A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers

This book is phenomenal. It has a perfect balance of storytelling and teaching, making the book hard to put down. Bravo 👏🏻

I have spent my career on the West Coast in the West coast Crater known as Silicon Valley. (silicone valley is near LA) I found this book to be an easy read and an engaging story of how Larry McDonald fought back from some early family disadvantages to realize his dream of being a real player as a trader on the Street. Many of us who are far removed from this world do not really have a very good feeling for this world and this book gives you at least a feeling for what they do up on Wall Street.While some have criticised the book for the author's lack of direct contact with the top management, I don't think this prevents the book from giving a reasonable glimpse of what was going on inside of Lehman brothers as the housing market collapsed. McDonald exhibits a decent sense of humor as he describes what he saw occurring around him. I have no doubts, as somebody who has spent his career inside fortune 500 companies that McDonald is able to give a reasonable sense of the realities going on inside Lehman.Certainly the issues he raises about the cutting off of the top management from the troops is indicative of a top management who was disconnected and I have to say that while I have experienced top managers who rule by intimidation, I have not ever seen a top management that was as dedicated to isolation as what Mr McDonald describes. I have few doubts that it was unhealthy.There is a significant amount of discussion of California and Florida as relates to the housing crash and he specifically mentions a number of towns that I have personal aquaintance with. I don't see any of his assessments that I would personally take issue with except for a comment he makes offhand regarding one physical phenomenon. I think its clear he's not a physicist, but that is fine. He does correctly describe the situation in California mortgages and it is clear that he and his distressed assets team clearly saw the mortgage meltdown coming as early as June 2005.This book does hold your interest as his experiences move forward and the story unfolds. I found that I couldnt put the book down.I read this book in a weekend here. I also found that through the narrative he explained a couple of financial items that are main characters in the book and he does this in a very simple mannerI found that some of his anecdotes were pretty interesting ranging from his anecdotes of trying to get his first financial job by trying to get past the receptionists by posing as a pizza delivery boy. I also found his decription of the Bucket shop he interviewed in Philadelphia interesting as also his decriptions of his first financial job that he actually got as a retail broker with Merrill Lynch. His descriptions of how he got potential client leads by getting a bunch of Alumni lists from top schools and scarfing up country club memberships from the clubhouses of the local country clubs and. So I found the book pretty interesting.I also found that his descriptions of the "Tech Wreck" brought back memories for me as he does mention a couple of the companies that I have worked for.This is not a deep and trenchant attempt to analyze the balance sheets of Lehman. Its a personal memoir that tells the story of Larry McDonald and it discusses the activities that he was involved in and observed. I don't think he overclaims his knowledge and the story is engaging and an easy read. Its probably not the final word on Lehman Brothers but then it doesnt pretend to be. I suspect that a lot of the pieces are here however.

How do millions of people get to the edge of the cliff? What happens when the precipice upon which we are standing breaks off? Common sense would tell you not to stand on the edge of a cliff with millions of others wouldn't it?Is it the cliff's fault, or the colossal failure of common sense attributable to those gathered there?Only an insider such as Lawrence McDonald (and his co-author Patrick Robinson) can provide a poignant perspective having hung on this precipice.This is a truly great read. Buy it. Think about it.If you must pick one book to satisfy your hunger for riveting insights into the rise and fall of Wall Street over the past several years, this is it. Lawrence McDonald (former V.P. of distressed debt and convertible securities trading at now defunct Lehman Brothers) and Patrick Robinson craft a thrilling and action-packed literary journey through this period. This book is written for a broad audience - you certainly do not need to possess a Series 7 securities license to thoroughly enjoy this book.The authors do a fantastic job providing the reader with a feel for the tension, the people, the context and the conundrum that, among other things, resulted in the collapse of Lehman Brothers. The authors use a phrase from Texas to characterize the realization that Lehman Brothers was on the verge of embracing the reality of a potentially fatal collapse; "big hat, no cattle." --- A phrase that appropriately captures the challenge of the U.S. to emerge from the structural damage that has been incurred since the Fed and U.S. Treasury were required to step in and stabilize the systemic risk and ongoing aftershocks of Wall Street's penchant for irrational exuberance.This book makes a point that other treatments of this subject might overlook: A business is a group of people; real human beings with families, livelihoods, hopes and dreams. When people become deceived about the nature of the world around them, they have succumbed to myth and illusion - and begin making business decisions that compromise the welfare of all concerned, resulting, in this case, the collapse of Lehman Brothers.This book is replete with fundamental truths that we need to be reminded about, as we move ahead. The following excerpt is a prudent example:"The truth was, this was the starting point of America living in a false economy, because all this free money was in defiance of the natural laws of the universe. All bubbles, down the centuries, have started that way, leading to the inevitable time when people begin to think it's normal, that nirvana has finally arrived --- But, of course, it wasn't. It never is. You can ask my dad who watched the start of the insane credit boom in late 2003 by observing, dryly, "Here we go again. Straight back to the edge of the cliff." (p.77).

Despite the often tiresome reference to Lehman's staff by their name, as if the reader should know them presonally, the book is an excellent review of the origins of the credit crunch, and Lehman's share of it.

It's ironic that the financial bailout following the 2008 crash, much criticised at the time, has been swamped twenty fold by the US Government to once again save the US economy post Covid. As McDonald writes however, in 2008 it was all so unnecessary given the megalomaniac in control of Lehman Brothers. I was waiting for the moment when he would realise that it was madness for the writer to stay at Lehman's but that never happened. He witnessed some of the best and brightest leave but never seemed to think he should. Maybe as he says he was so in love with the Bank and its reputation, he just couldn't contemplate it. However we see what we want to see, pity he had to endure such unnecessary pain.Having myself worked for investment banks run either by a similar management style or by people who were living in a different time zone, the only option is to leave. Has he never heard the saying - Culture beats strategy for breakfast?It's no good blaming Bankers per se for the disaster of 2008 when it was as clear as a pikestaff that Clinton's naivety in repealing the Glass-Steagall Act of 1933, legislation specifically designed to prevent a 2008 situation, was the shot that started the rot. Combining that with clear instructions for bankers to throw away the rule book for mortgage facilities made it all inevitable. The road to hell is paved with good intentions.This is a sad reminder that it only takes the odd individual, and in this case Fuld, a really odd one, to completely wreck thousands of people's lives directly and many more indirectly. McDonald writes very lucidly and passionately about his work experiences which if one tries to ignore the f word, (why do publishers think that it absolutely has to be put in ALL the time - it doesn't), then it is almost an enjoyable book to read, however at the end one feels very sorry to the many multi talented and brilliant employees of Lehman Bros.

El libro me gustó ya que te cuenta el punto de vista desde los bancos y en general está muy bien

Meh...