One year after Lehman Brothers' failure and the ensuing bailout melodrama, a big book from New York Times business reporter Andrew Ross Sorkin is exposing the behind-the-scenes wheeling and dealing that led to government interventions in the financial sector. Entitled Too Big to Fail, the door-stopping tome is causing waves in the world of economic punditry. Commentators are gasping both at its size (business blogger Joe Weisenthal hauled his copy to the deli to discover its weight, 2.15 lbs.), and at the outrageousness of its anecdotes.
Here are their 3 favorite memorable moments so far:
- Hank Paulson's Secret Goldman Sachs Meeting in Moscow Finance blogger Felix Salmon's vote is for the following anecdote: Upon moving from Goldman Sachs to the Treasury Department, Treasury secretary Hank Paulson pledged to cut off communication with his former employers (a requirement waived secretly in September 2008). "But it turns out," writes Salmon of a June 2008 incident recounted by Sorkin, "that Paulson just happened to be in Moscow at the same
time that Goldman's board of directors was having dinner there with
Mikhail Gorbachev. (You know, as one does.)" Salmon is aghast:
How on earth did Paulson think this was OK? Goldman Sachs was a hugely powerful for-profit investment bank, and there he is, giving private chapter and verse on his opinions about the US and global economy, talking about internal Treasury matters, and previewing an upcoming (and surely market-moving) speech. All in secret, at a "social event" which somehow got kept off his official calendar ... This is sleazy in the extreme, and will only serve to heighten suspicions that Paulson's Treasury was rigging the game in favor of Goldman all along. (It's also a bit peculiar, to say the least, that the only two times Paulson met with private-sector boards he was out of the country, and arguably outside US jurisdiction.)
- Bankers' Pseudo-Patriotism Tim Cavanaugh, Web editor of libertarian Reason Magazine has a whole lot of favorite moments in this new book. "There's ... some hilarious what's-good-for-me-must-be-good-for-America self-delusion," he writes. " Bailout ringleaders are repeatedly commended for their patriotism. At one point, Goldman traders rise to sing 'The Star-Spangled Banner' after the regulator in the United Kingdom bans short-selling of Goldman stock."
- Lehman CEO's Disastrous 11th Hour Antics Former Goldman Sachs and McKinsey & Co. employee Yves Smith is aghast at the coverage of Lehman CEO Dick Fuld's final moves before the bank's collapse. Regarding Fuld's plea for clemency from Geithner and Paulson, the popular finance blogger highlights the "most obvious point to anyone who has had some exposure to deals: what the hell was Fuld doing trying to negotiate his own deals?" CEOs often make this mistake, she says, but Fuld was a particularly poor negotiator in a particularly high-stakes negotiation.
I'm simply gobsmacked at how he carried on. For instance, why did Fuld speak to Geithner and Baxter? This was completely nuts, a display of ego and utter stupidity. Fuld has the best connected, most trusted (by the Fed, anyhow, which is what counts) BANK regulatory lawyer in the US in Rodg Cohen. I'm personally not a fan of the man (long story involving a client here, won't bore you with details) but Cohen would be the guy to broker a deal like that. If anyone could have pulled it off, he could have.
This article is from the archive of our partner The Wire.
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