Customer Reviews

Other People's Money: The Corporate Mugging of America

5 star:		(5)
4 star:		(0)
3 star:		(2)
2 star:		(2)
1 star:		(1)

 

 

Other People's Money is a suspenseful, smart, compulsively readable account of the outrageous deceptions and monumental malfeasance of a number of high-flying corporations and the ego-driven executives who brought them to ruin ... along with the pensions, jobs and lives of thousands of American workers. Scarier still, the author convincingly argues that the reforms designed to prevent a recurrence of these scandalous doings are hopelessly inadequate to the task.

Written by a Wall Street insider (who happens to be -- surprise! surprise! -- a terrific writer), this gripping book teases apart the tangled relationships among corporations, Wall Street and government regulators. Despite the fact that it's exceedingly thorough and well documented, the book is never dull or dry. The author's passion and wit come through on every page.

Other People's Money is a "must-read" book ... and the sooner the better. It should absolutely be read by November 2!

This is a good skewering of the financial world from a woman who was a part of it (Prins is a former director at legendary Goldman Sachs, and, last time I checked, now works for a progressive think tank). My politics aren't nearly as economically left wing as Prins. I tend to think high finance is generally a good thing, but now, especially with the implosion of the of the housing market, takign a hard look at the way this money is made is important.

In this book, Prins focuses on what happened after the deregulation of the energy markets, and how that helped people like Enron do the nasty things they did. The book is a little simplistic in its rendering of good guys and bad guys, but at the end of the day, it is nice to see a left wing critque of wall street done in such a smart way.

What great journalism is supposed to do, challenge the powerful and succinctly, clear lay out complex issues to explain the motivations at their core. This book is essential reading for anyone who wants to see how the free market system has been overrun by charlatans and criminals whose hands were held by government and who all the while claimed to be its champions.

First of all, this book is extremely well-written, easy to follow and learn from.

Second, your politics shouldn't make any difference. Although the author is a "progressive" or liberal, her journalism is immaculate, and I say this as a part-time, free-lance editor. I can substantiate her references on Enron from the likes of Kurt Eichenwald, "Conspiracy of Fools." I also reviewed this book. All I can say about any political message, referring to other reviewers, is that if you don't see the value of this book then you're probably part of the runaway corruption rotting away at America. Just go away -- please!

Ms. Prins can speak volumes of her experience at Goldman Sachs. And, what she has to say should be heard. She reviews of the unraveling of Glass-Steagall and other protections, the greed and corruption of corporations and banking --- and mind you, that was back in 2004:

"Gary Winnick of Global Crossing said he'd give back $25 million to help his workers, who lost $275 million and of whom 9,000 were laid off."

"In the real world, when someone steals a TV, returning the antennae doesn't get him off the hook, but in the world of corporate executive cash-outs, it seems as if an expression of remorse on the Senate floor is all it takes."

The author, if she has an agenda, it is for regulation improvements that have a possibility of curbing the corruption:

"Corporations need independent boards of directors --- ones with no intertwined client relationships, no ex-government officials on boards of companies that directly benefit from their legislation. Corporate boards should include public seats as well as consumer groups." (Why not, our 401Ks pay for the lavish benefits to these corporate officials?)
Ms. Prins goes into detail on the growth and flaws of the super-banks. These giants have become sacred cows for every administration since Washington road a carriage to his inauguration. During the 2002 collapse she described the common practice of repaying old debt with new debt:

"These companies (US corporations) were so big and unwieldy that it seemed like creating more debt was the only way to keep them afloat. This is why the supermarket (super) banks are more exposed to the corporate merger downturn than midsized or small banks; they depend on a booming stock market and endless growth to give them business." (In other words, big and stupid goes together. Large corporations led by greedy idiots working hand-in-hand with greedy, careless bankers. Boy that sounds like a formula for success!)

Small and medium banks, often run more shrewdly, don't have the balance sheet for greedy corporations like Enron, Global Crossing, Tyco and World Com. "Ironically, these smaller institutions pay a proportionally larger insurance premium to the FDIC to back their investor deposits than do the larger banks, which are more reckless with their individual customer's money."

It's information like this that makes this book a valuable read. I strongly recommend it for those who honestly want to see our economy and society survive.

If this review was helpful, please add your vote.

In response to J. Ludwig -- "who happens to be -- surprise! surprise! -- a terrific writer" -- this book is not well written at all. As another reviewer has pointed out, it is in need of serious editing. This became obvious to me in the first few pages of the introduction. I found myself reading and re-reading the same sentence several times before finally realizing it really made no sense, though a limited financial vocabulary might lead you to second-guess yourself. Here are some examples early in the book:

"This doesn't mean that the class-action lawsuits filed on behalf of groups of investors against Enron, WorldCom, and other similar companies are not without merit. They absolutely are." (p. 36) Ok, let's review: doesn't mean...not without...absolutely are. So the conclusion is actually that the lawsuits have NO merit!

"It's a similar situation in the debt capital markets, in which corporations lend money to bond issuers and institutional investors, who buy those bonds in exchange for receiving interest over a number of years" (p. 30) First of all, "THOSE bonds"? Which bonds? The corporations are making loans to bond issuers AND institutional investors...I thought the corporations were the bond issuers??

Not only is Nomi not an entirely coherent writer, she is also not at all original--neither in style/idiom nor perspective. A typical left-leaning corporate critique you will read anywhere. The only unique value her book provides is the insider take on top ibanks that she leads off with (the Goldman christmas party). Unfortunately this is a minor component of the book.

And you needn't read any farther than the preface to get a sense for her perspective: "As an activist in London, I protested against the WTO...Shell...Then I'd return to my desk at Bear Stearns...and produce investment ideas for institutional investors."

First, she strikes me as a little too enchanted by the contradiction of these spheres which are not necessarily contradictory. Second, she seems a little too enchanted by her admission into the MD crowd at GS. If she was already enlightened at Bear Stearns, why did the outrage require admission to Goldman's inner circle to boil over? Nomi wants it all--Goldman's seal of approval, the third world's seal of approval, the journalist's seal of approval, YOUR seal of approval.

Nomi Prins is the meteorologist of the Market Crash of 2002. She analyzes the "perfect storm" created by deregulation in banking, energy and telecom markets; combined with the manipulation of political power, and the avarice and greed of key executives in these industries.

Want to know whose money? OURS!

This is one of the best clear, perceptive and comprehensive primers on the dynamics of the kind of common financial shenanigans that led to the current crisis. The author is vastly knowledgeable and communicates her understandings very well.

Nomi Prins, formerly a director at Goldman Sachs, has penned a work revealing that commercial & investment banks are principally interested in making money. No shocker there, but the folks employed at these large financial institutions might not have their clients' best interests at heart. This isn't news to the expected audience for a financial title like this, although her occasional description of seedy practices may surprise the average reader.

Nomi gradually moves on from the money-grubbing banks, to the pair of industries that fed on unlimited quantities of debt and equity issues to fund expansion: the telecom and energy sectors. WorldCom and Enron, respectively, are the principal focus of each sector. Nomi does a nice job providing the broad history of growth of these former giants, but details regarding operations, personnel and the accounting chicanery are left to other works.

At every turn, the discussion threatens to follow through with an indictment of the Bush administration, for numerous issues. This is where the partisan commentary seriously reduces the value of Nomi's work. She unmistakably has an axe to grind with the Bush administration, referring several times to the 2000 Supreme Court decision to stop ballot recounts in Florida (mind you, Florida State Law considered those recounts illegal, Florida State courts upheld that law when pressed by Al Gore's legal team, and the U.S. Supreme Court simply upheld those rulings). For Nomi, this turns into an opportunity to criticize the slow pace of justice in the prosecutions against Ken Lay, Bernie Ebbers, Andrew/Lea Fastow and Scott Sullivan. She also strikes at the 2002 Sarbanes-Oxley Act as too little, too late, and criticizes the administration for its fundraising ties to big businesses. Before I skewer her line of thinking, let me grant that some points raised do deserve further investigation: for instance, why the government engaged WorldCom for more business after it entered bankruptcy and never prosecuted it for corporate fraud.

The single greatest reason Nomi's line of attack fails is simply this: all the deregulation, all the investment bank financing, all the mergers, all the political contributions, all the fraudulent accounting, all the SEC failures to review corporate books, all the IPO flipping, all the nonsensical Internet ideas that received funding, the 2000 peak of the stock market bubble... it all (or substantially all) occurred under the Clinton administration! Nomi, choosing not to detail the truth of failures in accountability and enforcement, therefore pins what little she has on the Bush years, such as the sweetheart fines Elliot Spitzer extracted from NYC banks and brokerages, and the failure to prosecute the likes of Jack Grubman and Sandy Weill. In other words, a fire raged for years to the delight of the Clinton administration, and Nomi blames the Bush administration for not dousing the few hot embers in the charred remains with all the waters of the ocean.

You'll become frustrated at times with run-on sentences, and missing or misplaced punctuation (neither is completely Nomi's failing, let's give the editor due credit too). Also, each of the 6 chapters contains some 20-25 smaller sections of a couple pages each. Each of these sections contains a header, but beyond the first paragraph of each section, the topic diverges wildly. The layout is truly scattershot within chapters (and sometimes across). Terms used early in the book are defined 50 pages later. Individually, these copy issues might not amount to much, but taken as a whole, there are some serious editing issues here. I can appreciate the desire to pack lots of information into a single work, and fault lies not so much with the intention as with the execution. I bet this final version differs little from initial drafts, because it reads very much like an unedited work.

If you want to further investigate the rise and fall of Enron and WorldCom, the unbridled greed and drive for cash at corporate banks, and the governmental failings that drove our economy and stock markets to unsustainable heights, I suggest you look at other works devoted to these topics. Nomi's attempt to cover them all, in a shell blaming the firemen for the fire and in desperate need of editing, is not a good use of your time or money.

Having now read many books on the "corporate mugging" of individual investors, I've either hit my breaking point or this is a boring book. This book is a rehash of how investors were mistreated and how Wall Street participated willingly. And given that it is written by an investment banker with over ten years experience, it does have some credibility.

What this book does well is give great background on the scandals focusing mainly on telecom and utilities. In addition to the general background of Wall Street and the climate in the stock market, she does an exceptional job of providing regulation and deregulation background. But this book eventually wears you down. Maybe that's my fault. Having taken a large WorldCom loss followed by substantial profits in the beaten down utilities in light of Enron, I thought the subject matter would be right up my alley. But it's repetitious so if you read WSJ, Businessweek and NY Times, you've already read all of this. With the possible exception of her detailed coverage of the regulatory environment affecting the utilities.

In summary, I was interested in a business biography. What I received was a detailed, complex college textbook analysis of this unique investment period and the excesses that caused such a great loss of wealth. Maybe it's just my fault for having read too much but in summary, this book was too detailed and too repetitious and I didn't enjoy it. Read at your own risk.

Ms. Prins, she tells us, was shocked, SHOCKED, to discover that Goldman Sachs is not a boy-scout troop. Well, yes, however I was left wondering why it took her fifteen years on Wall Street, and two years as an M.D. at Goldman, to realise this (more prissy than Claude Rains, she is careful to let us know that she left her winnings behind her). Has she never read Liar's Poker? Actually apparently she has, but you wouldn't guess.

No more impressive is her self-congratulatory description of how she would split from Goldman in her lunch break to join anti-IMF/WB/WTO/globalisation-in-general demos, which clearly gave her a self-satisfied glow of virtue. Unfortunately this does not strengthen her credentials. G-S may not require merit badges from prospective employees, but it does expect analytic intelligence, and anyone capable of landing a senior job there should have known that the (refined - if not the WSJ ed. page) case for globalisation has never been in dispute by uncool nerdy policy wonks (i.e. informed, intelligent people), but only by cool rock musicians and social sciences/culture studies students, and that all those feel-good demos were essentially no more than destructive stupidity, hurting the people whom the participants - at least sometimes - thought they were helping. Ms. Prins should read more by those infamous capitalist predators Paul Krugman and Jagdish Bhagwati before venturing back into print (she might also learn from them how to write).

Other Peoples Money comes with blurbs from the Economist and Ralph Nader both. It was even listed by the Economist as a book of the year (how can you resist a book recomended by Ralph Nader and the Economist both?), and as such it is a serious disappointment. It sprays moral indignation around with a firehose, but condemns banks as much for simply trying to make money as for gross moral turpitude, which is very bad for its case, since there is clearly moral turpitude and to spare.

This book reads like a set of preliminary notes, not a finished work: it repeats itself over and over, it lacks structure (indignation is not structure), and it lacks a coherent case. The real, and overwhelming, moral case, which is never effectively made, is not about the wickedness of banks, but about the need for effective, disinterested regulation. (Sure, there is lots about weak regulation, but this is presented as the fault of the banks - but there is nothing immoral about banks lobbying for privileges - everybody lobbys for privileges, proletarian heros such as steel workers included - what is wrong is politicians who are stupid or venal enough to give in to such lobbying).

Completely missing, also, is any analysis of the *stupidity*, as opposed to the corruption, of the banks and the consultants in the late 1990s and early 2000s; if they were dope pushing sharks, then they were also sharks addled a lot of the time on the stuff they were selling.

My conclusion, at the end (or more accurately, at about page 200, when I gave up), was that, with enemies like Ms. Prins, the Street need lose no sleep over the steadfastness of its friends.

By the way, I no-more believe that Ralph Nader actually read Other People's Money before providing his blurb than that the Pope or Ian Paisley watch the movies they condemn.