Great Britain slipped into recession again this week. Its worth another view of how close we came to economic collapse:
The HBO movie was good. The book was so much better….and rather shocking.
Tag: bear stearns
Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System–and Themselves is clearly my favorite (for all the wrong reasons — you know economy on the brink of collapse) book in 2010.
Six month later Sorkin’s story of the financial meltdown and shocking background stories that stunned the world still resonate – due to news that Wall Street again is on shaky ground, especially with municipal bonds
Clearly the lack of oversight and Washington’s hands-off approach to Wall Street contributed, yet as Sorkin documents the big investment banks were playing with loose money, morals and an ego the size of Canis Majoris.
Its no wonder the rich get richer and the poor get poorer when you can lose the largest trade in the history of Wall Street and actually keep your job.
With companies like Bear Stearns, Morgan Stanley, Lehman, Freddie Mac, Fannie Mae, and AIG its no wonder George W. Bush was forced to step in and save the country from a nuclear meltdown. I believe Hank Paulson’s book On the Brink: Inside the Race to Stop the Collapse of the Global Financial System tells the tale of the Bush Administration and made it to my top five list too.
With HBO’s recent commitment to make a movie from Sorkin’s book it ensures many more will be reading this in 2011.
Author’s website
Tags: Andrew Ross Sorkin, Too Big to Fail, Bear Stearns, Wall Street, Morgan Stanley, Lehman, Freddie Mac, Fannie Mae, recession, AIG, trends
A financial crisis is a terrible thing to waste. Treasury Secretary Henry Paulson faced the largest crisis in our country’s modern history with a great opportunity. His first hand account of the near collapse of our financial economy is detailed in On the Brink: Inside the Race to Stop the Collapse of the Global Financial System.
His strongest writing are the 20 pages in the book’s Afterward, written one year after his departure from Treasury with the opportunity to look back and reflect upon the events and the solutions including TARP and the role of the G20.
Paulson was certainly the right type of person for the job having served as the former Chairman and Chief Executive Officer of Goldman Sachs. He previously served in the Nixon administration as an assistant to John Ehrlichman during the Watergate scandal.
Although reluctant to accept the job as United States Treasury Secretary under George W. Bush, Paulson acknowledged upon his arrival in Washington a credit crisis was on the horizon. Clearly Paulson notes he was naive of regulatory powers in Washington and any suggestions of financial reform in an election year were all dead on arrival.
It’s worth repeating that between March and September 2008, eight major US financial institutions failed — Bear Stearns, IndyMac, Fannie Mae, Freddie Mac, Lehman Brothers, AIG, Washington Mutual and Wachovia. Six of them in September alone.
Paulson jumps right out of the gate on page 1 as all Americans would have wanted:
Do they know it’s coming Hank? President Bush asked me. “Mr. President we’re going to move quickly and take them by surprise. The first sound they’ll hear is their heads hitting the floor….For the good of the country I proposed we seize control of the companies, fire their bosses and prepare to provide $100 billion of capital support for each.”
Regrettably its not Wall Street but rather Fannie Mae and Freddie Mac, the government backed lending institutions (GSEs) that Paulson is addressing. Paulson should could have done the same for Lehman, Bear Stearns.and ALL the other institutions since they received taxpayer money to keep them afloat….on their yachts.
–When you learn that someone at a financial company made a 1 Billion bonus (yes a billion for one person) you can see where the ship was heading…right into the rocks.
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Latest read: House of Cards
After ripping through Too Big to Fail it seems natural to continue understanding the collapse of Bear Stearns with House of Cards: A Tale of Hubris and Wretched Excess on Wall Street to get a bit under the hood of how the collapse of Wall Street almost killed our economy. The book’s focus is the last two weeks of life at Bear Stearns.
Most would agree Bear Stearns was the “perfect storm” in hilighting whats wrong with Wall Street. Trusted executives who cannot lead their company or explain products they are selling.
Author William Cohan even points out as Bear Stearns was collapsing two executives were in Nashville playing in a bridge card game tournament.
I was rather amused that with their ‘tough guy’ reputation on Wall Street, in the end the executives at Bear Stearns, facing the closure of their firm were actually considering filing chapter 11 to force a major collapse of the Western financial marketplace.
Known as their “nuclear option” Bear Stearns actually considered triggering the collapse of the US economy because they were unable to secure their quickly falling stock price at an “acceptable” price during negotiations with the Federal Reserve and JPMorgan Chase in their final hours of operations. And in the end, many of those tough guys ended up crying at their desks.
I humbly believe Andrew Ross Sorkin‘s Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System–and Themselves is not only a great read and one of the best books written about the Wall Street catastrophe — it is a rather unique history book for this crisis.
BTW: This is the best book I have read this year.
Sadly this book reads like an intense thriller. Yet the truth reveals how Wall Street’s greed and “good ol-boy network” was too dumb to act in time to save the country from falling into a recession.
Sorkin’s revelations about those so called “financial titans” were more accurately described as totally clueless to the catastrophe surrounding them. Ego — really was the chief reason for making so many horrible financial decisions. Its rather shocking especially as the impact of the crisis rippled further away from Wall Street and into the homes and businesses of everyday Americans.
I cannot think of a more striking example Sorkin described as the Board members of Bear Stearns. They voted to send the firm into Chapter 11 bankruptcy — with one board member “choosing” not to participate in the vote because he was playing in a professional card tournament in Detroit and instructed his secretary not to be interrupted.
Titans….ha! Sorkin paints a more accurate picture of these guys closer to the attitudes of the out-of-touch imperialist British monarchy. Defined by The Dictionary of Human Geography, Imperialism is “the creation and maintenance of an unequal economic, cultural and territorial relationship, usually between states and often in the form of an empire, based on domination and subordination.” Sorkin’s reinforces this definition about that failed Wall Street Empire.
I was amused to actually see a photograph of Mitsubishi’s $9 Billion check for Morgan Stanley….yep NINE zeros. Making it probably the biggest check ever written and the IQ of everyone who supported that decision. Simply shocking.