One of the biggest questions of the financial crisis has not been answered until now: What happened at Lehman Brothers and why was it allowed to fail, with aftershocks that rocked the global economy? In this news-making, often astonishing book, a former Lehman Brothers Vice President gives us the straight answers—right from the belly of the beast.
In A Colossal Failure of Common Sense, Larry McDonald, a Wall Street insider, reveals, the culture and unspoken rules of the game like no book has ever done. The book is couched in the very human story of Larry McDonald’s Horatio Alger-like rise from a Massachusetts “gateway to nowhere” housing project to the New York headquarters of Lehman Brothers, home of one of the world’s toughest trading floors.
We get a close-up view of the participants in the Lehman collapse, especially those who saw it coming with a helpless, angry certainty. We meet the Brahmins at the top, whose reckless, pedal-to-the-floor addiction to growth finally demolished the nation’ s oldest investment bank. The Wall Street we encounter here is a ruthless place, where brilliance, arrogance, ambition, greed, capacity for relentless toil, and other human traits combine in a potent mix that sometimes fuels prosperity but occasionally destroys it.
The full significance of the dissolution of Lehman Brothers remains to be measured. But this much is certain: it was a devastating blow to America’s—and the world’s—financial system. And it need not have happened. This is the story of why it did.
The Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehmen Brothers
This is a fantastic book. It starts by covering author's personal life which, later, goes a long way towards explaining his love for his job, his co-workers and his deep resentment towards the top management (Floor 31 crowd) for letting the Lehman Brothers down. The author brings out the research analysis and trading activities (mostly short selling based on research as he was part of the distressed debt group) in a very clear and interesting detail. He goes on to highlight the nearly two years worth of warnings that eventually led to Lehman's demise but were ignored by Dick Fuld and his inner circle. Overall, he is successful in bringing out the human face of tragedy while sketching out a detailed tapestary of events that led to the bankruptcy of his employer. I would seriously recommend Nicholas Taleb's Black Swan and Satyajit Das' Guns, Money and Traders as companion reading as each of these authors, just like Mr. McDonald, brilliantly brings out the dangers of high finance that have been part of human history since the early days of trade and commerce.
Good Story, but
Robinson and McDonald have written an enjoyable story that gives you a peek at some of the goings on if you believe all of it. I tend to read between the lines of some of these fairytales and this one strikes me as a bit self-serving. You almost feel sorry for McDonald who is painted as another victim of Lehman and Wall Street. I tend to look at all these guys as opportunist who if the rug wasn't jerked from under their butts they would still be laughing all the way to the bank with their millions, McDonald included. As much as the attempt is to show him as an everyman, he has little in common with us on Main street.
Excellent book highly recommended
The story is excellent and was engrossing! I recommend this book to anyone who wants to hear a first hand account of the fall of Lehman Brothers. Very detailed and kept me glued for hours on end.