Too Big to Fail
The Inside Story of How Wall Street and Washington Fought to Save the FinancialSystem--and Themselves
Loeb Award Winner
Financial Times and Goldman Sachs Business Book of the Year Award: Shortlist 2010
A brilliantly reported true-life thriller that goes behind the scenes of the financial crisis on Wall Street and in Washington.
In one of the most gripping financial narratives in decades, Andrew Ross Sorkin-a New York Times columnist and one of the country's most respected financial reporters-delivers the first definitive blow- by-blow account of the epochal economic crisis that brought the world to the brink. Through unprecedented access to the players involved, he re-creates all the drama and turmoil of these turbulent days, revealing never-before-disclosed details and recounting how, motivated as often by ego and greed as by fear and self-preservation, the most powerful men and women in finance and politics decided the fate of the world's economy.
Standing in the kitchen of his Park Avenue apartment, Jamie Dimon poured himself a cup of coffee, hoping it might ease his headache. He was recovering from a slight hangover, but his head really hurt for a different reason: He knew too much.
It was just past 7:00 a.m. on the morning of Saturday, September 13, 2008. Dimon, the chief executive of JP Morgan Chase, the nation’s third largest bank, had spent part of the prior evening at an emergency, all-hands-on-deck meeting at the Federal Reserve Bank of New York with a dozen of his rival Wall Street CEOs. Their assignment was to come up with a plan to save Lehman Brothers, the nation’s fourth-largest investment bank—or risk the collateral damage that might ensue in the markets.
To Dimon it was a terrifying predicament that caused his mind to spin as he rushed home afterward. He was already more than two hours late for a dinner party that his wife, Judy, was hosting. He was embarrassed by his delay because the dinner was for the parents of their daughter’s boyfriend, whom he was meeting for the fi rst time.
“Honestly, I’m never this late,” he offered, hoping to elicit some sympathy.
Trying to avoid saying more than he should, still he dropped some hints about what had happened at the meeting. “You know, I am not lying about how serious this situation is,” Dimon told his slightly alarmed guests as he mixed himself a martini. “You’re going to read about it tomorrow in the papers.”
As he promised, Saturday’s papers prominently featured the dramatic news to which he had alluded. Leaning against the kitchen counter, Dimon opened the Wall Street Journal and read the headline of its lead story: “Lehman Races Clock; Crisis Spreads.”
Dimon knew that Lehman Brothers might not make it through the weekend. JP Morgan had examined its books earlier that week as a potential lender and had been unimpressed. He also had decided to request some extra collateral from the firm out of fear it might fall. In the next twenty four hours, Dimon knew, Lehman would either be rescued or ruined.
Knowing what he did, however, Dimon was concerned about more than just Lehman Brothers. He was aware that Merrill Lynch, another icon of Wall Street, was in trouble, too, and he had just asked his staff to make sure JP Morgan had enough collateral from that firm as well. And he was also acutely aware of new dangers developing at the global insurance giant American International Group (AIG) that so far had gone relatively unnoticed by the public—it was his firm’s client, and they were scrambling to raise additional capital to save it. By his estimation AIG had only about a week to find a solution, or it, too, could falter.
Of the handful of principals involved in the dialogue about the enveloping crisis—the government included—Dimon was in an especially unusual position. He had the closest thing to perfect, real-time information. That “deal flow” enabled him to identify the fraying threads in the fabric of the financial system, even in the safety nets that others assumed would save the day.
Dimon began contemplating a worst-case scenario, and at 7:30 a.m. he went into his home library and dialed into a conference call with two dozen members of his management team.
“You are about to experience the most unbelievable week in America ever, and we have to prepare for the absolutely worst case,” Dimon told his staff. “We have to protect the firm. This is about our survival.”
His staff listened intently, but no one was quite certain what Dimon was trying to say.
Like most people on Wall Street—including Richard S. Fuld Jr., Lehman’s CEO, who enjoyed one of the longest reigns of any of its leaders—many of those listening to the call assumed that the government would intervene and prevent its failure. Dimon hastened to disabuse them of the notion.
“That’s wishful thinking. There is no way, in my opinion, that Washington is going to bail out an investment bank. Nor should they,” he said decisively. “I want you all to know that this is a matter of life and death.
Then he dropped his bombshell, one that he had been contemplating for the entire morning. It was his ultimate doomsday scenario.
“Here’s the drill,” he continued. “We need to prepare right now for Lehman Brothers fi ling.” Then he paused. “And for Merrill Lynch filing.” He paused again. “And for AIG fi ling.” Another pause. “And for Morgan Stanley filing.” And after a final, even longer pause he added: “And potentially for Goldman Sachs filing.”
There was a collective gasp on the phone.
As Dimon had presciently warned in his conference call, the following days would bring a near collapse of the financial system, forcing a government rescue effort with no precedent in modern history. In a period of less than eighteen months, Wall Street had gone from celebrating its most profitable age to finding itself on the brink of an epochal devastation.
Trillions of dollars in wealth had vanished, and the financial landscape was entirely reconfigured. The calamity would definitively shatter some of the most cherished principles of capitalism. The idea that financial wizards had conjured up a new era of low-risk profits, and that American-style financial engineering was the global gold standard, was officially dead.
Reprinted by arrangement with Viking, a member of Penguin Group (USA) Inc., from Too Big to Fail by Andrew Ross Sorkin. Copyright © 2009 by Andrew Ross Sorkin."...comprehensive and chilling..."
"...his action scenes are intimate and engaging..."
-The New Yorker
"Sorkin's prodigious reporting and lively writing put the reader in the room for some of the biggest-dollar conference calls in history. It's an entertaining book, brisk book...Sorkin skillfully captures the raucous enthusiasm and riotous greed that fueled this rational irrationality."
-The New York Times Book Review
"...brings the drama alive with unusual inside access and compelling detail...A deeply researched account of the financial meltdown."
"...meticulously researched...told brilliantly. Other blow-by-blow accounts are in the works. It is hard to imagine them being this riveting."
"Sorkin's densely detailed and astonishing narrative of the epic financial crisis of 2008 is an extraordinary achievement that will be hard to surpass as the definitive account...as a dramatic close-up, his book is hard to beat."
"Sorkin's book, like its author, is a phenom...an absolute tour de force."
-The American Prospect
"Andrew Ross Sorkin pens what may be the definitive history of the banking crisis."
-The Atlantic Monthly
"Andrew Ross Sorkin has written a fascinating, scene-by-scene saga of the eyeless trying to march the clueless through Great Depression II."
"...Sorkin has succeeded in writing the book of the crisis, with amazing levels of detail and access."
"Sorkin can write. His storytelling makes "Liar's Poker" look like a children's book."
To keep up-to-date, input your email address, and we will contact you on publication
Please alert me via email when: