Reckless Endangerment: Greed, Corruption & the 2008 Crisis

Introduction and Authors' Purpose

In Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon, New York Times financial writer Gretchen Morgenson and financial and policy analyst Joshua Rosner examine how government involvement — or the lack thereof — in the economic sector helped contribute to the current economic meltdown. In the introduction, Morgenson explains the authors' two primary goals. First, they want to name names. She states that the book "identifies powerful people whose involvement in the debacle has not yet been chronicled" (Morgenson & Rosner, 2011). Second, they want to reveal how seemingly discrete economic problems were actually interrelated, by tracing the connections among them (Morgenson & Rosner, 2011).

The authors recognized that the American people felt robbed, but they were also determined to address the widespread confusion that followed the disaster. Not only did most Americans fail to comprehend how the country ended up in the greatest economic crisis since the Great Depression, but, more tellingly, they could not identify the people who led them there. The authors therefore approached the financial crisis like a whodunit mystery, setting out to detail "who did it, how, and why" (Morgenson & Rosner, 2011). What they reveal is that the economic crisis was not the result of any single bad act or single bad actor, but that "this was a crisis that crept up, building almost imperceptibly over the past two decades. More disturbing, it was the result of actions taken by people at the height of power in both the public and the private sectors — people who continue, even now, to hold sway in the corridors of Washington and Wall Street" (Morgenson & Rosner, 2011).

Key Concept: Power, Profit, and Impunity

The key concept of the book is to connect intentionally irresponsible lending practices to the global economic crisis. It seeks to demonstrate how corporate practices can devastate an entire nation's economy. Moreover, it argues that the very people who helped create the economic crisis, because of their positions of power, would remain insulated from its impact in a way that the average person would not. Not only would they avoid legal repercussions, but many of them saw tremendous profits as a result of this behavior — profits that effectively transferred wealth away from the average American without any form of repayment.

In fact, many of these individuals remain in positions of power, capable of engineering similar scenarios in pursuit of profit. Their influence has only grown as the gap between the super-wealthy and the average American has widened during the recession. That the powerful created this crisis and faced no punishment for doing so may be the most important concept in the book.

Management Implications of Predatory Lending

This key concept is relevant to management in several ways. Ideally, understanding it would warn future managers of the dangers of allowing profit to serve as the primary motivator in business decision-making. It would help business professionals understand that unethical practices do not only harm their own companies, but can have far-reaching consequences for the entire economy. Given that the U.S. economy is intrinsically intertwined with other economies worldwide, this means that an individual's unscrupulous practices can affect the global economic system.

However, there is no morality tale in the book: the bad actors escape punishment, and the victims receive no justice. As a result, an unscrupulous student of business or management might conclude that predatory practices and profiting from the misfortune of others are permissible, as long as one makes some effort to comply with the letter of the law.

References

Morgenson, G. & Rosner, J. (2011). Reckless endangerment: How outsized ambition, greed, and corruption led to economic Armageddon. New York: Henry Holt and Company.