2010), 58.
20. Ibid., 58–59.
21. Ibid., 59.
22. The President’s Working Group on Financial Markets, Over-the-Counter Derivatives Markets and the Commodity Exchange Act (1999), 1, available at link #79.
23. Tett, Fool’s Gold, 75.
24. Financial Crisis Inquiry Commission, Financial Crisis Inquiry Report (2011), xxiv, available at link #76.
25. And according to Louise Story of the New York Times, the secrecy serves an important (anti)competitive purpose as well. See Louise Story, “A Secretive Banking Elite Rules Trading in Derivatives,” New York Times, Dec. 11, 2010, available at link #80.
26. Financial Crisis Inquiry Commission has likewise pointed to lack of “price transparency” as a factor that exacerbated the crisis. See Financial Crisis Inquiry Commission, Financial Crisis Inquiry Report (2011), 267.
27. Partnoy, Infectious Greed, 46.
28. Financial Crisis Inquiry Commission, Financial Crisis Inquiry Report (2011), 40.
29. Partnoy, Infectious Greed, 46.
30. Ibid., 402.
31. Financial Crisis Inquiry Commission, Financial Crisis Inquiry Report (2011), 53.
32. Posner, The Crisis of Capitalist Democracy, 192–93.
33. Ibid., 251 (emphasis added).
34. Ibid., 168.
35. Ibid., 264 (emphasis added).
36. Financial Crisis Inquiry Commission, Financial Crisis Inquiry Report (2011), 211 (quoting Moody’s COO Andrew Kimball).
37. Ibid., xvii.
38. Raghuram G. Rajan, Fault Lines: How Hidden Fractures Still Threaten the World Economy (Princeton, N.J.: Princeton University Press, 2010), 152.
39. Marcus Miller, Paul Weller, and Lei Zhang, “Moral Hazard and the U.S. Stock Market: Analyzing the ‘Greenspan Put,’ ” CSGR Working Paper no. 83/01 (2001), available at link #81. Financial Crisis Inquiry Commission reached a similar conclusion. See Financial Crisis Inquiry Commission, Financial Crisis Inquiry Report (2011), 60–61. See also Rajan, Fault Lines, 112–14.
40. Rajan, Fault Lines, 148.
41. Simon Johnson and James