Recently read: Too Big To Fail
Too Big To Fail, by Andrew Ross Sorkin
This is an amazingly detailed history of the banking events from mid-2008, running from shortly after the collapse of Bear Stearns up to the injection of TARP funds into the big banks. It is obviously well-researched, and the details help in understanding what actually happened.
One of the big questions is why the government bailed out Bear Stearns, but allowed Lehman Brothers to fail. While a perfect understanding isn't possible, the details about the various attempts to transform Lehman Brothers (mergers, sales, etc.) make it fairly clear: There wasn't congressional support for using government money, and the other options simply ran out of time.
It's both interesting and frustrating to see how, over time, the various regulators were less and less graceful in their handling of the crises. Summoning the CEOs of the major banks to Washington DC, on short notice, with no explanation of why is certainly rude and high-handed. But it's understandable: They were in an impossible situation, and it may have been the only way to contain the crisis. Apparently there were a number of times when a regulator suggested one executive call another to discuss some deal, leading to somewhat confusing phone calls: "Well, I guess you know why I'm calling." "No, I don't" -- and a failure to make any sort of deal.
The way that the crisis unfolded suggests that the structure of the regulators and regulations leaves a lot to be desired: There wasn't anyone keeping track of what might happen if things went sour (though, to be fair, a number of regulators warned of pending problems: Congress should bear much of the blame), and as the crisis progressed the powers of the regulators were inappropriate for the tasks. In a number of cases progress depending on someone who understood (part of) the problem convincing another regulator that they had to act, and at other times they were too forceful.
The banks should have done a number of things differently too, of course: Borrowing immense amounts of money with short-term loans is inherently risky, and many of the problems could have been avoided by acting faster or with more foresight. But it's hard to offer a meaningful critique of (for example) Morgan Stanley: They continued to make money even in the crisis, it's just that their customers were abandoning them (and demanding their money now) because a majority of the other investment banks had just failed.
I have a few petty critiques of the book: It shows some signs of having been rushed through the publishing process, in the form of some typos and a duplicated sentence. I also disagree slightly with his interpretation of a few details (the role of the Federal Reserve in the 1929 crisis, for example), but those are truly minor blemishes on the whole.
It's an important historical account, and highly readable. It's also kind of stunning that anyone was able to pull together so many details about what happened.
Highly recommended
This is an amazingly detailed history of the banking events from mid-2008, running from shortly after the collapse of Bear Stearns up to the injection of TARP funds into the big banks. It is obviously well-researched, and the details help in understanding what actually happened.
One of the big questions is why the government bailed out Bear Stearns, but allowed Lehman Brothers to fail. While a perfect understanding isn't possible, the details about the various attempts to transform Lehman Brothers (mergers, sales, etc.) make it fairly clear: There wasn't congressional support for using government money, and the other options simply ran out of time.
It's both interesting and frustrating to see how, over time, the various regulators were less and less graceful in their handling of the crises. Summoning the CEOs of the major banks to Washington DC, on short notice, with no explanation of why is certainly rude and high-handed. But it's understandable: They were in an impossible situation, and it may have been the only way to contain the crisis. Apparently there were a number of times when a regulator suggested one executive call another to discuss some deal, leading to somewhat confusing phone calls: "Well, I guess you know why I'm calling." "No, I don't" -- and a failure to make any sort of deal.
The way that the crisis unfolded suggests that the structure of the regulators and regulations leaves a lot to be desired: There wasn't anyone keeping track of what might happen if things went sour (though, to be fair, a number of regulators warned of pending problems: Congress should bear much of the blame), and as the crisis progressed the powers of the regulators were inappropriate for the tasks. In a number of cases progress depending on someone who understood (part of) the problem convincing another regulator that they had to act, and at other times they were too forceful.
The banks should have done a number of things differently too, of course: Borrowing immense amounts of money with short-term loans is inherently risky, and many of the problems could have been avoided by acting faster or with more foresight. But it's hard to offer a meaningful critique of (for example) Morgan Stanley: They continued to make money even in the crisis, it's just that their customers were abandoning them (and demanding their money now) because a majority of the other investment banks had just failed.
I have a few petty critiques of the book: It shows some signs of having been rushed through the publishing process, in the form of some typos and a duplicated sentence. I also disagree slightly with his interpretation of a few details (the role of the Federal Reserve in the 1929 crisis, for example), but those are truly minor blemishes on the whole.
It's an important historical account, and highly readable. It's also kind of stunning that anyone was able to pull together so many details about what happened.
Highly recommended