Gretchen Morgenson is getting good reviews for her book Reckless Endangerment, which unlike most of the financial crisis genre casts considerable blame on Fannie and Freddie. So bravo for that.
But sometimes she can be so clueless. I mean really: how can she not understand the difference between credit default swaps (“complex swap deals it had struck with its trading partners”) and repo? She goes on and on comparing MF Global to AIG, claiming both were brought down by CDS. Then she goes into a riff on CDS written on Greece, and credit linked notes, and ISDA, and blah blah blah.
Gretchen: secured lending–repo–brought down MFG. You could have written something interesting about the repo market, how it works, how it is a fragile form of financing that can bring down firms. That would have been informative and useful. But to flog the CDS horse when CDS aren’t even involved. Sheesh.