Too Big to Fail?

I’m 253 pages into Andrew Ross Sorkin’s book Too Big To Fail. It’s the first book I’ve read on the financial crisis, and I suspect it will be the last. Sorkin has been the focus of a lot of sniping over the past few weeks — he’s young, talented, rich, connected, famous, etc. — and there are questions about whether he gave due props to his colleagues and their work.

Setting that aside, it’s a great book. As Tyler Cowen cautions, it is not an analytic treatment of what happened. If you don’t already know much about derivatives, credit default swaps, subprime mortgages, and all that stuff, you won’t learn any of it here. Instead, Sorkin has written a classic soap opera in the Peter C Newman style — the fate of the world resting on great clashes of will and personality, almost entirely between serious alpha males, the sort of guys who hit the treadmill at 4am and can’t believe an underling would skip a meeting for his daughter’s wedding.

The focus of the book (so far) is on the fight to save Lehman, and the contortions that Dick Fuld went through trying to set up a deal that would save the company. What is emerging is, predictably, a story considerably more complicated than the received version of events (which is that the Fed and Treasury, having been yelled at for bailing out Bear Sterns, decided to let Lehman fail as a lesson to the rest, triggering the ensuing credit panic). In particular, Lehman seems to have been in a lot of trouble for a long time, and one of its biggest problems was Fuld himself.

Sorkin clearly has great sources, and has had a great deal of access. It’s very thorough fly-on-the-wall treatment of events, and I expect I’ll finish this one, even though there’s another 250 pages to go.

Here’s William Watson’s review.