Wall Street Thriller: book review

A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers by Lawrence G. McDonald and Patrick Robinson  bills itself as a “Wall Street Thriller” and it most definitely reads like one. The narrator/protagonist is Lawrence G. McDonald, a former convertible bonds trader at Lehman. The style of writing by his co-writer, Patrick Robinson, and the voice of the narrator reminds me Anthony Bourdain and his book Kitchen Confidential (slightly less cussing though).

This is a good read. I loved learning about the inner workings of Wall Street from one person’s perspective — and it just that — a biased perspective. He does not hide this fact but that’s in part what makes the book so entertaining. I learned more about how high finance works from reading this book than I have from any financial textbook. McDonald describes from his perspective why Lehman failed, what was done to try save it, and fully lays the blame at the feet of two people: Dick Fuld, CEO and Joe Gregory, COO.

One begins to understand the complexity of the financial instruments involved, the delusional activities of large group of people, and the sheer calamity brought upon this country and the world as a result of these activities. The collapse of Lehman was at the crux of the financial meltdown. Reading this book you realize how much of our financial system runs on faith and trust, and how important it is to have checks and regulations in place that keep that trust and faith in place. Dismantling the Glass-Stegall act was at the root of the most recent chaos — and that blame lies with the Congress at that time. And there is the easy access to credit thanks to the Federal Reserve keeping interest rates low after the 2001 bubble. (Sorry, can’t mention the name of the demi-god Alan Greenspan.)

The book is well-named: A Colossal Failure of Common Sense. However it’s just not the top two Lehman that suffered from this failure, it’s most of the heavy hitters in the system that did. And they should be ashamed of the havoc they wrought.

But we all had a piece of it, however small. I hope our awareness these failures leads to change. We’ll see.

Good book, albeit biased — worth the read.

Full disclosure: Lehman Brothers was a client I worked with and I knew some of the people at the firm.