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House of Cards: A Tale of Hubris and Wretched Excess on Wall Street (Hardcover)


by William D. Cohan (Author)

Review

Praise for the New York Times bestseller THE LAST TYCOONS, winner of the Financial Times/Goldman Sachs Business Book of the Year Award


“Cohan’s portrayal of the firm's dominant partners—whose gargantuan appetites and mercurial habits provide the unifying force behind the book’s operatic melodramas— makes this an epic. . . . In fact, The Last Tycoons bears a striking resemblance to F. Scott Fitzgerald’s The Last Tycoon.”
—New York Times Book Review

“Breezy and highly readable. . . . For those of us who enjoy high-level gossip (most people) and an inside look at the machinations, triumphs, failures, and foibles of some of Wall Street’s and America’s most exalted personages, Cohan’s book is entertaining and seductively engrossing.”
—Chicago Tribune

“Cohan's thoroughness—he interviewed over 100 current and former bankers and assorted bigwigs—unearths a trove of colourful tidbits, many quite racy. . . . Illuminating are Mr. Cohan’s descriptions of the scheming, politicking, and general dysfunction that was Lazard.”
—Economist

“Cohan not only knows where the bodies are buried but got a guided tour of the graveyard.”
—Financial Times

“[The Last Tycoons] has sent a jolt through Lazard and the rest of Wall Street.”
—Wall Street Journal


--This text refers to the Kindle Edition edition.

Review

Praise for the New York Times bestseller THE LAST TYCOONS, winner of the Financial Times/Goldman Sachs Business Book of the Year Award


“Cohan’s portrayal of the firm's dominant partners—whose gargantuan appetites and mercurial habits provide the unifying force behind the book’s operatic melodramas— makes this an epic. . . . In fact, The Last Tycoons bears a striking resemblance to F. Scott Fitzgerald’s The Last Tycoon.”
—New York Times Book Review

“Breezy and highly readable. . . . For those of us who enjoy high-level gossip (most people) and an inside look at the machinations, triumphs, failures, and foibles of some of Wall Street’s and America’s most exalted personages, Cohan’s book is entertaining and seductively engrossing.”
—Chicago Tribune

“Cohan's thoroughness—he interviewed over 100 current and former bankers and assorted bigwigs—unearths a trove of colourful tidbits, many quite racy. . . . Illuminating are Mr. Cohan’s descriptions of the scheming, politicking, and general dysfunction that was Lazard.”
—Economist

“Cohan not only knows where the bodies are buried but got a guided tour of the graveyard.”
—Financial Times

“[The Last Tycoons] has sent a jolt through Lazard and the rest of Wall Street.”
—Wall Street Journal

Well Told Story of Serious Financial Mismanagement, March 10, 2009
By Loyd E. Eskildson "Pragmatist" (Phoenix, AZ.)


"House of Cards" reports on the collapse of the investment banking house Bear Stearns (America's fifth-largest investment bank), and the beginning of the worst banking crisis since the Great Depression. Cohan's background as an investment banker allows him to cut through the complexity to explain what happened in simple, clear terms.

Bear Stearns had survived every crisis of the 20th century, including the Great Depression - without a single losing quarter - until the end of 2007. In 1997, Bear Stearns had helped pioneer the subprime mortgage-backed security by serving as co-underwriter on a $385 million offering. By the mid-2000s, it was the market leader in this segment.

The focus of the book is the last ten days of Bear Stearns, leading up to its absorption by J.P. Morgan at a fire-sale price ($10/share, down from $167; less than the value of its $1.5 billion office building), greased by $30 billion in Federal Reserve funds. (The Fed was worried that a bankruptcy of Bear Stearns could wreak fiscal havoc around the world.)

Just a year earlier it had been identified as "America's most admired securities firm" by Fortune magazine; in 2006 its Asset Management fees had reached $335 million. Bonuses were in the 8-figure range. Unfortunately, it was also the most heavily invested in mortgage-backed securities. Bear Stearns, like its competitors, financed itself with oversight sources (the cheapest source).

However, when analysts began questioning Bear's viability, given its shaky mix of assets, continued financing for Bear dried up, and it toppled. Amazingly, its chairman was too buy playing bridge and golf to get involved until too late; earlier he had forced out the only many who understood what was going on. The firm even turned down a last-minute offer from a Saudi Arabian for substantial financing ("not needed"). Its leadership then blamed the media and short-sellers for Bear's demise.

True, Bear's fall was quite rapid. However, there had been warning signs - problems at smaller firms with similar asset structures, rising risk premiums for its mortgage bond holdings ($50,000 for $10 million during the first half of 2007, rising to $350,000 on 3/5/08), its first quarterly loss at the end of 2008, and the downgrading of some of its bond holdings. Worse yet, Cohan also alluded to failing to conserve cash by reducing dividends and ceasing stock buybacks, as well as increasing leverage - unfortunately, it is not clear whether he was referring to Lehman, Bear, or both.

The bad news - the 468 pages, complete with endless interviews and accounts of bridge games, is a bit much. The even worse news - Bear Stearns' and others playing for billions has left American taxpayers with a debt of trillions. And we still haven't heard "the rest of the story."

Way juicier but sort of like watching dominoes fall, March 11, 2009
By Amy Y. "Tell me, what is it you plan to do wi... (FREMONT, CA USA)


Cohan details the bursting of the bubble in a book that reads like part gossip columnist, part financial thriller. Talk about making your average Jane feel smart, Cohan makes the big names of Wall Street look like a bunch of rats scurrying about thinking they have won the cheese when really they are about to get the big, gut-popping smack-down.

I enjoyed this read because, aside from being mildly fascinated by economics, it does seem to answer the question that most American are now asking as they look at their 401Ks, retirement plan statements, and now-empty stock portfolios: "What the hell were they thinking?"

Calling it a 'House of Cards' is quite apt as Cohan shows us how multi-million, er, make it billion, dollar empires were built on quicksand: stuff backed by things backed by more stuff, sorta.

This is some seriously fascinating stuff- many of the chapters read like a financial drama cum thriller. Cohan puts the reader in the middle of the action: the "Wehrmacht" SWAT team of Bank of America 'parachuting into the downtown offices of Sullivan & Cromwell' to review Lehman's books, an edge-of-your-seat account of the weekend that the Fed, specifically, Geithner and Paulson- try to anticipate the consequences of the scenarios (which includes some pretty candid quotes right from the source), you can almost hear the jaws drop as Wall Street is informed there will have to be a "private sector solution" i.e. no bailout for Lehman Bros., the scramble to broker a deal with Barclays to take on the bulk of Lehman, the refusal of the FSA(the UK's version of the SEC who needed to okay the deal) to accept the deal, the back-room conversations exuding palpable fear as CEOs from some of the largest firms considered who might be the next to fall, the thirteenth hour desperation of Lehman execs trying to make a case for a federal bailout, and finally the reality of bankruptcy and no calvary riding in... and, of course, Lehman's was sold to Barclays under the supervision of the bankruptcy court.

While Cohan's book is both entertaining and enlightening, the real value I see here is he does a pretty good job of shoowing us how we got here... why this bubble was different from the others. It's all well and good to say that hindsight is 20/20 but ultimately we're all living with the consequences of the decisions made by a very elite few.

I got through this in one day- the writing is excellent. Very straightforward with the facts without waving around the blame stick too much- it's there in the title, though. Definately, if you are going to read even one book about how we arrived at this financial crisis- this would be a great choice.

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