Book Review: All the Devils Are Here


All the Devils Are Here, by Bethany McLean and Joe Nocera, is a fascinating look at the principle players who brought about the financial crisis of 2008. It reveals the motives and mistakes made over the course of a decade by those who were entrusted with running the largest financial corporations of the world as well as those who were entrusted with regulating them. It explodes the myth that the market is self-regulating in a way that will result in what is best for all. It also explodes the myth that centralized regulation of huge corporate interests will protect the average citizen from corporate greed. I can’t imagine too many Austrian or Keyensian capitalists would truly like what is revealed in this work, for both sides can only defend their positions by ignoring half of what these authors have uncovered and presented for us.

One of the great myths of the subprime mortgage bubble was that it was brought about because of government regulation. Yes, it is true that there were regulations to put more low income families into homes, but the vast majority of subprime activity did not fall into that category. Most of that activity was refinancing existing mortgages or home equity mortgages, and most was done in a way that was almost entirely unregulated.

Efforts were made to regulate this activity, particularly by the states that were overridden on the grounds that federal rules override state rules. The corporations fought against all efforts to impose federal regulations with the willing support of both Republican and Democrat legislators. The Fed, led by Alan Greenspan, believed in the promises of the Austrian school, especially that the market would best judge economic activity. There was an assumption that CEOs drawing seven or eight-figure incomes from multi-billion dollar companies knew economics better than anyone else.

Another prevalent myth is that sub-prime mortgages were the principal cause of the crisis. All the Devils Are Here reveals that the bundling of these mortgages into packages for trade on the market (CDOs) and betting on these packages (Credit Default Swaps) created a world-wide calamity. These practices were also almost completely unregulated.

The fact is that the warning signs of the economic collapse were abundant and there were those in the system—both in the government and in the corporations—who saw the signs and tried to warn them. They were ignored. There were also those who could have seen it, but were removed from the decision-making process because they were dismissed as cranks who were interfering with money-making. There were those for whom the apparent success of what was being done blinded them to the impact their decisions were having on the common citizen. I don’t mean that they deliberately ignored the bad effects, they just didn’t see them, they couldn’t see them from their lofty perches on top of their financial empires. There were also those who preyed on the hopes and dreams of the uninformed. It wasn’t just that they tricked people who couldn’t afford any kind of loan into buying a house, they tricked lots of middle-class people who already had homes into accepting new loans with terms that were much worse. There were examples of outright fraud in the process.

From the prospective of Distributism, All the Devils Are Here reveals the great danger of centralized power. Whether it be government or corporate, power too far removed from the lives of ordinary citizens doesn’t see (or ignores) the impact their decisions have on those lives. Centralized power considers the local issues to be inconvenient nuisances to their centralized planning and objectives. We believe that, when the scope of power is localized, the average local citizen can have a much greater impact on the policies – both government and corporate – and that will give us a truly free market, greater economic stability, and greater freedom overall.


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Editorial Board, The Distributist Review

  • Will B. Done

    This essay is reaching for justifications to suit their ideology.

    For another, much more insightful perspective on this enormous issue, please check Peter J. Wallison’s “The Big Lie” at American Spectator,

    • All essays look for justifications to suit the author’s ideology, just as your recommendation of another article and your evaluation of it as being a “much more insightful perspective” suits yours.

      The article you link misses the boat as far as my article and the book it reviews goes. Neither the authors, nor I, blame the financial crisis entirely on the financial institutions. The article also ignores its own inconvenient data about the nature of the majority of the loans involved – they were not for low-income, first-time buyers. Yes, those were certainly a factor, but other activity contributed to a greater amount than those activities – and that is supported by data. The article also claims that Mr. Nocera couldn’t deal with the fact that the financial crisis was triggered by the default of the sub-prime mortgages. That’s absurd because his book acknowledged that fact. The question, however, is why did the default of relatively few, and relatively low value, mortgages trigger the near collapse of our entire banking industry. The data supports the claim that the repackaging of the loans into CDO’s, and the CDS’s used to essentially bet on those CDO’s exponentially increased the financial impact of those defaults – and that activity was unregulated.

      In other words, the governments interference in the market was a factor, and the unregulated activities in which the financial institutions engaged made a bad situation much worse.


  • Bill Baltar

    I finished the McLean/Nocera book recently. It impressed me as a thorough and unbiased account of what happened in the housing market. I’m judging the book primarily on its content, not on any previous understanding of what happened. Seems to me the book documents the events in such detail that it can be concluded that certain big banks (including investment banks), the big mortgage associations (Fannie & Freddie), many mortgaqe originators and lenders, the credit-rating agencies, and the federal government are (more or less) equally responsible for the mess. The book is a story of what happens when common sense is thrown out the window. Can you believe that it got to the point where various lenders (for example Countrywide and Ameriquest) did not care whether the loans they made would be repaid, and the banks that bought the loans for securitization (for example Goldman Sachs and Merrill Lynch) also did not care? It seems to me that the government-sponsored-enterprises, Fannie Mae and Freddie Mac, were more interested in profit than financing home purchases, but to say, as it was implied in the American Spectator article Will B. Done referred to, that the crisis was a result of government (HUD and Fannie Mae) policies and not Wall Street and other private-sector problems is nonsense. Did Wall Street not build markets for mortgage-backed securities, collateralized-debt obligations, and credit-default-swaps? Where is the sanity in that? Speculation replaced investment as a source of profit. Government policies played a part, including the government policy not to regulate certain markets, but how can anyone say the private-sector didn’t sell its soul for the sake of profits and bonuses?