I just finished reading a book: "A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers
" by Lawrence G. McDonald.
I can't remember exactly why I decided to read this book, but I was hoping it would be another "Barbarians at the Gate
" or "The Smartest Guys in the Room
." It wasn't, but it was a pretty good read, and worth your time if you want:
• A decent "man-on-the-street-accessible" primer on the financial crisis
• Some juicy details about the workings of Lehman
• An entertaining read
To summarize, the book begins with a few basic business lessons the author learned from his father, then an account of McDonald's career before making it to Wall Street, next an account of his time working for Morgan Stanley and Lehman Brothers, and finally a second-hand account of what happened in late 2008 as Lehman blew up. (McDonald was laid off six months before the bankruptcy.)
There are a few faults with the book. The worst fault is that Larry McDonald was the wrong person to write this book. He wasn't senior enough to be believable as a true first-hand raconteur of the failure of Lehman. It's obvious from the way that he portrays everyone he worked with as 'imminently qualified, the best in the world, etc.' Yet, the villains of the book, he readily admits to having never met, nor worked with closely. Sure, he worked with some individuals who would have been terrifically qualified to write this book, but McDonald's own admissions put him as too in awe of Lehman's history, too green, and too far removed from the board room to have the insight necessary for a great first-hand account of Lehman's collapse.
This gives rise to the second fault of the book, which is that if he wasn't the right person to tell the story, then it would have been good to have an unbiased view. Was Dick Fuld always wrong in everything he did? This book seems to think so, but that seems a stretch too far. A journalist such as John Helyar or Bethany McLean ('Barbarians' and 'Smartest') will present a more rounded picture of the villains and heroes. McDonald's villains are all evil, and the heroes are all perfect.
The third fault is that McDonald has a bit of an ego. Yes, he was successful, but he makes claims (generally lumping himself in with people much more senior than he that took actions) that don't really equate for someone of his position. He also displays some of the usual hypocrisy of successful people. He's very quick to point out how he sees the pain and hurt caused by business failures that he's at the losing end of (in an over-the-top preachy manner, but doesn't exactly go out of his way to discuss this same pain when the companies that he was investing in (as a self described "vulture") went bankrupt. He's not unbearably one-sided, but definitely has his own Wall Street mentality.
Anyhow, I point out the faults because the book was pretty good and is worth your time... but it's not a world beater, and it is fairly limited in scope. I'm still waiting for the definitive journalistic account of the crash. I'm sure there's a WSJ investigative reporter working on it now, and when it comes out... I'll be sure to add it to my bookshelf alongside Barbarians at the Gate and Smartest Guys in the Room. For now, A Colossal Failure of Common Sense is destined for the public library drop box, where it rightfully belongs. Save your bucks, be a socialist, use the library... or make me a dollar and buy it from Amazon. A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers
) since my copy is nearly due back to the Chicago Public Library.
