Nightmare on Wall Street

“He’s not going to do it,” Paulson told Geithner in amazement, “He said he didn’t want to ‘import our cancer.’” That’s the US treasury secretary telling the head of the New York Fed that Alistair Darling, Britain’s chancellor of the exchequer, had just turned down his request to clear some hurdles for British bank Barclays to buy – and save – Lehman Brothers last September.

It reveals the greatest strength of this book: a near-minute by minute recounting of the events from Bear Sterns’ failure to the collapse of Lehman and the rest of the drama as Wall Street and Washington fought to save the US financial system.

To give a fly on the wall account of almost every conversation, memo, email and phone call between each of the major – and some not so major – players in the drama needs two things: very hard work and tremendous access. Sorkin, a financial columnist for the New York Times, conducted more than 300 hours of interviews with his sources and he makes full use of the seemingly unlimited access that he enjoys with the protagonists.

Most of the people who told their stories refused to be identified, but that adds a tantalizing challenge for the interested reader: now, who could have revealed that? Sometimes the solutions are no-brainers.

Warren Buffet is getting ready to leave for a dinner when he’s called by Barclays and requested to guarantee Lehman’s trades for two months. With no intention of doing so, but ever polite, Buffet asks for a fax that he’d “be glad to read.” Moments later after hanging up, Buffet remembers an incident from 10 years ago and thinks: “Maybe he had to stop being so polite to these Wall Street boys.” Now who could have told Sorkin that?

It’s a tribute to his writing that despite his ball-by-ball narrative Sorkin manages to hold your attention for nearly 550 pages. His character sketches are lean and unjudgemental. Yet, though he doesn’t pass judgement, by the end most of the characters – with the possible exception of Buffet and some of the regulators – come across as distinctly unsavoury.

And yes, there’s the story of then-Treasury secretary Hank Paulson, who quit Goldman Sachs to join government, visiting Russia at the exact time that Goldman was holding its board meeting there. He asks to meet the board, purely as a ‘social event.’ Advised by his staff against it, he decides to meet them anyway without noting it on his official calendar. Sorkin describes some Goldman folks feeling as if they were in a ‘spy thriller’ as they rode down in a special bus to meet Paulson in his hotel suite

in the evening. It was June, 2008 and Paulson still felt the US economy would ride out a rough patch by year-end.

If you’re looking for analysis and interpretation you’ll be disappointed. Sorking faithfully sticks to his task as chronicler. Near the end, he observes that the financial system, created to support real businesses and the economy, had crossed the road. Instead of helping trade and commerce, it was busy feeding itself, money making money. As the crisis receded, “it left the survivors with a real sense of invulnerability at having made it back from the brink. Still missing in the current environment is a genuine sense of humility.” That should raise some red flags about the current state of global markets.