Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System--and Themselves
NEW YORK TIMES BESTELLER • The definitive account of the 2008 economic crisis, from the award-winning financial columnist and founder of DealBook, with unparalleled behind-the-scenes access to the key players on Wall Street and in Washington
“Too Big to Fail is too good to put down. . . . It is the story of the actors in the most extraordinary financial spectacle in [over] 80 years, and it is told brilliantly.” —The Economist
NOW AN HBO FILM
One of the most gripping financial stories in decades, Too Big to Fail delivers a blow-by-blow account of the epochal economic crisis that brought the world to the brink. Through unprecedented access to the players involved, Andrew Ross Sorkin re-creates all the drama and turmoil of those turbulent days, revealing never-before-disclosed details and recounting how—motivated as often by ego and greed as by fear and self-preservation—the most powerful men and women in finance and politics decided the fate of the world's economy.
This edition has been updated with a new afterword reflecting on the tenth anniversary of the crisis.
“Too Big to Fail is too good to put down. . . . It is the story of the actors in the most extraordinary financial spectacle in [over] 80 years, and it is told brilliantly.” —The Economist
NOW AN HBO FILM
One of the most gripping financial stories in decades, Too Big to Fail delivers a blow-by-blow account of the epochal economic crisis that brought the world to the brink. Through unprecedented access to the players involved, Andrew Ross Sorkin re-creates all the drama and turmoil of those turbulent days, revealing never-before-disclosed details and recounting how—motivated as often by ego and greed as by fear and self-preservation—the most powerful men and women in finance and politics decided the fate of the world's economy.
This edition has been updated with a new afterword reflecting on the tenth anniversary of the crisis.
BUY THE BOOK
Community Reviews
I liked this book. It effectively tells a story that few folks had a chance to observe. That's a valuable thing to do. It's not the most best layman's review of policy (I liked In Fed We Trust). It's closer to an oral history of how things transpired, what was communicated to whom and when, how they responded.
It's almost exhausting to read the marathon of twists and turns faced by the small cadre of regulators in the second half of 2008. Sorkin intersperses the narrative with reminders of how little sleep everyone was getting (four hours qualifies as a large number), what they were drinking coffee out of (paper cups everywhere), and at numerous lazy descriptions of important persons (e.g., I don't think Bernanke ever says anything but that Sorkin describes his tone as 'academic').
Anyhow, what to conclude from this? 1) the Fed / Treasury's response helped stem the crisis which avoided a more painful recession; 2) their response was not optimal (e.g., Lehman should not have failed); 3) however a stronger policy response may not have been feasible in a democracy - e.g., the electorate may have had to experience some measure of chaos before elected officials could back such a plan; 4) appropriate policy did not exist to solve the crisis before the crisis occurred; 5) therefore regulators solved the crisis largely through improvisation of existing tools (e.g., converting Goldman/Morgan Stanley to BHCs) and asking for new tools (e.g., TARP), without which the regulators would have been helpless; 6) even with these improvised tools, Treasury had little sense of how to effectively use them until shockingly late, Paulson bet on an impractical plan to purchase individual troubled assets that Kashkari had devised until after TARP went to Congress twice.
Perhaps the most interesting reflection that a story, told this way, leaves you with is that the resolution of real crises like these are highly contingent on the bureaucrats that happen to be in office. Federal bureaucracy, particularly in America, depends on rules to constrain its ability to impact citizen's lives. The folks in these positions are not really supposed to improvise all that much, or at least that's what we like to think. But here you have the Treasury Secretary cajoling CEOs to merge with each other, take capital infusions, declare bankruptcy, and on it goes. At one point, Paulson threatens the CEO of Wells Fargo by telling him he should take a Capital infusion because "his regulator is right over there and they are going to call you on Monday and tell you your capital is insufficient."
In Rome, folks would get together and suspend Democracy in times of crisis. In the US bureaucracy, it doesn't work that way and I think it probably cannot. But it is remarkable that our fate during pivotal times of crises depends not so much on folks that we select to handle something of that magnitude, but rather whoever happened to be in the office at the time. An office which, most of the time, is dramatically less important and less carefully scrutinized. I suppose I am focusing on that in light of a crisis 12 years in the future that would find somewhat less of a steady hand at the helm of the US Federal Gov't.
Anyhow, a closing thought. The book clearly has flaws. Sorkin had better access to folks at Treasury and the NY Fed than the rest of the Fed and so the narrative is a bit imbalanced. But at the same time, this is pretty close to a point of view driven story. With only a few exceptions, we're seeing things as Paulson saw them more or less in real time. It's a remarkable viewpoint to have and we're lucky Sorkin wrote the book.
Great, fun read. Four stars!
It's almost exhausting to read the marathon of twists and turns faced by the small cadre of regulators in the second half of 2008. Sorkin intersperses the narrative with reminders of how little sleep everyone was getting (four hours qualifies as a large number), what they were drinking coffee out of (paper cups everywhere), and at numerous lazy descriptions of important persons (e.g., I don't think Bernanke ever says anything but that Sorkin describes his tone as 'academic').
Anyhow, what to conclude from this? 1) the Fed / Treasury's response helped stem the crisis which avoided a more painful recession; 2) their response was not optimal (e.g., Lehman should not have failed); 3) however a stronger policy response may not have been feasible in a democracy - e.g., the electorate may have had to experience some measure of chaos before elected officials could back such a plan; 4) appropriate policy did not exist to solve the crisis before the crisis occurred; 5) therefore regulators solved the crisis largely through improvisation of existing tools (e.g., converting Goldman/Morgan Stanley to BHCs) and asking for new tools (e.g., TARP), without which the regulators would have been helpless; 6) even with these improvised tools, Treasury had little sense of how to effectively use them until shockingly late, Paulson bet on an impractical plan to purchase individual troubled assets that Kashkari had devised until after TARP went to Congress twice.
Perhaps the most interesting reflection that a story, told this way, leaves you with is that the resolution of real crises like these are highly contingent on the bureaucrats that happen to be in office. Federal bureaucracy, particularly in America, depends on rules to constrain its ability to impact citizen's lives. The folks in these positions are not really supposed to improvise all that much, or at least that's what we like to think. But here you have the Treasury Secretary cajoling CEOs to merge with each other, take capital infusions, declare bankruptcy, and on it goes. At one point, Paulson threatens the CEO of Wells Fargo by telling him he should take a Capital infusion because "his regulator is right over there and they are going to call you on Monday and tell you your capital is insufficient."
In Rome, folks would get together and suspend Democracy in times of crisis. In the US bureaucracy, it doesn't work that way and I think it probably cannot. But it is remarkable that our fate during pivotal times of crises depends not so much on folks that we select to handle something of that magnitude, but rather whoever happened to be in the office at the time. An office which, most of the time, is dramatically less important and less carefully scrutinized. I suppose I am focusing on that in light of a crisis 12 years in the future that would find somewhat less of a steady hand at the helm of the US Federal Gov't.
Anyhow, a closing thought. The book clearly has flaws. Sorkin had better access to folks at Treasury and the NY Fed than the rest of the Fed and so the narrative is a bit imbalanced. But at the same time, this is pretty close to a point of view driven story. With only a few exceptions, we're seeing things as Paulson saw them more or less in real time. It's a remarkable viewpoint to have and we're lucky Sorkin wrote the book.
Great, fun read. Four stars!
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