The cover illustration to this doorstopper account of the credit crisis is a picture of a dinosaur, suggesting that within we will learn about deadly but doomed beasts, whose evolutionary deficiencies will consign them to extinction. It’s not a bad visual metaphor for investment bankers, except that they are still here.
Andrew Ross Sorkin’s blow-by-blow account of the unfolding of events in the US, when financial titans up to and including Goldman Sachs were days, or even hours, away from running out of liquidity, gives a handy dramatis personae of those inhabiting Wall Street’s Jurassic Park, in the manner of a compendious Russian novel. A reader uninitiated in the detail of the crunch will need it: there are seemingly endless descriptions of the men (and one or two women) involved. Take the following: “Jamie Dimon’s black Lexus pulled away from the curb of his Park Avenue apartment to head down to the Fed at just before 8am. Dimon, who sat on the back seat returning emails on his BlackBerry, had just gotten off a conference call with his management team … telling them to prepare for the bankruptcies of Lehman Brothers, Merrill Lynch, AIG, Morgan Stanley and even Goldman Sachs. He knew he might have been overstating the case, but figured they needed to be prepared. He was the Man Who Knew Too Much.”
This sort of thing can become a little wearing, as can the description of virtually any man in his mid-40s or 50s as “remarkably youthful,” as if the likes of the then 47-year-old president of the federal reserve, Tim Geithner, should have been trundling around Wall Street with the aid of a Zimmer frame — but I suppose one should cut some slack for a 32-year-old wunderkind author.
Sorkin’s portrayal of Erin Callan, former Lehman’s finance director, is typical: she is a “striking blonde” with “Sex and the City” stilettos, suspected to be romantically involved with the man who hired her, a suggestion made without a shred of substantiation. The bigger problem, though, is the claim of authorial omniscience, admittedly based on more than 500 hours of interviews with 200 people.
The book, which has been billed as the defining account of the credit crunch, has caused a media storm in Manhattan: Sorkin’s colleagues on the New York Times are reported to be angry at his failure to credit the newspaper’s scoops. US business reporter Charlie Gasparino of CNBC is upset at a quote attributed to Lloyd Blankfein, the head of Goldman Sachs, calling him a “rumor monger,” as is the bank. Blankfein has been heard to grumble since about Sorkin’s self-professed mind-reading abilities. There has been sniping, too, that the author is too cozy with the people he writes about: the likes of Jamie Dimon and John Mack (CEO of Morgan Stanley, nickname: “the Knife”) turned up at his book party, hosted by Vanity Fair magazine.
Sorkin’s account deals with the frenzied few months starting on March 17, 2008, when Lehman Brothers chief Dick Fuld was summoned back by then treasury secretary Hank Paulson from a trip to India because of the collapse of Bear Stearns. It ends in mid-October of that year, with Paulson finally accepting that he had to “cross the Rubicon” with a bailout for the banks.
Sorkin does offer some genuinely telling detail. Fuld, the self-centered, foul-mouthed but deeply loyal man who took Lehman to its destruction, is summed up in one anecdote. He was hiking one day with a colleague when the colleague’s asthmatic son panicked and had to be guided to safety by his father and Fuld. The party met another walker who looked at the 10-year-old boy and commented: “My, aren’t we wheezy today.” Fuld turned on him and shouted: “Eat shit and die! Eat shit and die!”
From a UK perspective, there are fascinating insights into less than flattering US views of us. John Varley, the intelligent and decent boss of Barclays, is dismissed by Paulson as a “waffler” and a “weak man.” Paulson declared the British had “grin-fucked us” after the chancellor and the Financial Services Authority, the City of London regulator, declined to allow Barclays to take over Lehmans on the grounds it was too risky — meaning we did the dirty on the Americans while smiling to their faces.
A clue to the difficulty politicians had in dealing with the crisis is in the very small gene pool shared by the two worlds. Dubya’s brother Jeb worked as an adviser to Lehmans’ private equity arm and his second cousin George H. Walker IV was on the executive committee. Hank Paulson’s brother Richard also worked for the firm; as a former employee of Goldman Sachs, Paulson was tied up in knots over his subsequent dealings with his former employer.
So is Too Big to Fail the best book about the crisis? For my money, Fool’s Gold by Gillian Tett is a more sophisticated read; from a UK perspective, Alex Brummer’s The Crunch is more engaging; and Graham Turner’s No Way to Run an Economy is more provocative. But Sorkin has provided an entertaining addition to the crunch-lit genre. Its final message is a worrying one. Unlike the dinosaurs on the cover, the Wall Street raptors are far from extinct, despite their greed and folly; those who remain are doing better than ever. “Perhaps most disturbing of all, ego is still very much a central part of the Wall Street machine,” Sorkin says, noting that the survivors have been left with a genuine sense of invulnerability. Jurassic Park may be less populous, but how long before the sequel?
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