Too Big to Fail

Here is what I have learned from listening to the audiobook edition of Andrew Ross Sorkin's, "Too Big to Fail", along with continuing coverage of the financial apocalypse:

The use of "Fuck", "Asshole", and "Bullshit" are endemic to the profession.

Dick Fuld is alternately associated with one of the above three terms, and is, ultimately, a tragic figure.

People complain about the crisis for all the wrong reasons: Regulation, Hubris, Government Bailouts, Collusion.

I tend to favor regulation. At the very least, I tend to favor regulators doing their jobs. But as is becoming abundantly clear, no one was outright breaking any laws.

Lehman's own auditors signed off on the use of repurchasing agreements, whereby the firm basically sold obligations for cash on hand just before quarterly earnings report, knowing they would buy them back. This made their balance sheet look much stronger than it actually was.

Even mark-to-market accounting, which came out of the Enroll and Worldcom debacles, played a part. Mark-to-market basically means you have to value your assets at what you could get for them if you sold them right now, not further down the road. With housing, in particular, it means that if housing prices collapse you can't say, "yeah, but ten years from now the market will bounce".

Listening to the games of telephone between the government, the banks, and other banks, it's remarkable that everyone was doing their job. Maybe they were doing it badly (i.e. Fuld) but still - there wasn't any outright illegal behavior. There was no real malfeasance. Hubris, yes, incompetence, arguably, but the system was working the way it was set up to work.