Book Review: Too Big to Fail (Andrew Ross Sorkin)

The Annual Meeting of Berkshire Hathaway in 2009 was different from meetings in years past.  For the first time, Warren and Charlie were going to take questions from a panel of financial journalists, instead of directly from shareholders.  Three journalists were chosen to be the voice of the shareholders, the youngest of whom was a baby-faced young man called Andrew Ross Sorkin.

Not being a regular reader of the New York Times, I wasn't familiar with the name.  He carried himself off competently enough during the meeting, even if he wasn't particularly insightful.  At the 2010 Annual Meeting, I found myself standing in line to get Andrew Ross Sorkin to autograph my copy of Too Big to Fail.  As he signed the book, taglining it with 'BRK 2010', I found myself wondering exactly how young he was (thirty-three).  And whether it was too yuppie for me to be seeking an autograph of someone so young (jury still out).  And whether Too Big to Fail would live up to it's proud-to-say-I-met-the-author billing (it doesn't).

Too Big to Fail is where Wall Street meets daytime television.  It has a dizzyingly large cast of characters.  Each character has a complicated back story, that sounds awfully like the back story of someone else you can't quite remember.  And at the end of every episode (and a few times in between), the background score plays a dramatic note, we get a close-up of a character with a 'look' on his face, and the audience is led to feel that right this moment, they are on the precipice of something momentous.  Only, there is nothing momentous that ever actually happens.

The best part of Too Big to Fail is the peek it offers into the backstage of the Great Recession.  Sorkin has clearly had great access to some of the most important players in the drama.  Some of the tiny details of color that he offers in the book offer a perception of stunning levels of access.  The book presents call logs from the phone of Hank Paulson, quotes from key participants in some of the closest of closed door meetings, copies of documents that might one day be in the Smithsonian.  That, in a nutshell, is the charm of Too Big to Fail.  It is a compilation of insider stories of people who were newsmakers during the tumultuous days of 2008.

Reading about the recession and the administration's response play out as a reality show, one can't help forming a few (possibly irrational) personal impressions of the key players.  Here are some of the impressions I ended up forming:

Hank Paulson:  Comes across as someone who never really made the transition from dealmaking wall street CEO to government official.  He comes across as someone who had no intellectual peers in the lame-duck administration, and who pretty much did whatever he thought necessary, with the implicit support of the president.  But too often, he comes across as someone who (a) still acts as a market participant, rather than as a government executive, and (b) is very (almost too) aware of the legacy he can create through his stint of little over a year in government.  He seems well meaning, and smart, and patriotic.  But too often, he seems to get carried away in deal heat.  One of the most dramatic instances of this deal heat is the government's hostile takeover of Fannie and Freddie (who ever heard of a hostile takeover by the government?)

As Labor Day weekend approached, the Treasury team and its advisers started to plot the actual details of the dual takeover.  They knew they would have to move quickly, with military precision, and in secrecy before the GSEs could start rallying their supporters in Congress.  They wrote scripts specifying exactly what they would tell the companies and their boards.  They wanted to make certain that there could be no compromises, no delays.  Internally, Treasury officials talked about offering Fannie and Freddie two doors: "Door 1, you cooperate; Door 2, we're doing it anyway."

Talk about hardball.  A similar story plays out in the bankruptcy filing of Lehman where one of the Directors, under much pressure from the administration during the decisive board meeting, asks with some angst: "Let me see if I understand this:  Are you directing us to put Lehman into bankruptcy?"

One can see Paulson the deal-maker everywhere.  Paulson the calm bureaucrat in-charge of the administration's response is MIA.

Tim Geithner:  For the period of this book, Geithner is still Governor of the New York Fed, not yet the Treasury secretary.  In much of the drama though, his attitude is quite indistinguishable from Paulson's.  Sorkin talks about the AIG rescue, and the media stories about how Goldman had orchestrated it to benefit from the AIG bailout cash:

The new reports, however, kept feeding off one another and therefore missed the underlying truth:  Paulson himself had had very little to do with the rescue of AIG; it was, rather, orchestrated by Geithner (and executed, in part, by Treasury's Dan Jester).  While the fact has often been overlooked, Geithner, by his very nature - as has been demonstrated throughout this book and in his subsequent policies as Treasury secretary - is as much a proactive deal maker as Paulson, if not more so.

Chris Cox of the SEC comes across as completely out of his depth.  Sheila Bair as capable, if self-centered and narrow minded.

Vikram Pandit comes across as something of a bumbling fool, with very little idea of his own company's precarious position, and with a team that is universally thought of in the industry as incompetent.  There are times when industry players are wondering about the viability of Citi and Pandit and team are torn halfway between fear for their own survival, and greed for a large deal that could magically make them stronger.  And you are left scratching your head thinking, am I missing something, or are these guys really out of it?  In the way some of the backroom meetings are described, I must admit that Pandit also comes across as petty, which is disappointing for me in a parochial way.  It is clear in the book that Sorkin's access to Pandit hasn't been nearly as open as that to other players (there is not a single backroom story of an internal meeting in Citi, for instance).  This lack of access might have something to do with this, but the impression of a bumbling, petty Pandit is clearly left on the reader.

Strangely missing from all the action in Too Big to Fail is Ben Bernanke.  He is there in every key meeting of course.  But the way the story is presented, it is very much from the perspective of the market players and administration officials.  Bernanke seems to be just following the action.  Again, my impression is that this is a matter of access, and that Sorkin has not had as much access to Bernanke as he has to other players.

For all its razzmatazz, its unprecedented access to inside players, its dramatic quotes and blow by blow narrative, Too Big to Fail, in my mind, loses the plot.  The back stories of key players turn into a few too many backgrounds, till one story starts merging into another, and you are not sure which character has which story any more.  Also, 500 plus pages of description of what is essentially a series of meetings between different combinations of a small set of people tends to get a tad repetitive after a bit.

And finally, this trivial factor which is a decisive killer in my mind:  There are way too many typos in the book.  Too many editing mistakes.  Which is shocking for a book of this prominence.  It is like the publishers were in a hurry to get the book out there before the public's fascination with the recession faded away.  And they cut one corner too many.  The third time they spelt 'frustrated' as 'frusterated', I gave up on the book.  But then, you are not me.  It might not bother you when you read - "I don't speak Russian," Weinberg replied in turning down the president down.  Me, it does.  So the book doesn't work for me.  Too Big to Fail is too big.  And it fails.