13 May 2010
Too Big to Fail by Andrew Ross Sorkin. New York: Viking Press, 2009. 600 p., $18.12.
This is the second book concerning the financial crisis that I have read. The first book, In Fed We Trust (review here), was a huge disappointment. Thankfully, Sorkin's excellent novel has restored my faith in the ability of journalists to write excellent prose longer than the length of an article. The author combines exhaustive research and meticulous attention to detail with a captivating narrative about the events that led to the greatest collapse of public trust in modern history.
Sorkin's great advantage is his enormous pool of sources and connections with the titans of the financial industry, and he takes full advantage of his insider status. Throughout the book, the author is able to reconstruct the events, conversations, and emotions from the collapse of Bear Stearns through the recapitalization of the major banks via TARP. Though not all conversations can be considered a verbatim transcript, the details lend credence to the timeline and the overall presentation of the facts. Many of the major events discussed in the book have already been thoroughly discussed and analyzed. The added value of this book is its ability to elucidate the decisionmaking process that led to the major events.
The major players involved-from government officials such as Paulsen and Bernanke to prominent CEOs such as JP Morgan's Dimon and Lehman's Fuld-were clearly not stupid. Nor were they inept or criminal. Rather, they struggled to grasp the true import of events that proceeded at such a rapid pace as to belie any attempts to catch up. From the rescue of Bear Stearns to the collapse of Lehman Brothers, policymakers arguably had some breathing room to stabilize the financial system. But what was lacking during that period was political capital and the sense of urgency that seems to be crucial to carry out drastic actions. And in retrospect, drastic actions were certainly needed at a very early stage.
The book flows smoothly through the intricacies of novel financial instruments as easily as the personal biographies of key actors. I was particularly impressed with Sorkin's ability to jump from one perspective to another without losing any narrative momentum. The editing of the book leaves something to be desired-the spelling and typographical errors were distracting-but I was captivated by Sorkin's writing style.
The conclusion of the book is an excellent summary of what we know up to this point. Which is to say, not enough. Financial companies have gone back to massive leveraged positions and politicians have fought against any regulatory plans that would restrict banks from engaging in risky behavior. I would have appreciated hearing more of Sorkin's perspective on the lessons of the Great Recession, but I suppose I will just need to read his articles in The New York Times.