Who Caused the Credit Crisis, Goldman Sachs or Goody Bags?

One year after the collapse of the global financial markets, newspapers, bloggers, and TV commentators are still speculating about who let this happen. Was it regulators who ignored risky lending? CEOs who dished out huge bonuses just before the axe fell?

Bruce Feirstein has an answer — 100 of them, actually.

For the past five months, screenwriter and journalist Feirstein (COM’75) has been examining the cultural, economic, and political factors that caused the crisis. The result is “The 100 to Blame,” online this month at Vanity Fair’s Web site, an excoriating list of the people, places, and ideas responsible. Listed in alphabetical order, with five entries posted daily, “The 100 to Blame” includes obvious culprits (number 32, Credit-Default Swaps) and more nuanced contributors (number 90, Sex and the City, and number 96, lower-back tattoos, also known as tramp stamps).

The full list was released on September 2, with detailed explanations of five entries published each day since.

BU Today: What criteria did you set for the list?
Feirstein: The first thing we thought about was how partisan this had all become, beyond the simple Wall-Street-is-greedy angle. With the Democrats blaming everything on George Bush, and the Republicans blaming everything on Democratic social engineering, we wanted to take a fresh, objective look at things and see how all the pieces fit together. There were lots of people, places, and things that were complicit in this — from bankers to regulators to politicians. We all knew it would be easy to come up with a list that blamed it all on greed. But there are a lot of people who bear some responsibility.

Your list ranges from really serious, detailed examinations of policy problems to quick pop-culture references. Why both?
In taking a wider look at what happened, we wanted to examine not just the pathology behind it (Greed is good!), but the sociology as well. What allowed almost an entire country to get swept up in housing mania? Why did so many people stop saving and start buying houses, cars, and TV sets they couldn’t afford? What possessed people to think their homes could be used like ATM machines? So the idea was to come up with a list that was unexpected, interesting, yet also made a larger point.

Is there a particular area (government, Wall Street, entertainment, capitalist culture) that dominated?
It’s a combination. Our regulators failed us miserably. The influence of lobbyists and money on our politicians is unseemly. There’s a term called “captured regulators,” where eventually the regulators of any highly technical industry (like banking) come to protect the industries they’re supposed to be regulating, instead of citizens who need protection from their business practices. Part of the reason this happens is due to the arcane nature of the regulations. Another reason is the revolving door between government and banking; if you’re a regulator at the SEC, chances are your next job is going to be at one of the banks you’ve been regulating. From allowing predatory subprime mortgages to be sold to allowing the banks to predict their own level of acceptable risk, there was a huge breakdown in the regulatory structure. Alan Greenspan believed that it was in the best interest of the marketplace for financial institutions to regulate themselves, that they’d never do anything to put the entire system at risk, as it would affect their very existence. He was wrong.

Has your view of the financial crisis changed after completing this list?
I found myself infuriated by what went on, in both the public and the private sectors. There’s one guy partially responsible for running Lehman Brothers into the ground by making bad bets on commercial real estate; late this summer he bought Lehman’s entire commercial real estate portfolio for pennies on the dollar — kind of like selling your house to the arsonist who burnt it down. The level of systemic malfeasance — from bankers to politicians — was depressing.

Who or what didn’t make the list by a close margin?
There was a theory I wanted to get in about The Winner Take All Society that didn’t make the final cut. The premise is that a small group of people are getting paid outrageous sums of money, to the detriment of society as a whole. This has always been the case in movies, or music, or art: stars get paid outrageous fees, while those in the middle struggle. This has now moved into banking and the corporate world, resulting in gated neighborhoods, struggling school districts, and creating fortunes that can’t be spent in anyone’s lifetime and paving the way for a disengaged aristocracy. In the era of individuals earning $100 million salaries on Wall Street, it’s an interesting and relevant subject that I would have liked to explore. But it wasn’t directly responsible for the meltdown. We also cut an entry on Hedge Funds Investing in Hollywood as a harbinger for what went wrong.

Our readers need to know — why are tramp stamps to blame?
You have to read it and see. At Vanity Fair, as with everywhere else, we want the page counts!

Jessica Ullian can be reached at jullian@bu.edu.