Thursday, 25 October 2012

Too Big to Fail by Andrew Ross Sorkin

Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System is an in depth look at the credit crunch from the time that Bear Sterns was bought by JP Morgan (it does not cover this in any great detail) to the introduction of the bail outs for the major US Banks.

Too Big to Fail: Inside the Battle to Save Wall StreetThis book is the most in depth look at the near collapse of the financial system in America (although it briefly touches on the impacts on the international financial system) and is the most in depth look at a financial crises since the 1990's classic Barbarians at the Gate which dealt with the takeover of RJR Nabisco.  It is written in a similar fashion as well - it looks at the crises from each individual bank CEO and senior management as well as regulators and investors. 

What Sorkin has attempted to do in this book, and does so amazingly effectively, is look at the financial crisis from every viewpoint so that we the reader understand what was going through the minds of decision makers when important decisions were being made (whether they were the right or wrong ones at the time).  It was a mammoth task and one that few books previously have emulated.

The necessary trade off for the amount of detail required is that this book takes a seriously long time to read if you are following all the detail.  I like to think that I am a rather quick reader however this book took me a very very long time to finish.  I enjoyed every moment of it. 

The beauty in a book like this is that most of us know the highlights - Lehman's fails, Morgan Stanley and Goldman Sachs become bank holding companies, AIG, Fannie Mae and Freddie Mac are effectively nationalised, the banks are bailed out etc etc.  Therefore we are not reading to see what happens but rather HOW it happens.  In this way the detail is not too much - we are reading for the detail, for the thought processes and for the insights that this book gives us into the way that CEO's, regulators and law makers think.

Because this book is not pushing one point of view or another, but rather going through a series of events, and these are from the view of the professionals involved in it it may seem like it is very much pro business and does not tackle the underlying flaws in the system.  But this book is not meant to preach - it is giving insights into what actually happened - not what should have happened.

  • The level of information that author has been able to get from interviews etc is truly amazing - if you want the detail behind the effort to save Wall Street then this is the book for you
  • It is not biased at all - you actually see that the decision making of these CEO's who are too often vilified by the meida as human and probably making the same decisions that you and I would make
  • It provides sufficient historical context without going overboard - you come to understand why decisions were made and why businesses ended up in the position they did
  • This book is seriously dense.  If you are not looking for the detail of the credit crunch and bail outs then find another book that looks at these issues at a higher level
  • This book was very Americanized - it did not look at the compounding factors in international markets.  The effects of collapses in the banking sector and Europe had a masive impact on the international markets
  • My criticisms were not really those that could be addressed by the book - it was dense by it's nature and an attempt to look at international markets would have added complexity that probably could not have been adequately covered in one book.  As such they are not really crticisms but things that you should keep in mind when reading the book - there is so much more that went on that was not covered by this book
  • However, this book gave me a level of understanding of the crisis I have never had before and as such would recommend it to anyone
You May Also Be Interested In:
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The Big Short by Michael Lewis
The Intelligent Investor by Benjamin Graham
Damn it feels good to be a banker by Leveraged Sell Out

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