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on 2 February 2015
This book could not have been written without the active participation of two people - Gordon Brown, and Fred Goodwin. I am seldom lost for words, however on reading parts of this well researched and easily readable book, I was left literally shaking my head and open mouthed.
Whilst Brown is a bit player in this book - the book of course is not about him, but without his policies as Chancellor, Goodwin might not have been in such an easy position to have gone from being an accountant with no banking experience whatsoever, then after a couple of years at the Clydesdale Bank, to within the space of literally a handful of years, transformed the similarly provincial Scottish bank RBS into a monster with a toxic balance sheet of £1.9 TRILLION - £400 BILLION larger than the entire UK economy. There are of course many other culpable figures in this story; members of the parochial and at times nationalistic Scottish establishment who wanted a Scottish bank to one of the world's biggest. Many others were either too afraid of being `shredded' to speak out, or merely happy to keep the bonuses rolling in. Alex Salmond even has a couple of cameo roles - including when he wrote Goodwin a nationalistic `thumbs up' letter on the takeover of ABM Amro, a venture which took place when the warning lights on the control panel were flashing and the klaxons sounding as in any good disaster movie one minute before the music finally stopped. (Ironically, Banco Santander - one of RBS's partners in the venture, unknown to Goodwin, immediately sold off their profitable part of ABM Amro, making them a profit of 2.4bn in three weeks - leaving RBS owning a third of the bank, but 70% of the balance sheet).
Much of the entire financial services industry - and many who sailed in her, were existing in a money- go-round of targets, investments, take overs, and the design and sale of financial products that hardly anybody understood, which were all there for one purpose - to make money, particularly for themselves. Everybody was at it. Bankers, accountants, regulators, auditors & ratings agencies. The more money was made, the bigger the commission and bonuses for all concerned. Individuals were making £10 million a year bonuses.
The entire UK banking boom of the years following the official abolition of boom & bust seemed little more than a stack of pyramid schemes, interlocked through a web of complicated instruments which nobody appeared to understand, built around mathematical formulae and hedging where nobody lost. Markets went up - people made money. Markets went down - they made more. Loans and mortgages were being bundled up into packages and sold off as quickly as possible thus allowing them to loan even more. Banks were even creating products where they were actually betting against the punters who had been daft enough to buy their own products! What could possibly go wrong? Well, the American sub-prime crash saw to that. The rest is, unfortunately history.
Fred Goodwin cannot but come out of this in any other light as an ambitions megalomaniac and bully who appeared to have more interest in things like the colour of bank carpets, cars, or the shape of filing cabinets, than the intricacies of how banking actually worked. He continually displayed extreme arrogance - right up to when in December 2007 he turned up on Alistair Darlings Edinburgh doorstep with a gift wrapped panettone demanding that the Governor of the Bank of England `do something' to get him out of the mess of his own making.
If you want to find out how boom went to bust - there can be few better and more easily readable books. You do not need to be an accountant to understand what went wrong.
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on 16 June 2017
I bought the Kindle version last year, and finished reading it recently. At times I found reading it tedious but glad I persisted in completing it, as later on it was a page turner. It is shocking to see how greed for financial gain and power can cause havoc to a country's economy, eventually affecting the ordinary person in the street. It appears most of players directly or indirectly involved in the fall from grace of the bank got away lightly.

Some of these institutions are too big and too important to a country's economy and well being that the government of the day cannot and will not let them go under.

It is a cliche to say lessons are learnt or will be learnt. No doubt regulations are in force to prevent a recurrence of similar crisis. But no amount of technology or regulation will guard against cycles of boom and bust. The driving force will always be greed, a human fraility. All that the players in the game need is a certain amount of luck, not to be caught out severely in the bust or by the long arm of what appears to be an ineffectual law
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on 16 May 2017
Incredibly cheap, perfect conditions, as new, arrived in no time. All great!
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on 14 November 2013
An excellent insight into the sequence of events and the motives and drivers of the banking community. Having read this, one is left with no confidence at all that cultures, discipline or control mechanisms have changed sufficiently to prevent recurrence.
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on 3 June 2016
Having dealt with RBS for man years it was a real eye opener
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on 17 April 2017
Where did he get that name? Fred 'the shred' Goodwin got that name by sacking thousands of his employees. Nasty/nice guy Fred was not too clever when he was in charge of one of the biggest banks in the world- Royal Bank of Scotland. Not only was he found out to be incompetant in his job, he also had a mistress- a colleague of Goodwin's at RBS. The lady's identity remains guarded by a legal injunction to this day. Its no wonder his wife left him.
The 'genius' Goodwin bought a rotten apple- Dutch Bank in financial dire straights. Then he went for the sub-prime mortgages investments (USA). Thats what started the financial melt down in 2008. But hey, who cares? Let us poor taxpayers bail him and his colleagues, and his bank out. Problem sorted. Very insightful book. Well recommended.
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on 3 May 2014
I did enjoy this book and it has been researched well in terms of the people. I think it does a good job of talking about some of the characters at RBS.

The book describes in great detail the investment bank, CDO's and acquisition of ABN Amro along with portraits of the people involved in these areas.

Then casually at the end of the book it is made clear that the majority of the losses were in property lending in the UK and Ireland. However up until that point there had been no mention of property lending or any of the people involved in that part of the business. I would have thought that the area of the business responsible for the largest losses should have been covered in some way. What happened? Who were the people involved?

Also in his conclusion he implies that HSBC was just as bad as HBOS and RBOS which is pretty unfair. Tax payers have not had to bail out HSBC. While the management of HSBC are not perfect they are in a different league to Fred Goodwin and company.

Overall, I think the flaw is that the author does not properly understand finance. I have also read "Hubris: How HBOS Wrecked the Best Bank in Britain" and "Anglo Republic: Inside the bank that broke Ireland" which in my view are better books because they properly explain what happened. After finishing Make It Happen I feel that I still don't completely understand what happened at RBS.
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on 26 April 2014
All in all, a pretty good read. However, getting towards the final stages of the book, I was hoping for a detailed analysis of what exactly caused the write downs and losses, but got only a few passing references to how much was lost in a few asset classes or business lines.

Many people have the view that RBS's losses were caused by some vague notion of 'gambling' or 'toxic loans'. This book had the opportunity of laying out exactly what caused the losses, but failed to fully grasp it. Having read the book, I now know that a large percentage of the losses were incurred in property lending, particularly in Ireland (both North and South), but I still am none the wiser of what the total exposure was to US sub prime and related CDOs was, what the eventually realised losses on this asset class were, what percentage of the exposure and losses came from the RBS side and what came from the ABN acquisition etc.

Maybe a future edition could give some more detail on the balance sheet and losses. More interestingly, it could run a what if scenario - estimating what the eventual losses might have been if half of the bank's assets hadn't been sold at fire sale prices.
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on 6 December 2013
I have read a number of books on the 2009 financial crisis. Most of them were interesting but heavy going in parts. This book is an exception because it is well written, informative and in places even witty. It was a real pleasure to read.

Fred Goodwin was clearly an unpleasant individual, with a huge inferiority complex, which he attempted to mask through bullying and rudeness. Clearly the rest of the board should have stood up to him which they singularly failed to do. Alas this failure was probably motivated by a desire to prolong their lucrative remuneration schemes. A lesson to the banking industry I think - overpay your employees and the allegiance will be to their wallets not the business.

There is a slightly curious ending to the book where the author points out that Fred wasn't solely to blame. This is obviously true but nevertheless I think we can heap about 70% of the ordure on his shoulders. This book itself more or less proves that Goodwin was the chief malefactor, and the other villains bit players.

Highly recommended because of the quality of the writing.
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on 4 January 2014
A great deal has been written about the banking crisis of 2007-10, much of it of a similar dreadful quality to some of the assets on the RBS balance sheet in 2007. To my mind, two serious attempts have been made to document what led to the crash at RBS: the BBC documentary "Inside the Bank that Ran out of Money", and now Iain Martin's book.

Martin received co-operation from the Royal Bank. He interviewed the CEO and chairman, had access to RBS archives, and conducted off-the-record interviews with key current and former RBS employees. This book is largely a summary of those interviews, presented in a direct and unadorned style. If the Bank didn't want it to be written, they at least made the best of the inevitable. The resulting book is unbiased and reasonably sympathetic to the current RBS management.

Martin tackles the main areas leading up to the crash in roughly chronological order: the history of Scottish banking, the early career of Fred Goodwin, Sir George Mathewson's reform of the Bank in the 1990s, the NatWest takeover and Goodwin's stewardship in the 2000s. The pace quickens with the ABN Amro deal, whereby Goodwin set out to buy an American retail bank and ended up with a Dutch wholesale one. Then we have the American sub-prime mortgage crisis, the credit crunch and the crisis at RBS, culminating in the biggest failure in UK corporate history and recession in the wider economy. Even though you know the outcome, it's thrilling stuff.

An exception to the chronology is that chapter one deals with the height of the crisis. No doubt Martin's publisher thought it boring to start with a lesson in Scottish history, but to restore the proper order, insert chapter one between 13 and 14.

Martin is at his weakest when he strays from exposition of the facts. In chapter 11, he tries to teach us something of asset and liability management. Having accused Goodwin of having a weak grasp of the subject, Martin shows himself to be less than a master. I would recommend that every aspiring corporate treasury employee read this book as a warning of what can go wrong, but you won't learn much about how treasury actually works.

In his final chapter, Martin gives his own idea for regulatory reform. He thinks that balance sheets have grown too big to be managed by the boards of the banks, so we should have many smaller banks. The trouble is, there are two reasons for bailouts: not only are banks so exposed to each other that a collapse of one can trigger the domino effect, whereby the whole system starts to collapse, but it is politically unacceptable for small depositors and SMEs to lose their deposits. Even small banks may need to be bailed.

Many reforms are needed. Capital ratios are being strengthened by a combination of recapitalisation and balance-sheet reduction. Banks should never again fund long-term assets, such as mortgages, on the overnight money market - banking is all about funding long-term assets with short-term liabilities, such as current account balances and deposits, but the behaviour of such liabilities is well understood and they tend to roll over even in stressed conditions, whereas the short-term money market can dry up overnight as we saw in 2008. The Basel committee will hopefully agree improved standards on the weighting and inclusion of derivatives on the balance-sheet. The new UK regulators need to be bolder in enforcing new capital and liquidity standards and in being willing to refuse to approve insufficiently qualified and experienced bank directors and senior staff. There are things the government could do to help, such as smoothing the boom-bust cycle by counter-cyclicality in economic policy (with the acquiescence of us voters). Clearly, the ratings agencies got things badly wrong leading up to the crisis, so my own view is that we would be in a better position if we moved away from our dependence on these three American firms with their questionable fee structure, and instead developed an international ratings standards body. The latter reforms seem a long way off but the former are well underway and should stave off another disaster for a while. The danger will come in decades' time, when memories have faded and a new generation questions the need for the onerous banking regulation that we are now developing. If you buy Iain Martin's book, leave it in a prominent place where your grandchildren may stumble across it.
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