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A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers | [Patrick Robinson, Lawrence G. McDonald]

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

One of the biggest questions of the financial crisis has not been answered until now. What happened at Lehman Brothers and why was it allowed to fail, with aftershocks that rocked the global economy? In this news-making, often astonishing book, a former Lehman Brothers Vice President gives us the straight answers - right from the belly of the beast.
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Publisher's Summary

One of the biggest questions of the financial crisis has not been answered until now. What happened at Lehman Brothers and why was it allowed to fail, with aftershocks that rocked the global economy? In this news-making, often astonishing book, a former Lehman Brothers Vice President gives us the straight answers - right from the belly of the beast.

In A Colossal Failure of Common Sense, Larry McDonald, a Wall Street insider, reveals, the culture and unspoken rules of the game like no book has ever done. The book is couched in the very human story of Larry McDonald's Horatio Alger-like rise from a Massachusetts "gateway to nowhere" housing project to the New York headquarters of Lehman Brothers, home of one of the world's toughest trading floors.

We get a close-up view of the participants in the Lehman collapse, especially those who saw it coming with a helpless, angry certainty. We meet the Brahmins at the top, whose reckless, pedal-to-the-floor addiction to growth finally demolished the nation's oldest investment bank. The Wall Street we encounter here is a ruthless place, where brilliance, arrogance, ambition, greed, capacity for relentless toil, and other human traits combine in a potent mix that sometimes fuels prosperity but occasionally destroys it.

The full significance of the dissolution of Lehman Brothers remains to be measured. But this much is certain: it was a devastating blow to America's - and the world's - financial system. And it need not have happened. This is the story of why it did.

©2009 Lawrence G. McDonald; (P)2009 Random House

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  •  
    Susan Atlanta, GA, United States 07-28-09
    Susan Atlanta, GA, United States 07-28-09 Member Since 2001
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    "First take: Tale of the narcissist"

    I almost gave up on this book because of the unnecessary autobiographical and self laudatory detail the author indulged in for the first 4 or 5 chapters. He's just soooooo amazing, how he single handedly pulled himself up by his boot straps and launched his own brilliant career. Isn't he just wonderful?!? It went on and on in this tone, "I'm just the greatest, amazing, how I overcame all these obstacles, like I'm the only person who ever worked 20 hour days ..." blah blah blah. 4 hours into it and not a word about Lehman experience yet. Profoundly disappointing and stupid. I will revise when/if I ever get through this nauseating thing.

    19 of 20 people found this review helpful
  •  
    James OAKLAND, CA, United States 09-19-09
    James OAKLAND, CA, United States 09-19-09
    HELPFUL VOTES
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    "Fascinating Story, Pooly Delivered"

    Seems that all of the reviews are accurate. The author is a narcissist, and parts of the book are very poorly written, comically so at times. Yes, there is rampant metaphor abuse; the narration is so amateur I thought is was read by the author. That said, the story is fascinating, and the message that Lehman's failure should not have happened and would not have happened had top management been more capable and responsible or heeded the alarm bells of 2006 is persuasive. I have never worked on Wall Street, and was riveted until the end, though often annoyed by the arrogance of the author and poor writing, I recommend this Audible offering, a nice compliment to William Cohan's better offering, House of Cards: A Tale of Hubris and Wretched Excess on Wall Street.

    4 of 4 people found this review helpful
  •  
    Wade Barrie, Ontario, Canada 08-09-09
    Wade Barrie, Ontario, Canada 08-09-09 Member Since 2009
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    "Good read but lacking in philosophical learning"

    This book was a personal and impassioned account of the collapse of Lehman Brothers.

    After a short explanation of how the author began his career at the firm he spins a fascinating yarn of brilliant and powerful people who saw the iceberg coming, but are unable to take the controls in time to save the ship.

    The author on the one hand celebrates what great minds can accomplish in an unregulated 'free market' system while at the same time being shocked at the destruction such power can have when inevitable human flaws take their toll. It is the author's bafflement with the two sides of the same coin that the reader is left with.

    While this book will not be the definitive history on the collapse on Lehman Brothers, it was a fascinating insiders look to the world of high finance. I was riveted until the end and would recommend it.

    3 of 3 people found this review helpful
  •  
    08-03-09
    08-03-09 Member Since 2004
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    "Dubious account."

    The value of this book is that its focus is on the Lehman Brothers collapse. In conjunction with other books such as Chain of Blame, House of Cards, and Trillion Dollar Meltdown, I found it informative. It is hard to fully understand the collapse of Lehman Brothers without also understanding the collapse of Bear Sterns and Countrywide as well the many other events. This book serves as another piece to the puzzle.

    However, I agree with other reviewers who stated that this book is the "tale of the narcissist." The personal narrative sections are very off-putting. Even the descriptions of the author's co-workers I suspect are exaggeration. In short, the author is very self-aggrandizing, which makes me skeptical of the first person events he describes.

    However, about 60% of the narrative deals with the bigger picture of the collapse of Lehman and the financial crises in general. I found this portion of the book useful in better understanding the events which precipitated and transpired during the financial crises of 2008.

    I recommend this book in conjunction with other, more reliable sources, for those interested in better understanding the role the collapse of Lehmans's played in the financial crises of 2008.

    3 of 3 people found this review helpful
  •  
    robert Rochester, MN, United States 09-22-09
    robert Rochester, MN, United States 09-22-09 Member Since 2007
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    "Entertaining, but not factual"

    Author is self-absored and was clearly a low-level trader at Lehman, so a lot of what is proffered is hearsay. Also, I really didn't care to know about his life story in the first 3 chapters - irrelevant and self-serving, not to mention poorly written. If you like hearing lots of dirt, regardless of source or validity, this might work for you. Forthcoming books and audio on Lehman's collapse will have far more credibility - I hope.

    2 of 2 people found this review helpful
  •  
    Jim Portage, MI, USA 09-19-09
    Jim Portage, MI, USA 09-19-09
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    "Exciting Telling of a story."

    McDonald does a great job of setting up all the figures in the collapse, both good and bad. He kept in suspenseful and interesting. For not knowing about Wall Street, he did a good job of explaining these complex transactions in lay-man terms so it was easily understood. By far the most complete and understandable explanantion on how it all went down. I recommend it.

    2 of 2 people found this review helpful
  •  
    Michael Moore Bay Area, CA USA 08-05-09
    Michael Moore Bay Area, CA USA 08-05-09 Member Since 2005

    mcubed33

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    "Informative First Hand Account"

    This is a first-hand and very informative account of the reasons Lehman Brothers fell into ruin and bankruptcy in September 2008. The author was a Lehman bond trader, a loyal employee (this was his dream job), and part of a group within Lehman that was highly disturbed by the high risk strategy continued by top management even after stormy conditions had arisen in what had been a highly profitable ride for Lehman in the sub-prime CMO market. "Strategy" may be a euphemism here because according to the author top management was not open to rational argument on Lehman's business course, even when confronted as early as 2006 by highly able and experienced Wall Street executives within Lehman. The dissenting voices were forced out or squelched until it was too late. The lethal combination of high leverage (44 times at its high in 2008) and unsaleable real estate, private equity, and CMO assets reached the point where Lehman was no longer seaworthy when it hit the unprecedented financial storms of 2008. The author clearly makes the case that Lehman's failure should not have happened and would not have happened had top management been more capable and responsible or heeded the alarm bells of 2006.

    The book does have some flaws. The author is on less sure ground when he talks about the general causes of the financial crisis of 2008. For example, he cites the repeal of the Glass-Steagall Act in 1999 as a key contributor. Yet only one of the keystone US financial firms facing collapse in 2008 (Citigroup) was organized under a corporate structure that included a major commercial bank. Further, the rescue of Merrill Lynch by BofA and the approval of Goldman Sachs and Morgan Stanley to become bank holding companies--all elements of the Government's response to the financial crisis of 2008--would not have been legally permitted under the old Glass-Steagall Act.

    2 of 2 people found this review helpful
  •  
    Jairus Gotha, FL, United States 08-02-09
    Jairus Gotha, FL, United States 08-02-09
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    "Failure of Common Sense by the Publisher"

    Lawrence McDonald, former pork chop salesman, did his greatest selling job ever in getting Random House to publish this book. It is an auto-hagiography with some gossip added. It would be better published in comic book form because all the characters are either good or evil.
    Not only is it an extremely tedious and boring book, it is very poorly written. I know that Patrick Robinson has written other books, but I hope they are better written than this. It is full of well worn cliches, but the worst part is the rampant metaphor abuse. Some of them go on for paragraphs and most are unoriginal.
    There is no question that Richard Fuld made horrible management mistakes in the failure of Lehman Brothers, but this book certainly does not offer any real evidence. I hope someone like Michael Lewis, who can write and is not full of himself, takes on this important topic.
    I have read scores of books on Wall Street and this is without a doubt the worst book on the subject I have ever read/listened to. It may be the worst book on any subject I suffered through.

    4 of 4 people found this review helpful
  •  
    Fred Hebron, IN, USA 12-13-09
    Fred Hebron, IN, USA 12-13-09
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    "Useful but a little self serving"

    For a number of reasons the Lehman bankruptcy is a very important and painful personal event in the context of my own financial and business interests.

    So while the author does adequately remind us that hindsight is always 20/20, I was a little tired of hearing repeatedly of the absolute world class brilliance of various Lehman trading teams. While I am in no position to determine whether these claims of brilliance are correct, I do have to continually remind everyone that anyone in the senior manager position or above at this company has to be considered fairly complicit in this collossal failure.

    That being said, the book is a nice, easy to listen to narrative of the insanity that led to this collapse. The author's point of view is well positioned and the personal stories are helpful. Its a little more autobiographical than I thought it would be, but that's OK.

    As a senior unsecured creditor myself, I wish it would have shed more light on the potential outcome of the bankruptcy, but that's probably another book all together.

    2 of 3 people found this review helpful
  •  
    Kenneth AUSTIN, TX, United States 05-21-13
    Kenneth AUSTIN, TX, United States 05-21-13 Member Since 2011
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    "Excellent book with some tips on how to hustle!"
    Would you listen to A Colossal Failure of Common Sense again? Why?

    I am writing this review after my second time listening to the audio book. My first listen was about 6 months ago. I consider this book an entertaining and educational experience.


    What did you like best about this story?

    The detail about some of the big trades that Larry and his group undertook while at Lehman. Larry's experiences trying to get into Wall Street were well worth the listen on those merits alone.


    What does Erik Davies bring to the story that you wouldn’t experience if you just read the book?

    The attitude of the author comes through clearly. It was easy to follow along and the actor's voice was easy on the ears.


    Any additional comments?

    This book is more about the author's experiences. Lehman serves as a back drop until the final chapters of the book. This book gives you the downfall of Lehman but Larry's biography would do well in motivational seminars. This book is great for investing nuts and financial history buffs.

    0 of 0 people found this review helpful
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