Book Review: Too Big to Fail

12 08 2011

Too Big to Fail on Amazon.com

An ex-colleague recently told me to safely ignore Andrew Ross Sorkin’s Too Big To Fail – “it’s little more than propaganda”, he said.

Undeterred, I ploughed through the tome, finding it well-written and informative. While it may have defended certain individuals, it by no means came across as biased; though perhaps I’m just naive.

Where The Big Short is a fascinating yet brief look at a few key players in the crisis who bet against the market, Too Big to Fail is an exhaustive look at the events that occurred during the credit crisis in 2008. It follows an impressive cast of individuals, from the US Treasury, through the Federal Reserve, and just about every major investment bank in the US.

I confess that getting though the book took some effort. Not because there wasn’t ample drama and conflict, but chiefly because there was just so many characters to familiarise with.

Much of the book centres around the fall of Lehman Brothers and the attempts of all and sundry to save it. The book makes much of both Dick Fuld, the ex-CEO of Lehman who, by all accounts, tried dearly to save the firm, and Hank Paulson, the US Secretary of the Treasury under Bush, who struggled relentlessly to prevent an economic meltdown (perhaps that’s the said propaganda?).

Sorkin has evidentially put a lot of work into researching the events of the time, and the book reads surprisingly well; often throwing in well-placed reminders regarding character relationships touched on in the past. I particularly like the occasional inconsequential commentary by those present (eg. he looks fit for his age) or throwaway body-language queues that lead nowhere, immersing the reader in the situation.

While the book focuses primarily on Lehman, it also covers most of the other major events during the crisis. In particular, the buyout of Bear Stearns by JP Morgan for $2 a share with support of the US government (later revised to $10), AIG being propped up by the government shortly letting Lehman fall (by not providing government assistance to any of the buyers) and the eventual takeover of Merrill Lynch by Bank of America.

The question of whether or not the US government were to blame for the depth of the crisis by not saving Lehman remains to be seen. Pick up a copy and make up your own mind. At the very least you’ll see how they do things on the other side of Wall Street.

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