lehman Archives - Don Kasprzak

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.

too big to fail

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.