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on 5 January 2011
The book itself is OK- interesting in parts, quite boring in others, and I found Sorkin's conclusions on the whole sorry mess unconvincing, more journalistic than properly analytical. Michael Lewis' A Big Short was a much more enjoyable read.

The Kindle Edition however was unacceptably bad: full of typos, spelling errors, and even whole passages of text repeated accidentally. Worst, the photos at the back of the book were entirely missing. Fortunately, as usual Amazon customer services were very good and refunded me as soon as I complained- I then used the refunded money to buy the iBooks edition instead, which was much more polished and had all the photos in it. Putting faces to all the grey banker types mentioned in the book is surprisingly illuminating, so I would avoid the Kindle edition and either buy the paperback or the iBooks e-version.
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on 7 February 2010
I won't repeat in detail what many reviewers have already written - but in short by telling the tale from the perspective of the personalities involved and focusing on the drama of the events - Sorkin produces an extremely readable, page-turning account of the 2008 financial crisis.

Instead the main view I wanted to add is that it would be great if Mr Sorkin could produce a revised version to provide what would then arguably be the definitive account of the crisis. The revised version could useful reflect the following points:

1. The current version is very much Wall Street focused (which indeed is what it claims to be). The crisis was however global and inclusion of events such as the drama in Iceland, the rescue of Fortis, the bailouts of the UK banks, etc. would more fully reflect the scope of events.

2. Too Big to Fail does not include all the major events of the crisis - for example a noteable omission is the fact that the crisis revealed other scandals that had been taking place hidden by the excesses of the boom years - Madoff, Kerviel, Stanford and the like.

3. While I loved the dramatic perspective from which the book portrays events and wouldn't want it to be re-written as an academic text, the final chapter which reflects on some of the lessons learned from the crisis could be stronger and could also take a look at what steps could be taken to prevent history from repeating itself.

4. The focus of the current account on events on Wall Street and in Washington unfortunately means the book does not provide any particularly useful insights on how events were actually impacting everyday individuals throughout the world. I'm sure by doing this the events could be put into proper context and additional drama could be provided.

5. I very much understand that there was a race on to get the book out - however I do think that Mr Sorkin's editors/publishers could have done a better job in some respects. There are numerous typos, the odd place where a sentence is repeated twice, and some glaring factual errors (the Canary Wharf business district of London for example is not known as the 'Square Mile' - a title which is reserved for 'the City' itself). The book would also benefit from a contents page, a timeline (particularly because the text jumps around chronologically from time to time) and a glossary of relevant financial terms (explaining what a CDO is, what a derivative is etc. without hampering the text itself).

In my view with these additions this admirable book could well aspire to the title of the definitive account of the 2008 crisis. Without them however it still merits 5 stars as one of the most dramatic business books I have read. My congratulations and thanks to Mr Sorkin.
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on 27 December 2013
I feel proud for getting to the end of this, because there were times I didn't think I was going to make it. Not that there's anything wrong with it. The author explains everything clearly and no one can say this is a story without narrative drive.

In the end, though, I'm not sure whether Sorkin isn't trying to do too much - a pacy blockbuster and an academically respectable analysis rolled into one - but he manages the balancing act as well as anyone could. His major problem is the incredibly long cast-list, both individuals and institutions. In fairness, there's a dramatis personae at the beginning, but it's organised by institution rather than individual, so that, for example, if you forget who Mark Feldman is - a name I chose at random for the purposes of this review - you can't just look under `F': you have to go through each organisation until you get to `JP Morgan Chase' - and there he is, sixth name down. (And, yes, there is an index, but it's only reasonably helpful in this regard: `Feldman, Mark, AIG final capital search, 340, 379, 384). None of this is helped by the fact that none of the big players on Wall Street are well-known names. The consequence was that it was only by about page 400 that I felt I was getting to really know them all.

The two biggest characters in Too Big To Fail are Dick Fuld, CEO of Lehman Brothers, and Hank Paulson, Secretary of the US Treasury. Sorkin has a lot of sympathy for Fuld (p539), while Paulson is undoubtedly the closest the book has to a hero. Sorkin's admiration for Paulson is far from unqualified. "It cannot be denied," he writes, "that federal officials - including Paulson, Bernanke and Geithner - contributed to the market turmoil through a series of inconsistent decisions. They offered a safety net to Bear Stearns and backstopped Fannie Mae and Freddie Mac but allowed Lehman to fall into [bankruptcy], only to rescue AIG soon after. What was the pattern? What were the rules? There didn't appear to be any, and when investors grew confused ... they not surprisingly began to panic" (p539). A wider, more accurate moral picture of Paulson is probably to be found in the 2011 Charles Ferguson/ Matt Damon film about the Crash, Inside Job.

Reading this book as a British citizen, I must admit to feeling it told me quite a lot about (some aspects of) the US attitude to the UK. At one point, the British are all but given the blame for the fall of Lehman, after HM government refuses, late on, to back the Barclay's bid for it. "`He's (ie, Alistair Darling) not going to do it,' Paulson told Geithner in amazement. `He said he didn't want to "import our cancer"'" (p350). One wonders how the Bush administration would have reacted, being asked to guarantee a similar project only in reverse?

Oh, and hold on. Rather later in the book, the British help save the day: Goldman Sachs is on its way under, and Mr Darling introduces a partial ban on short-selling in the UK. "But just then, at 1pm, the market - and Goldman's stock - suddenly turned around, with Goldman rising to $87 a share, then $89. Traders raced through their screens trying to determine what had been responsible for the lift, and discovered that the Financial Services Authority in the UK had announced a thirty-day ban on short selling twenty-nine financial stocks, including Goldman Sachs. It was exactly what Blankfein and Mack had tried to persuade the SEC's Christopher Cox to do" (p441). Indeed, just about all the main troubled giants on Wall Street have called for some sort of ban on short-selling throughout the book, some of them vociferously, but the US government won't hear of it. Anyway, Goldman Sachs is retrieved at the eleventh hour by the decisive action of the UK government. How do its employees react? Three cheers for Great Britain? A rousing chorus of God Save the Queen? No, "a young trader found a copy of `The Star Spangled Banner' on the internet and broadcast it over the speakers to commemorate the moment. About three dozen traders stood up from their desks, placed their hands over their hearts, and sang aloud, accompanied by high fives and cheers" (p442).

Sheesh, that's gratitude. But then, as Matt Taibbi apparently wrote in Rolling Stone, Goldman Sachs is "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money" (p537). Typical squid gratitude perhaps.

This is a very good account of the Wall Street Crash of 2008. To intending readers, I'd advise putting aside one large chunk of time to read it, rather than lots of little chunks: that way you're more likely to maintain a handle on the characters and events. And, at 530 pages of small font, you've got to be very, very interested in this particular historical event. I wasn't perhaps enough - but I still managed to finish it anyway. I'm glad I did.
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on 31 August 2010
Hindsight is a wonderful thing and books are normally written with the benefit of hindsight. But this account of the response to the catastrophic events in 2008 of as they unfold, portrays the uncertainty and momentousness of the decisions made on a day to day basis to prevent world financial meltdown. It provides a gripping, page turning read even for someone unfamiliar with Wall Street.

Sorkin touches on the seeds to the disaster - the deregulation of the banks in the late 1990's. the push to increase home ownership which encouraged lax mortgage standards, historically low interest rates. which created the liquidity bubble, and the system of Wall street compensation that rewarded short - term risk taking. They all came together to create the perfect storm.

The account of the battle to save Wall Street interweaves the responses and actions of many of the leading players from Hank Paulson of the US Treasury, Tim Geithner President of the New York Federal Reserve, to CEO's, legal advisors and other key characters in the 9 major banks, and the key insurance and mortgage companies. With the sheer number and complexity of the simultaneous negotiations, this could lead to total confusion, but Sorbin manages to provide a comprehendable picture of this complex situation.

The book portrays the idiosyncracies and personal agendas of the people leading the financial institutions as they respond to the financial hurricane. After the decisions of the Federal officials, Paulson, Geithner and Bernanke, to intervene directly with Freddie Mac and Fanny Mae and their underwriting the toxic assets of Bear Stearns to allow Jamie Dimon of JP Morgan to buy the first investment bank casualty, the pressure was on them not to bail out the fat cat bankers but to allow the market to find a solution to the investment banks' predicaments. When the British FSA refused to allow Barclay to buy Lehmans and expose itself to risk associated with its toxic assets, the deal negotiated by CEO, Bob Diamond, collapsed and Lehman's had to go into Chapter 11 bankruptcy. This decision was followed by the rescue of AIG by US Federal Bank's underwriting of its merger with the Bank of America.

Sorkin vividly describes the "policy by deal" that followed Lehman's bankruptcy and AIG bail out as the investment banks frantically negotiated major mergers or refinancing deals, often within the space of 24 hours, to avoid running out of cash as the financial system ground to a halt. And he describes Paulson, Geithner and Bernanke's decisions, perhaps belatedly to introduce fiscal measures through TARP, through opening up lines of credit and direct investment by the USA government in the 9 major banks.

The book provides food for thought on whether the battle averted disaster or whether it was a series of decisive but reactive actions.

This book well deserves its shortlisting for the Samuel Johnson non fiction book of the year 2010.
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on 13 January 2013
This is a fantastic book detailing first person accounts that record the events leading up to and resulting from the failure of Lehman Brothers. But it is not without its shortcomings.

The first part of the book focuses on Fuld's attempts to save Lehman Brothers. Like a Dr. Strangeway standing at the prow of a massive container ship, Fuld sees all that he has created come apart as the containers of incorrectly secured bad debt shift in the storm of subprime mortgages taking the ship down. As it sinks, Fuld becomes increasingly desperate as he tries to save his company. About 2/3 of the way through the book, the Lehman Brothers slips beneath the waves dragging a desperate Fuld down with it (*) and he makes little impression thereafter.

The latter part of the book focuses on Poulson's attempts to save the American economy that is threatened - really threatened - by Lehman's collapse as the financial storm intensifies. Sorkin takes you inside the rooms of the USA's leading investment banks as all around them collapses as even the leaders of the finance industry lose the confidence of the markets.

The book is rich on information, and while I saw Fuld and Polson as the central characters there are lots of details about those around them to fill out the picture in detail. However, there are shortcomings as well, and while I unambiguously recommend this work, they are worth noting.

Grammar starts off really well. It is wonderful to read an American using correct English forsaking gotten for precision. However, at about half way through the precise English of the book's start flags and colloquial Americanism moves from speech into description. I may be alone in regretting his. However, the book does lose some of its cogency at about the same place ... perhaps representing writing fatigue or a rush to deadline?

This book on the international financial crisis is VERY American. Except for when the Barclay's Bank offer to acquire Lehman fails and the company goes into administration. Sorkin does nothing to correct the quotes from Americans that lay the blame for the failure at Britain's door, an unsupportable conclusion if only because any number of American banks had pulled out of trying to buy Lehman's before Barclays was the last man standing. An analytical failure that is sad.
And analytical failure is something of a theme. Too big to fail is great on the human perspective but falls very short on the analytical review of what may have caused it. Apart from one paragraph - yes one - where Clinton's liberalisation of the financial market is loosely connected to the failure in Bush years.

So what do we have? A great story from some of the world's leading egos about what went wrong told well and from many perspectives. It is really worth reading, it tells what happened in American, but leaves you searching for the international perspective and an answer to "why?"

(*) Yes I realise that it is air excaping from the ship that reduces water specific gravity resulting in people sinking, rather than being "sucked down" but this is a reveiw about a book not a scientific discussion!
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on 6 November 2010
In his excruciatingly long, and sometimes boring, recap of the negotiations to save capitalism in the US and worldwide from a systemic collapse, A.R. Sorkin gives not enough background information (only a few paragraphs in 544 pages!)

The author mentions summarily that financial deregulation, lax mortgage standards, a liquidity bubble (low interest rates) and too high compensations for chief officers (for only short-time results) were the main causes of the cataclysm. Moreover, he briefly remarks that financial institutions heaped debt on debt (borrowing again against the `securitizised' mortgages) and played with a leverage of up to 32 to 1. Their derivatives exposure leaped to 2.7 trillion dollars. The concomitant fees were also staggering.
But, when capitalism's `creative destruction' (J. Schumpeter) turned into complete `self-destruction', the short-sellers stepped in, of course, also improperly (no intra-day share borrowing).

Socialism bails out capitalism
Not for the first time, socialism (nationalization of the financial sector) saved the `free market'. The `invisible hand' remained invisible. It was the same old story: privatize the profits and when those disappear, socialize the (cataclysmic) losses. Make the innocent herd of taxpayers come up with the cash.

Fake heroes and mighty confusion
With adjectives like `most prominent' the author seems to consider the negotiators involved in this bad drama as heroes, while, as David Faber stigmatized them in his `House of Cards', they were only super greedy and stupid (not to amass billions of dollars of compensations).
The text is also very confusing: `The Federal Reserve had never before made such an enormous loan to the private sector.' But, the Fed is controlled by the same private interests.

US business model
The financial sector became the centre of US global business, not to lend to `real' industries, but `to move money around' (a quote from the former Chairman of Sony).
After the bail-out, it seems that the dictum `business as usual' is again the main motto in the financial sector. The author is for once prophetic: the boom/bust cycle will repeat itself again.

For an in depth analysis of the systemic crisis, one should read the books of Frank Partnoy or D. Faber's book (based on his TV report `House of Cards').
For a general overview of the US financial sector I highly recommend `Gods of Money' by F. William Engdahl.
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TOP 1000 REVIEWERon 9 July 2011
This is Woodward-style reporting that re-creates dialogue verbatim, skims along the surface of events, and yet virtually never addresses what it means, how we got here, and where we should go from here. Rather than any depth of inquiry, what the reader gets is descriptions of the maneuverings of extremely arrogant and rich men as if they were celebrities in show business. Moreover, the book largely assumes that the reader understands the mechanisms of banks, the FED, the FDIC, the SEC, and the Dept. of Treasury. At least for me, this reflects a pathetic lack of intelligence and nerve that hides behind journalistic artifice. It is a superficial, timid, and insider view of one of the most colossal failures in both business and policy of modern times.

The failings of this books are legion. First, the author offers virtually no overview of the institutions, preferring to explain them off the cuff, so the reader gets no sense of context or how they might work. Second, the financial instruments (derivatives, mortgage securitization, etc.) are also explained inadvertently, adding to the confusion that non-specialists feel, and many acronyms remain unexplained. Third, the author completely fails to cover the role of the rating agencies and how they became as corrupted as Arthur Andersen did, trying to play with the big boys. Fourth, the author gives little explanation of the policy instruments, regulations, and other tools available to policy-makers. Fifth, the author assumes that the reader understands how the players feel and see things - I was confused innumerable times when he labelled some incident "humiliating", or someone became a "laughing stock", or some other emotion that appeared abruptly and without context.

Thus, I can only assume the author wrote for businessmen who know all about these issues already, who wanted a blow-by-blow chronology of every obscure remedy and tactic that was considered, i.e. every little negotiation or ploy or hope or merger plan. It is boring and incomprehensible - what they would mean is glossed over. Now, I write about businesses for a living and I wanted basic explanations, but found virtually none. It was tremendously frustrating, given that the book is almost 600 pages!

So far as I could tell, beyond the particular mechanisms themselves, the crisis arose because: 1) by ideological preference, regulation was lax and unenforced, which 2) enabled bankers to aggressively develop techniques that provided fees (i.e. short-term profit) while increasing the liquidity of normally illiquid assets like mortgages; 3) these instruments, buttressed by AIG insurance, flowed so easily that the major institutions became intertwined so that they were all dependent on eachother as if the legs of a massive house of cards (creating only the illusion of reducing risk with "free market" mechanisms); 4) mortgages and credit were so loose that many homeowners lived way dangerously beyond their means. Once the real estate market cooled (i.e. house prices began to fall, bursting a speculative bubble), the entire system began to teeter. To remedy this, the only thing that the government could fall back upon was hasty dealmaking (mergers, sales, etc.) and injections of liquidity to prevent insolvencies that would cause the entire system to collapse. We came very close to a collapse that would have dwarfed the Great Depression.

I can only imagine how a better journalist with some intellectual and emotional depth - say, a Halberstam - would have written about this as a morality tale that also explains the context and institutions and practices more clearly. Afterall, the entire direction of modern capitalism is in question and we may be at the most important crossroad of this generation. Terrible mistakes were made at taxpayer expense, we didn't learn from past mistakes, and now the firms are showering bonuses on the players with the presumption that all is again well. Etc.

I cannot recommend this book. WHile I found some useful items in it, most of it can be skimmed for the handful of valuable nuggets that are sparely scattered throughout the book. It is an unbearably mediocre performance.
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on 13 November 2010
This book takes us through the dénouement of the Credit Crisis in rollicking style. Despite its length it held my attention throughout, so although the tag `Too Big to Read' might be funny, it isn't really true. But I am worried about the book's accuracy. Sorkin is a journalist, and given his age I presume he did not have a spell working in the industry first. Having seen much financial journalism over the last 25 years I therefore have concerns about how deeply he understands the business. If that were not enough cause for concern, his area of coverage is mainly M&A, which is helpful when covering the many deals (actual, floated, or aborted) over the crazy period of September & October '08, but I'm not sure he has the equipment to understand the arcane financial products in the way that, for example, Gillian Tett seems to. A good illustration of naivety is on page 217 where Sorkin writes: `Treasury officials identified four key risks in Lehman Brothers: the repo book, the derivative book, the broker-dealer & its illiquid assets' Er.....so what's left!?

There are a lot of factual mistakes in the book. For example, there are 2 basic errors as early page 6:
1. Sorkin claims that BNPP briefly suspended customer withdrawals: without clarification this implies it was BNPP the bank that did this (it was actually a couple of the funds they managed). If that had happened, i.e. the largest bank in France failing to pay depositors, Armageddon would have happened a year earlier and Lehman's bankruptcy would just have been a brief footnote to history
2. He says that Bear Stearns was `the weakest & most highly leveraged of the big 5 [broker-dealers]'. It is true that Bear was the smallest, with significantly less capital than its peers, but it was actually the LEAST leveraged, and consistently had the best balance sheet ratios & most conservative risk profile of the `bulge-bracket': being the smallest, it had no choice.

There are numerous other errors throughout the book (for example John Varley was the CEO of Barclays, not the Chairman). These may just indicate that the book was produced in a hurry, as does some of the journalistic prose, but it might also indicate a deeper lack of understanding.

This is a problem, and not just for pedantic reasons: the book's power is derived from what is clearly exceptional access to a lot of the major players and observers of the drama, but (for obvious reasons) most of the quotes and the dialogue are not attributed. This means that sorting out fact from misconception becomes that much more difficult. In summary this is very much worth reading but don't necessarily believe all you read!
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on 10 September 2010
Andrew Sorkin is the chief mergers and acquisitions reporter for The New York Times. As he writes, his book is `a chronicle of failure', capitalism's failure. He gives a detailed account of events from 17 March 2008, when JP Morgan took over Bear Stearns, one of Wall Street's big five.

Sandy Weill, the architect of Citigroup, said in 2007, "The whole world is moving to the American model of free enterprise and capital markets." They promised a new world of risk-free investment. Wall Street firms had a debt/capital ratio of 32/1. Also in 2007, the Securities and Exchange Commission dropped its 1938 rule preventing investors continually shorting a falling stock. Lax regulation met greedy bankers.

In 1999 Ben Bernanke (now chairman of the Federal Reserve) had said that the dotcom bubble was not a big concern, unless and until it fed inflation. Similarly, the Fed ignored the growing housing bubble.

Bush's Treasury secretary Henry Paulson, a devout Christian Scientist and huge fundraiser for Bush, asked a possible new recruit to the Treasury, "Are you a Republican?" Sorkin writes, "As luck would have it, he was."

At a Goldman Sachs board meeting in June 2008, held to discuss a possible merger with AIG, nobody noted that AIG had overvalued its securities, even though they knew about it. Best and brightest? They may think so. They are the monsters, not the masters, of the universe.

As the crisis began, the head of one private-equity giant whinged, "Everybody is just pursuing his self-interest." When Wall Street's top nine CEOs met the Treasury team, on 13 October 2008, to agree the bail-out, the first question was, "Why am I in this room, talking about bailing you out?"

The second, and last, question was, "What kind of protections can you give us on changes in compensation policy?" A Treasury man replied, "We are going to be producing some rules so that the administration will not unilaterally change its view." As soon as they heard that their unlimited bonuses were safe, courtesy of the taxpayer, the CEOs signed.

Workers outside held signs saying, `Jail not bail' and `Crook'. The $1.1 trillion bail-out was by Wall Street, for Wall Street. As Jamie Dimon, CEO of JP Morgan, asked, "Why would you try to bail out people whose sole job it is to make money?" Wall Street served and saved only itself, not its clients, not its borrowers, not the economy, not the American people.

Sorkin warns that `vulture investors' are looking forward to the collapse of commercial real estate. There have been no real changes to Wall Street, so "when the next, inevitable bubble bursts, the cycle will only repeat itself."
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on 8 December 2014
A book like any other
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