Too Big to Fail

I always wanted to read up on the crisis but the thought of delving deep to understand ‘credit default swaps’, ‘leverage’ etc didn’t feel appetizing enough.

Inspired by a friend’s blog post, I started reading/hearing the audio. And right from minute 1, I was hooked. I normally leave thoughts on books for my book review blog and despite the fact that I’ve already reviewed ‘Too Big to Fail’, I simply had to blog about this one.

– TBTF is pulsating. There’s no other word for it. A comparable audio book (~19 hours) that I simply loved took me about 2 months to finish. This book, I finished in 3 weeks because I couldn’t get enough of it!

– TBTF looks at the crisis from the points of view of the personalities in the crisis i.e. all Wall Street CEO’s, key deal makers and the US treasury officials. This seemed tailor made to my interest – of understanding the people, their minds and the rationale behind why they did what they did.

There were many moments that stood out in the book. A few are listed below –

– When JP Morgan’s bankers ‘discovered’ a 20 billion dollar hole in AIG’s balance sheet. I couldn’t even bring myself to imagine what it must have felt to realize that they had to raise an extra 20 billion in 3 days.

– When the annoyed bunch of Wall Street CEO’s ended up having a competition on games on their Blackberry after a discussion with the Fed officials (Hank Paulson and Tim Geithner)

– Bank of America’s CEO Ken Lewis’ wife telling Dick Fuld not to call as he wasn’t willing to talk to him. Dick Fuld, the longest tenured CEO at Wall Street, was for the first time, beginning to taste failure..

– How every Wall street firm tried to merge with every other..

– How everyone ended up going to Warren Buffett whenever there was trouble.

– Lehmann going down – unfortunately and without logic.

– How the smartest financial men in the world tried hard to save the financial market but couldn’t undo accumulated ‘sins’ over 10 years.

– How constant success had bloated so many ego’s and bank accounts to disproportionate degrees..

– George Bush incredulously asking Paulson ‘Does an insurance company do all that?’ when Paulson described the risk that the market faced if AIG went down and thus explaining all of AIG’s businesses.

– How everybody important is from Goldman Sachs

I could go on and on. The book was an eye opener in many ways and of course, extremely educational. During the course of the book, I felt up close and personal with each of these characters. In time, I actually felt lots of sympathy for Dick Fuld – the Lehmann CEO who was painted as the villain as he was probably among the few people present who wasn’t acting in his own self interest and just trying very hard (too hard at times) to save Lehmann, the firm that he loved so. I understood why Jamie Dimon was painted the big hero thanks to the circumstances and his tact and felt a sense of connection with each of those characters.

In fact, one part of me was also heaved a sigh of relief that the US Fed had people of the stature of Hank Paulson (ex-CEO of Goldman Sachs – but, of course) among others. Without men like him, the situation could have been far worse..

A great book – but right at the end, Andrew Ross Sorkin poses a great question. He asks if he have really learnt from the crisis. And I wondered about it too as this note about Jamie Dimon on ‘Time‘ (for being one of the most influential people in the world in 2011) sent a chill down my spine –

‘Dimon, 55, had the wisdom and the long view to prevent his employees from succumbing to the insane greed that enriched so many bankers while destroying their firms, not to mention ruining millions of lives. As a result, JPMorgan caused far less damage during the financial crisis and emerged more powerful than ever, while Bear Stearns, Lehman Brothers, AIG, Countrywide and WaMu collapsed. For this, Dimon deserves enormous credit.

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As I warned somewhere in the middle, I could go on and on about this book.

In 1 word, it is fantastic. Go get it!