Busted Indeed

By David Ott
In mid-May, the New York Times Magazine printed an excerpt from the book, Busted: Life inside the Great Mortgage Meltdown, by Edmund Andrews.

The article is fantastic and gripping because Andrews is a well-educated economics reporter for the Times, but in the article he seems like a true victim of the subprime mortgage crisis. The reader is definitely left with the feeling that what happened to him could happen to anyone.

When I saw the book at the airport, I was caught by the opening pages where Andrews confronts then Federal Reserve Chairman Alan Greenspan about his personal situation. Admittedly, Schadenfreude also played a role in my impulse buy.

The book is much like the article with much greater detail. Andrews describes the divorce of his wife of 21 years and how he sets out to live the American dream with his new wife, Patti. To live that dream, they need a house they can’t afford. As he says early in the book about his new house, “I couldn’t afford it, but that didn’t mean I couldn’t buy it.”

Sure enough, during the housing and credit bubbles, there were plenty of financial institutions willing to lend them money on very easy terms. One of the best characters in the book is his mortgage lender, Bob, who says, “I am here to enable dreams.”

With Bob’s help, Andrews starts with a ‘liar’s loan’ so that he doesn’t have to produce pay stubs or tax returns that would prove that he can’t afford the loan. As their situation deteriorates, Bob is always able to find a creative solution. Five years later, unable to have ever been able to make ends meet, the Andrews become delinquent on their mortgage.

Despite his angry tone, Andrews is straightforward about not being a victim, despite the tenor of the original Times article. He says time and time again that he knew what he was doing; it was a gamble for the love of his life that seemed rational during an irrational time.

Andrews delivers very clear, well-written explanations of the entire mortgage ecosystem, from the mortgage broker to the investment banks. He even uses his investigative journalism skills to figure out which toxic mortgage security ends up owning one of his loans.

The trouble with Busted, though, is that despite being a professional reporter, he fails to mention some key facts. A blogger for The Atlantic, Megan McArdle, found that his new wife Patti had some financial troubles that he didn’t feel were worth mentioning.

In fact, Pattie had declared bankruptcy twice before. At the time of her first bankruptcy, she and her ex-husband had $30,000 outstanding debt on eight credit cards and owed $200,000 in back taxes in addition to the mortgage, car loans and private school tuition bills. The second bankruptcy relieved Patti of an unpaid loan to her sister, who had helped her out after her first divorce and bankruptcy.

It’s impossible to know what happened between Patti, her ex-husband and her sister. Perhaps she did nothing wrong and is horribly unlucky. Or, more likely, she was accustomed to living above her means for decades and encouraged Andrews to do the same.

In another blog, he defends himself, saying that the first two bankruptcies had nothing to do with the financial calamity outlined in the book and he didn’t want to embarrass his wife.

The argument about embarrassing his wife would be more palatable if he hadn’t been so vivid about her role in their personal crisis and the vivid accounts of their marital problems. Although he always writes himself as the bitter villain, the dirty laundry about her inglorious financial past wouldn’t have been any more damaging than what was already in print.

What’s worse though, is that as a reporter, he should have known better. Even though this is a more of a cautionary memoir (a la A Million Little Pieces) and not a newspaper article, her previous dealings were material facts that he should have presented. As they say on Law & Order, “It goes to character, Your Honor.”

Busted goes a long way to show that you shouldn’t buy something just because you can. Andrews wasn’t a victim, he was a participant. To some extent, we all played a role in the crisis and bought into the same dream. In our heart of hearts, though, I think we all knew better just as Andrews did.

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Recommendation: Sell

Busted: Life Inside the Great Mortgage Meltdown

W.W. Norton & Company New York, New York

ISBN: 978-0-393-06794-1 (hardcover)