The House of Cards That Was Our Economy
May 4, 2009 by Lela Davidson
Filed under Finance
How could it happen? That’s been the question on people’s lips and minds over the last several months. House of Cards: A Tale of Hubris and Wretched Excess on Wall Street helps to explain exactly what happened on Wall Street leading up to the devastation of 2008. And it’s no dry tale of transactions.
In House of Cards, author William Cohan doesn’t give bare facts and theories, he weaves a captivating story of the ten days that revealed financial stalwart Bear Stearns to be nothing but a house of cards subject to the forces of a perfect financial storm. It’s not easy to turn the machinations of Wall Street into readable drama, but Cohan achieves this and more. Says Business Week:
“Cohan vividly documents the mix of arrogance, greed, recklessness, and pettiness that took down the 86 year old brokerage house and then the entire economy. It’s a page-turner in the tradition of the 1990 Barbarians at the Gate by Bryan Burrough and John Heylar, offering both a seemingly comprehensive understanding of the business and wide access to insiders….hard to put down, especially thanks to its dishy, often profane, quotes from insiders”
When on March 5, 2008, a Florida hedge fund manager declared Bear Stearns & Co., the nation’s fifth-largest investment bank insolvent, he wasn’t necesarily taken seriously, but ten days later, the financial giant no longer existed. House of Cards details the how and why of this meltdown and the “end of the Second Gilded Age on Wall Street”. Cohan translates for the lay reader just how a combination of risky bets, corporate politics, lax government regulations, horrifying decision-making have pummeled the world financial system.
Especially intriguing are the insider accounts of the corporate culture of Bear Stearns, power battles, and the greed and inattention in relation to the firm’s huge positions in mortgage-backed securities.
And it’s not just the plot that makes House of Cardsread like a novel. The characters are colorful enough for fiction. There’s Ace Greenberg, the miserly old man who demanded the re-use of paper clips, and Jimmy Cayne, whose prowess at bridge assisted his corporate rise.
“Masterfully reported. Cohan has turned into one of our most able financial journalists….he deploys not only his hands-on experience of this exotic corner of the financial industry but also a remarkable gift for plain-spoken explanation…the other great strength of this important book is the breadth and skill of the author’s interviews…Cohan does a brilliant job of sketching in the eccentric, vulgar, greedy, profane and coarse individuals who ignored all these warnings to their own profit and the ruin of so many others. It’s impossible to do justice to his reportorial detail in a brief review…”
If only it were fiction.
