Stitch and Bear

A long-running Irish blog with reviews of the best restaurants in Dublin and throughout Ireland. Some wine and cocktails thrown in for good measure!

Thursday, April 1, 2010

House of Cards - William D. Cohan

Wall Street has long been a source of fascination for me and many people. It's kind of frightening to think that the money you earn and spend, the money you invest in pensions and savings, and the debts you incur are all influenced by the actions of a relatively small group of (mainly) men located in financial centres like Wall Street.

House of Cards tells the story of Bear Stearns, a global investment bank, which was the first major casualty of the recent crisis in the financial markets. Bear Stearns was a pioneer in the area of securitisation and asset-backed securities which initially resulted in bumper figures at the bank, but ultimately led to its downfall in 2008. This resulted in the bank being sold in a firesale to JP Morgan Chase.

The story starts in 2008 and recounts the mounting pressure on the bank's executives as they faced an unparalleled liquidity crisis in the overnight lending market, resulting in the sale of the proud and historic bank, all in the space of just 10 days. Having established the present, Cohan then starts to take us through the history and key personalities of Bear Stearns.

What emerges is a portrait of how powerful and dominant personalities came to be in charge of billions of dollars. One of the main figures in the rise, and ultimate downfall, of Bear Stearns is long-serving CEO Jimmy Cayne. Named as one of the worst American CEOs of all time, Cayne is endemic of both the brilliance and faults that lay at the heart of the bank. A championship bridge player, he was playing in a tournament when B.S. hedge funds experienced difficulty, and it was clear to see that he did not comprehend the financial instruments upon which the success of Bear Stearns had been built.

Cohan paints a picture of character over integrity, forcefulness and personality over knowledge and regulation. It is a scary world, full of folly. Many people are confused about recent events, but House of Cards is a wonderful place to start to learn. It is well researched, detailed and well-written. Cohan does not eulogise, but simply presents the personalities and facts. There is no need for embellishment - the outcomes of recent years speak for themselves.

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