All the Devils Are Here: The Hidden History of the Financial Crisis

There are all kinds of business books out there, hundreds, even thousands sold every year. Very few of them are written so well, that you are compelled to finish it when you start. "All the Devils Are Here" is a tale that needs to be told, and is told in such a way that you will find yourself going without eating to finish it.I knew Bethany McLean's work previously from reading "The Smartest Guy in the Room". It's the same deal, great story, written in a compelling manner. In this book there are 22 chapters of narrative written in 358 pages. Here are just a handful of the colorful characters you will meet and learn considerably about.* Stan O'Neal - CEO of Merrill LynchHe's aloof, suspicious, completely envious of competitor Goldman Sachs, and personally is very insecure. He could not stand having people of superior intellect around him, and in a corporation that is precisely what you need.* Franklin Raines - Head of Fannie MaeYou talk about screwing up, the American taxpayer may have to lend Fannie Mae a hundred billion dollars before it's over, and somehow Raines still got a severance package.* Brian Clarkson - CEO of Moody's the rating serviceOnly in America could Clarkson have come up with the concept that you could take third tier bonds, and if you put enough of them together, they could be triple AAA rated. The concept would plow the country deep into the financial crisis.* Hank Greenberg- The modern founder of AIGIn the end, Greenberg developed a company with so many layers of intertwining intrigue, that only he knew how all the pieces fit together. It was a house of cards.* Angelo Mozilo - CEO of Countrywide, the loan peopleHe wanted homeownership for everyone, and in the process of actualizing the myth, helped to bring on the financial crisis which would also destroy his career, and independence of his company.There are many more players and their stories. The above are just the key players, but you will also get to know Alan Greenspan, Jimmy Cayne (Bear Stearns), Alan Greenspan, Lloyd Blankfein (Goldman Sachs), and more. If you think you understand Wall Street, think again. Reading the newspapers won't help you. You need to hear it from a master storyteller, and that's what you get with McLean and Nocera. In page after page, they put it all together for you. They take the disparate parts, and weave a mosaic that allows you to finally understand how did we allow ourselves into this mess? Who did it? Could it have been avoided? Finally, are we out of the hole yet, or are we digging further in?You will learn about how Stan O'Neal schemed, and plotted his way to the top of Merrill Lynch, forcing previous CEO David Komansky out of his job earlier than expected. O'Neal proceeds to gut the firm of its enormous talent base, and brings in a bunch of yes men, to assuage his ego. He fires the head of risk management, only to have to rehire him later on. O'Neal practically collapses when he's told that the firm owns tens of billions of dollars of unsalable bonds. O'Neal was ultimately fired. I had the pleasure of seeing him on a Jet Blue flight to Florida recently. Gone is the Gulfstream jet he used for a play toy. I must admit to taking pleasure by yelling, "Hey O'Neal, how do you like Jet Blue." I'm a taxpayer too.You'll learn how Goldman Sachs went from putting the client first to a firm now better known for its proprietary trading desk, and private equity group. O'Neal may have envied Goldman, but Goldman knew how to manage risk. They would elevate their risk management group to the same level as other groups in the firm; giving them independence to sniff around and tell the CEO what they really thought was happening. Only Goldman managed to survive the financial crisis unscathed, while everyone else was writing off tens of billions of dollars.The story of Moody's was especially interesting. Warren Buffett bought 15% of the company because of its impregnable market position, coupled with steady, reliable, and huge cash flow. In one year, Moody's went from 35% of the mortgage backed securities market to a 59% market share. How did they do it? They blew up their standards, shifted their analysts around in order to make them ask fewer questions, and started charging millions every time an investment bank wanted to do a 100 million dollar collateralized bond obligation.Moody's believed and promised the unthinkable. You could take poor bonds, but by putting them together and bundling them, you could make them triple AAA rated. As a rule, institutional buyers do not look beyond the triple AAA rating. They simply rely on the integrity of the rating agency. Moody's thought the laws of economics had been repealed. What is amazing is that to this day, Moody's has never been punished for their actions.If you want exciting, if you want compelling, then you must get your hands on this book. It will make you angry, even furious at how the regulators looked the other way. You will never trust Wall Street again and why should you? It becomes apparent that many people in financial services are paid four, five, six times what people make for the same function in other professions, and industries, and yet they required an $800 billion bailout from mom and pop America.There have been upwards of 50 books written about the financial crisis. As of this date, "All The Devils Are here", is the best of them. It is the most interesting, and it is laid out in easy to read language with no axes to grind, no hidden agendas. It will give you clarity, as to the interplay between government, Wall Street, and the banks. I give this book five stars, and thank you for reading this review.Richard C. Stoyeck

Bethany McLean lives in Chicago. She's a writer for Vanity Fair and was coauthor (with Peter Elkind - editor at large at Fortune magazine and an award-winning investigative reporter) of the 2004 award winning The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron. McLean wrote for Fortune for thirteen years prior to joining Vanity Fair. She also spent three years working at Goldman Sachs. Joe Nocera lives in New York where he is a business columnist for The New York Times and a staff writer for The NYT Magazine. Nocera worked for ten years at Fortune as a contributing writer, editor at large, executive editor, and editorial director. He has been honored with three Gerald Loeb awards for distinction in business journalism. Nocera was a finalist for a Pulitzer Prize in 2006. ---- Based upon the above, one might expect that the literary contribution of this tandem should be second to none. In All The Devils Are Here - The Hidden History of the Financial Crisis - It is.Growing up in the U.S. - each and every kid has a few "ah-ha" moments that you never forget. My first was the day I became aware that Santa Claus was a myth. I was freaking devastated! Another was May 4, 1963 when I watched the evening news with my dad on our black and white television as images of students being blasted by fire hoses and attacked by police dogs in Birmingham, Alabama filled our living room. Then, six months later, President John F. Kennedy was assassinated. In April 1968, Dr. King was murdered. June 1968, Bobby Kennedy was gunned down. In August 1974, President Nixon resigned in disgrace. In 1998, President Clinton was impeached by the U.S. House of Representatives (and acquitted by the Senate in February 1999).To be fair about it, I guess every human lifetime is populated with moments that cause us to re-examine what we believe. They pierce the illusions that support our current worldview. They cause us pain, uncertainty, fear and doubt - they also cause us to re-examine our faith, confidence and trust in our fellow man - and the efficacy of the institutions that man has created. I am referring to stuff like justice, capitalism, democracy, free-markets, innovation, government oversight and fair-play.I guess Daniel Levinson said it best when he wrote the following in The Seasons of A Man's Life:"As he attempts to reappraise his life, a man discovers how much it has been based on illusions, and he is faced with the task of de-illusionment. By this expression I mean a reduction of illusions, a recognition that long held assumptions and beliefs about self and world are not true. This process merits special attention because illusions play so vital a role in our lives throughout the life cycle."(1)In All The Devils Are Here - The Hidden History of the Financial Crisis McLean and Nocera guide us through the de-illusionment process. It could be titled The Seasons of A Nation's Life. This book unequivocally reveals that long held assumptions and beliefs about self and world are not true. It is painful. French President Nicolas Sarkozy characterizes the essence of what McLean and Nocera reveal when he says: "If financial trading creates the volatility it claims to protect against, where is the value to society of the service rendered?"(2)I have read and reviewed (see my reviews on [...] or on Amazon) many of the books published during 2009 and 2010 about the "financial crisis." If you haven't, or if you want to read one book about it, I recommend All The Devils Are Here - The Hidden History of the Financial Crisis by McLean and Nocera.By the way, devils don't necessarily have horns on their heads, pointed tails, nor are they easily recognizable. The "axis of evil" comes in many forms and is as much an internal domestic threat as it is a foreign threat or "out there somewhere."See your physician before you read this book. You may experience cardiovascular difficulties as you read it. However, when you finish the book, I hope it has the same effect on you as it has on me - restoring a sense of dedication to supporting the ongoing reform of a system whose value to society in terms of services rendered has become and remains unequivocally questionable.We have much work to do to root out the vestiges of the deeply entrenched dysfunction that the financial crisis has implanted in our nation, and our world.McLean and Nocera's work provides a baseline for revealing the myths and illusions that must be discarded before we might make progress toward avoiding a comparable catastrophe in the future and restoring a system that is a superb example of national pride - versus an ongoing source of shame.Buy it. Digest it. Act upon it.NOTES: (1) Levinson, Daniel J., The Seasons Of A Man's Life, New York: Ballantine Books, a division of Simon & Schuster, 1978, p.192 (2) Stiglitz, Joseph E., Sen, Amartya, Fitoussi, Jean-Paul - MIS-Measuring Our Lives - Why GDP Doesn't Add Up - The Report By The Commission On The Measurement of Economic Performance and Social Progress, The New Press, New York, NY Copyright © 2010 by The New Press, Foreword Copyright © 2009 by Nicolas Sarkozy, Preface Copyright © 2010 by Stiglitz, Sen & Fitoussi - p. xiv

I thoroughly enjoyed reading this and whilst I have not unlike some reviewers read this non stop, I could not waited to get back to it. I have even bored a friend at dinner about it. And she is an archaeologist.This is a story of the people behind the subprime mortgage crash, and it builds up by discussing how some of the players got involved in the market and manipulated it and profited by it or lost everything. Few of those involved were innocent, whether by being complicit in producing products that they knew would be dangerous or "toxic" as one package was called, or because they were too greedy to investigate what they were buying. From the regulators, the rating agencies, the GSE (government sponsored enterprises), to the banks, mortgage companies even to the borrowers, everyone let greed hurtle them towards disaster.Some have commented on how difficult it is to read. Yes this is not a quick read but it is fascinating. I have an accounting background but not in banking or treasury and sometimes I could not remember the detail behind a CDO or a Credit Default Swap but the narrative swept me along regardless. Here is tale of greed encouraging men and women to exploit a system were regulation either could not keep up or was not there at all, as new products were created and/or political machinations stopped the few regulators who tried from controlling the monster.There are also complaints that this is solely concentrated on the US. Perhaps the title as it refers to the men who bankrupted the world is misleading. I for one would have liked mention of the other collapses But I also see it as a strength that the area focused on just the US. If there was too wide a focus then some of the pace of the book might have been lost. And after all this was a book written by Americans for Americans.

Having read and enjoyed Bethany McLeans account of the Enron debacle, I decided to read All the Devils Are Here, although, needless to say, it is not the first book I have read on the subject. This account trumps most others due to its depth and size of scope. It takes you from the events that sowed the seeds to the crisis, like the advent of the mortgage-backed security, to the bankruptcy of Lehman Brothers. In doing so, it covers all important institutions and literally hundreds of characters. Some, notably Alan Greenspan, come off in a very bad light, while for example Hank Paulson is portrayed more positively. However, in spite of its title, the book is not about the right or wrongdoings of individuals, but rather an account of a colossal systemic failure. This ranges from the fraudulent subprime lenders and CDO underwriters to the FED and other regulatory agencies as well as politicians at the federal level, who completely abandoned their roles as overseers and among other things exempted lenders from state laws passed to prevent predatory lending. Particularly interesting was also the parts about the GSEs Fannie and Freddie, run as private companies for shareholder profit at the expense of the US government. Although not as thrilling as for example Michael Lewis The Big Short, All the Devils Are Here make it up by being detailed and insightful.

Brilliant read - hard to put it down. Complicated subject artfully explained whilst not bogging down the pace of the book.

Well paced and surprisingly easy to read and understand.

Excellent read, would recommend.