The 5 Best Books of the Year on Wall Street Greed and Hubris
In addition to being extremely informative on the topic of how the largest banks in the U.S. nearly killed the country's economy, the following titles do a good job of taking you inside the halls, cubicles, meeting rooms and corner offices of some of the major players involved, giving you an accurate look at what life is like (and, in some cases, was like) on Wall Street. Of course, they're also quite entertaining.
1. "The Big Short: Inside the Doomsday Machine", by Michael Lewis
Unbeatable when documenting the greed and hubris of Wall Street, Lewis (a bond trader turned author) writes, "The Venetian hotel—Palazzo Ducale on the outside, Divine Comedy on the inside—was overrun by thousands of white men in business casual now earning their living, one way or another, off subprime mortgages. Like all of Las Vegas, the Venetian was a jangle of seemingly random effects designed to heighten and exploit irrationality: the days that felt like nights and the nights that felt like days, the penny slots and the cash machines that spat out $100 bills, the grand hotel rooms that cost so little and made you feel so big. The point of all of it was to alter your perception of your chances and your money, and all of it depressed Steve Eisman, the CEO of FrontPoint Partners, a hedge fund that detected the subprime mess before nearly everyone else. He didn't even like to gamble."
2. "The End of Wall Street", by Roger Lowenstein
The straightforward, sober, thorough, thoughtful, extremely knowledgeable, longtime Wall Street Journal contributor Lowenstein (who also authored the excellent When Genius Failed: The Rise and Fall of Long-Term Capital Management) writes in The End, "The government's backstopping of Fannie and Freddie, along with the federal agenda of promoting homeownership, was yet another cause of the bust. Yet for all of Washington's miscues, the direct agents of the bubble were private ones. It was the market that financed unsound mortgages and collateralized debt obligations (CDOs) that spread their contagion globally; the Fed permitted, but the market acted. The banks that failed were private; the investors who financed them were doing the glorious work of Adam Smith."
3. "All the Devils Are Here: The Hidden History of the Financial Crisis", by Bethany McLean and Joe Nocera
McLean and Nocera take their title from Shakespeare's Tempest and their devils from the top ranks of investment banks, including Goldman Sachs and the former Merrill Lynch.
They write, "To most Americans, pre-crisis, the Merrill Lynch name was far more storied than Goldman's. Certainly, it was far better known. Merrill was the 'Thundering Herd' that was 'Bullish on America.' It had offices in every nook and cranny in America, where brokers stood at the ready to sell middle-class Americans the stocks and bonds they needed to put their kids through college and build their retirement nest eggs.
To most people, what Goldman did was a complete mystery. What Merrill did was something everyone could see and understand."
4. "Crash of the Titans: Greed, Hubris, the Fall of Merrill Lynch, and the Near-Collapse of Bank of America", by Greg Farrell
A Financial Times correspondent, Farrell tees off Titans with this well-played paragraph:
"Stan O'Neal, chief executive officer of Merrill Lynch, a Wall Street firm on the verge of disaster, had only himself to blame. He calculated the damage that had been wrought. He reviewed the mistakes he had committed, the strategic blunders, the errors in judgment, and disregard for risk, all of which was exacerbated by faulty execution. Of course, it wasn't entirely his fault, since he relied on the advice of the one person who should have known better — his caddy."
5. "Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America", by Matt Taibbi