House of Cards

House of Cards

A Tale of Hubris and Wretched Excess on Wall Street

Book - 2009
Average Rating:
4
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William D. Cohan's superb and shocking narrative chronicles the fall of Bear Stearns and the end of the Second Gilded Age on Wall Street, explaining how a combination of risky bets, corporate political infighting, lax government regulations and truly bad decision-making wrought havoc on the world financial system.
Publisher: New York : Doubleday, c2009
Edition: 1st ed
ISBN: 9780385528269
0385528264
Branch Call Number: 332.66097 C6601h 2009
Characteristics: 468 p. ; 25 cm

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fdb045
Jul 29, 2015

First of all, the title does not indicate this book is mostly about Bear Stearns. I found it an interesting read because of the detail regarding the players, companies and environment during this time. It is a tough read due to all this detail. One has to wonder about the truthfulness of said detail but has to assume Cohan verified what he wrote.

s
StarGladiator
Aug 25, 2013

Rated AWFUL as a book of pure propaganda: ". . .how a combination of risky bets, corporate political infighting, lax government regulations and truly bad decision-making wrought havoc on the world financial system." Let's address these fictions of the author on an individual basis: risky bets? They were all rigged! Lax government regulations - - negative! It was by design, just see Greg Palast's release of the "Larry Summers' memo" at [http://www.vice.com/en_uk/larry-summers-memo] and research the lobbying by the top Wall Street investment houses (their Derivatives Research Group) and JPMorgan's and the Group of Thirty's lobbying to end "legal risk" for the credit derivatives' scam (resulting in the Private Securities Litigation Reform Act of 1995, the GLB Act and the Commodity Futures Modernization Act). "Bad decision making"? When John Paulson got together with Goldman Sachs to create the trash loans/CDO construct called the Abacus CDO, then purchased millions of dollars worth of credit default swaps against it ($1.4 million per naked swap, with a payout of $100 million per swap) resulting in billions for both parties, and similar situation for the principals of Magnetar Capital hedge fund, with 96% failed deals, yet they made billions? Plus all the others who did similarly.... [Congressional investigations into the standard practices of Washington Mutual uncovered that they kept a "black list" of honest real estate assessors who WaMu WOULD NOT hire nor contract any work out to, as said assessors would not falsify RE estimates, et cetera. This involved financial fraud to the max, no poor decisions or any other such claptrap nonsense! One lady at WaMu, a senior mortgage underwriter, refused to OK faulty loans and was summarily fired!] Furthermore, "A tale of hubris" ????? What hubris? They got away with the largest financial fraud in human history - - is John Paulson, Lloyd Blankfein, Alan Greenspan, Robert Rubin, Larry Summers, Geithner, any present and past CEOs of Chase and Morgan Stanley in jail? Negative!!!

JCS3F Jun 09, 2013

Personalities can't run companies. More than any other lesson, the story of Bear Stearns (or of Merrill Lynch, Countrywide, Lehman, Wachovia, Washington Mutual, AIG...) hinges on this point. The sheer speed and volume of information necessitates a level of expertise that hasn't been required of corporate leaders. This isn't to say that Jimmy Cayne needed to master collateralized debt obligations and their derivatives. But he should have implemented an audit structure that would have allowed senior executives at Bear to understand the full scale of their exposure. He also should have had the requisite focus and commitment to anticipate his company's vulnerabilities. In hindsight, even a layperson can see that excessive reliance on secured overnight funding is highly problematic. What is the value of your security? What happens to your funding if your counterparty disputes that valuation? What sources of redundancy do you have for your funding? Similarly simple questions can be asked about Bears assets and their hypothetical returns. The C-suite is 1) risk management and 2) leadership, in that order. It isn't $17,000 helicopter rides to golf courses in New Jersey or fawning puff pieces in the financial media. That paradigm is over. Though the crises will continue until the old guard adapts or takes up contract bridge full time.

jwt0427 Aug 08, 2011

A difficult read, rambles.

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