Finance

Too Big To Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System—and Themselves

Name: Too Big To Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System—and Themselves
Rating: 4.8 (1000 reviews)
Author: Andrew Ross Sorkin

Andrew Ross Sorkin

24 minAudio8 insights

What you'll learn

•The origins and culture of major Wall Street firms leading up to the 2008 crisis
•How complex financial products and high leverage contributed to systemic risk
•Key events and timelines of the financial meltdown and firm failures
•Roles and decisions of major players in finance and government during the crisis
•Details of government interventions, including bailouts and regulatory responses
•The aftermath of the crisis and its impact on the financial system and public policy
•Lessons learned about risk management, regulation, and the future of capitalism

Who should read this

✓Finance professionals and bankers
✓Policy makers and regulators
✓Students of economics and finance
✓Investors interested in market history

About this book

An in-depth narrative of the 2008 financial crisis revealing Wall Street’s collapse and government’s unprecedented rescue efforts.

Did You Know?

“

Andrew Ross Sorkin conducted over 500 hours of interviews for this book.

2 more facts available in the app

Audio Summary

Section 1

The Rise of Wall Street Titans: Culture, Power, and Risk

3:45

8 Sections

Preview: The Rise of Wall Street Titans: Culture, Power, and Risk

Imagine stepping into the roaring, chaotic atmosphere of a Wall Street trading floor in the mid-2000s. The air is thick with cigarette smoke, the phones ring incessantly, and traders shout over each other as they execute rapid-fire deals. This was the heart of a financial empire driven by ambition, competition, and a culture that celebrated taking risks. At the center of this storm stood towering figures like Dick Fuld, nicknamed 'The Gorilla' for his fierce, unyielding approach to business. His presence was as commanding as the imposing glass-and-steel Lehman Brothers headquarters itself, a symbol of both strength and impending vulnerability.

The culture on Wall Street was one of relentless pursuit of profit, often at the expense of caution. Leverage ratios soared to staggering heights—some firms carried debt 32 times their capital. This meant that even small losses could wipe out entire firms. Yet, fueled by cheap money and a seemingly unstoppable housing boom, the appetite for risk was insatiable.

Wall Street was not just a place of numbers and charts; it was a battleground where traders and bankers clashed in a complex dance of power and prestige. The traders, often seen as rough-edged gladiators, were at times at odds with the more polished bankers, yet both groups were united in their drive for success. This tension created a dynamic environment where loyalty was prized, and failure was not an option.

In this world, compensation was astronomical. In 2007, the financial sector raked in $53 billion in total compensation, with Goldman Sachs alone paying out $20 billion. This wealth was a testament to the dizzying highs of the financial markets, but also a harbinger of the collapse to come. The very products that generated these profits—complex mortgage-backed securities and derivatives—were poorly understood even by those selling them, creating a fragile house of cards.

It was a culture that believed in its own invincibility, convinced that the new era of financial engineering had tamed risk. But beneath the surface, the seeds of disaster were being sown. The story of Wall Street’s rise is not just about money; it is about human ambition, hubris, and the tragic consequences when caution is cast aside.

As we move forward, we will delve into how this culture and these financial innovations unraveled, sparking a crisis that shook the world. The next section will take us into the heart of the financial meltdown itself, where the illusion of stability shattered and the true cost of risk became painfully clear.