too big to fail Archives - Page 2 of 2

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.

too big to fail 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.