Too big to fail’ by Andrew Ross Sorkin, published by Penguin Books

This is an altogether different class of book, twice the size at 600 pages and much more impressive. The length seems daunting at first until you get into it and find that it reads like a novel. It uses the technique of assumed dialogue very effectively though at times it made me wonder how the author could possibly have known what (for instance) Henry Paulson said to Barack Obama at the height of the global financial crisis. I also wondered how many of the numerous characters featured would challenge what they are supposed to have said.

However, unlike ‘How they blew it’, this book on the global financial crisis has been well and painstakingly researched by a journalist from the New York Times who has previously won awards for his business and finance writing. It is written around the key personalities involved in the crisis and this makes it highly readable, a complete contrast to the boring book by Vince Cable on the same topic that I reviewed earlier in the year.

The overall impression of the book is that these ‘masters of the universe’ were, despite their wealth and reputation, just as pathetic and helpless as we mere mortals would have been when faced with unparalleled financial calamity. And, with only a few exceptions, they all thought first of saving themselves and their companies rather than thinking of the greater good of the global economy.

You are also left feeling a little bit sorry for that villain of the piece Dick Fuld, CEO of Lehmann Brothers, because he was the one who was left for the wolves whereas others who were just as guilty – AIG, Freddie Mac and Fannie Mae – were bailed out by the US government. You are also reminded how close those other financial powerhouses – JP Morgan, Merrill Lynch and even Goldman Sachs – were to bankruptcy and their futures were only secured by various types of rescue from, respectively, Mitsubishi, Bank of America and Warren Buffett.

There are surprising and impressive references to Alistair Darling and Gordon Brown which make you think that perhaps they were not after all exaggerating their role in the crisis. We are reminded that Darling was instrumental in the collapse of Lehmann because he rightly refused to underwrite a Barclays bail out at short notice; and Brown’s call for injections of equity capital into the banks really did set an example that was followed by the world. Perhaps this partly explains why Brown finds it so hard to understand how the country could reject him.

This is a great read for those who are interested in knowing what really happened behind the scenes during the panicky days of late 2008 when the global financial system was in danger of collapsing. It shows how near we were to a domino effect that would have driven all the major US financial institutions into bankruptcy. The quality of the final product reflects the excellent research that went into it; it is high calibre writing.

http://www.penguin.co.uk/nf/Book/BookDisplay/0,,9780141043166,00.html