The End of Wall Street, sensationalist title notwithstanding, is a devastatingly blunt account of the foibles and hubris that led to the US housing boom and bust of 2006-2008.

Roger Lowenstein creates a gripping narrative that explains not only the “what” but the “why” of the mechanisms behind worst American recession since the Great Depression. His account begins with a description of the runaway unregulated mortgage economy, where financial firms battled for a share of the exploding sub-prime loan market, which their (flawed) models predicted offered huge profits with limited downside. The semi-private entities Fannie Mae and Freddie Mac led the way, offering over $5 trillion in loans as the result of new government initiatives to provide affordable housing to everyone, regardless of income.

Low prevailing worldwide interest rates put the grail of home ownership within reach of previously unqualified borrowers, and also left investors looking for a way to squeeze a few extra basis points of return on their capital. A huge influx of foreign money meant that banks no longer held their mortgages but instead packaged and sold them to the highest bidder, shifting their acquisition emphasis from loan quality to loan quantity.

In the rush to acquire new loans, no matter how dubious, lending procedures were dropped and so-called Alternative A mortgagesA type of loan where prospective borrowers were not required to supply documentation of their income, and their more dangerous subset NINANo Income, No Asset: the borrowers did not supply documentation of income or assets mortgages were used and abused in a classic example of the greater fool theory which assumed an unending rise in home prices.

Lowenstein adeptly deciphers the complicated process by which these deadly loans were chopped into tranches using CDOsDummy corporations which invested in first-order securities which had themselves acquired mortgages and given high-quality ratings by so-called independent ratings agencies with questionable standards. He doesn’t skip the complicit Federal Reserve, whose reliance on a free-market economy would be at first sorely tested, and then shattered, with the infamous TARP bailout, and also gives a blow-by-blow account of the failings and near-failings of such venerable firms as Bear Sterns, Lehman Brothers, Wachovia, Citi, AIG, and Morgan Stanley.

You surely remember the basics of those dark days, but reading The End of Wall Street is an an eye-opening experience which will leave you shaking your head, wondering how so many smart people could be so dumb. The fault for the crash was spread among many, and this book’s most appealing quality is how it weaves all of their stories together to chronicle the runaway train which spectacularly derailed in the late summer of 2008.

If you’re not a finance geek, the prose can get a bit dry at times. There’s no James Bond or Jason Bourne momentsNew movie idea: James Bond fights Jason Bourne. Possibly with lasers., but if reading about the conversations and negotiations of the most powerful men in finance during the mortgage crisis sounds appealing to you, you’ll enjoy this one.

Grade: B+