Customer Reviews

The Sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System

5 star:		(33)
4 star:		(11)
3 star:		(3)
2 star:		(2)
1 star:		(10)

 

 

Rated 4.5 stars; rounded up.

It's almost impossible to understand what happened on Wall Street in 2007 and 2008 without going back in time to the 1970s, the era in which investment banking changed forever. And that's what Gasparino does in this book, making it one of the most valuable books about the financial crisis published so far that the general reader is likely to find. Its nature is likely to come as a surprise to anyone who is familiar with the author only from his television appearances; while it has all the gossipy insights into Wall Street that Gasparino has always delivered (including Jimmy Cayne, the former CEO of Bear Stearns, offering him what Cayne described as a joint in an elevator one day...), it thankfully goes well beyond that. The scandalous tales about daily life on the Street are there to entertain and amuse us, sure, (along with a reasonable degree of self-promotion) but the author combines that with solid analysis and insight into the role played by the evolution of structured finance and the failures of risk management.

Most significantly, Gasparino pays attention to history, specifically to the way that a handful of bond market honchos transformed the mortgage lending market from a local business into a Wall Street affair. He weaves together the strands of the narrative deftly, showing how politics in Washington and greed on Wall Street combined to turbo-charge the level of risk-taking and then a series of risk-management failures. Andrew Ross Sorkin's book,[...] is more elegantly written and works as a great chronicle of the months that lay between the collapse of Bear Stearns and the near-apocalypse of September 2008, six months later, but a lot of the historical context needed to understand why those events unfolded as they did is missing. In contrast, Gasparino tries to accomplish something more ambitious, explaining how risk moved from becoming a way to boost profits on Wall Street to being the heart of Wall Street's business. What happened to Wall Street wasn't just about subprime lending or leverage -- it's about why the creation of mortgage-backed securities and leverage became the heart of what Wall Street is all about.

So far, the only books I've seen to have shed light on this issue aren't easily read by a general reader without a knowledge of finance or a high tolerance for jargon. [...] What Gasparino does is to present some of the same concepts in a gossipy, chatty book that should appeal to those on Main Street who are striving to understand just what happened and how it could happen.

Gasparino's thesis is that government policy encouraged that risk-taking to reach extreme levels -- in the great debate over whether Washington or Wall Street is more to blame with the mess, he comes down on the side of blaming Wall Street. (I'm not sure I agree, but his argument is thoughtful, logical and well-supported by the facts that he musters.) He correctly identifies the 1998 collapse of Long-Term Capital Management as a turning point in the process; after that point, it became politically impossible to let a large financial institution fail (and the CEOs of the large investment banks came to realize that.) After seeing just how urgently regulators pursued a bailout style solution to that conundrum, followed by the efforts to prevent Bear Stearns bankruptcy in early 2008, why would Dick Fuld take seriously the suggestion that he take urgent steps to bolster his balance sheet? Long before the critical events of September 2008, which culminated in a bailout of Fannie Mae, Freddie Mac and AIG (not to mention the TARP program that has left the US taxpayer owning stakes in B of A and Citigroup), `moral hazard' was alive and well on Wall Street. In Gasparino's view, misbegotten government policies designed to make home ownership possible for all Americans (even those not in a position to afford it) should shoulder most of the blame. But the bankers aren't let off the hook, either. Their errors of judgment and oversights are placed in the spotlight and held up to scorn.

It helps that Gasparino has been covering Wall Street and all its doings for the better part of two decades, starting on the ground floor (the guys doing the bond deals) and working his way up to writing about Wall Street CEOs like Cayne, Fuld and John Mack. Sure, he's self-promotional, but he also has access to a network on Wall Street that is both broad and deep. And in this case, he's pulled off a book that is as much analytical and anecdotal. That combination could make it stand as one of the best books about the crisis, despite the rather glib conclusions about what needs to happen next. Gasparino is good at tackling what happened, and identifying villains across the landscape, but the reason this gets 4.5 stars instead of 5 (and came close to being rounded down instead of up) was that the forward-looking analysis fell rather flat. Gasparino comes up with some rather predictable recommendations -- ditch the SEC, for instance -- but doesn't have the insight of, say, a Niall Ferguson when it comes to imagining a future shape for what he acknowledges is a deeply-flawed financial system.

Recommended for anyone looking for insight into what we have just been through and why we have had to go through it. Gasparino, always a tenacious scoop-hound, has gone beyond his traditional strengths as a reporter and produced a book that is far better-written and more thoughtful/analytical than his two previous offerings. If you're looking for other reading material on the crisis, Andrew Ross Sorkin's book will take you deeper into the chronology of the critical months (including who ate what, when and where, and the jogging paths of key players in the crisis), but I found the historical context was more perfunctory and the book emphasized the day-to-day drama at the expense of the reasons for the debacle. There are several more detailed books available about both Bear Stearns and Lehman Brothers; [...]

Full disclosure: Gasparino is a former colleague, although we haven't worked at the same organization in about eight years and we're not in touch regularly. I usually don't review books by people I know; I'm making an exception for this one because I think it's both a lively read and one that will help those who aren't on Wall Street get a handle on what happened, and because it provides the kind of historical context that has been largely lacking.

First off, I worked with or for many of the major characters (especially at Merrill, but also at Morgan Stanley). In particular I was at Merrill during the LTCM debacle and can say that amazingly Gasparino got the character of O'Neal, Kronthal, Kim, Semerci and Latannzio generally correct even in the earlier crisis. I remember O'Neal ripping a new orifice in Connie Voldstadt who headed European fixed income on a conference call in the fall of 1998, without O'Neal really even understanding the actual essence of the problem. Semerci was a salesguy who nearly blew up Turkish accounts with mis-sold derivative transactions in 1997-98, yet i can see O'Neal being enamoured with him and unbelievably putting him into a position that people 10 times smarter than him held 10 years earlier. Charlie goes soft on Osman. Dow Kim is another character that gets off relatively easy. Kronthal (and especially Bobby McCann ) comes off as better than he was, still considering the vast number of issues Gasparino got them fairly right.

I think Gasparino covered most of the major issues, the lack of mark-to-market accounting, the hubris, and most importantly stupid assumption that many of us tried to warn various financial institutions was incorreect (that house prices can and do go down, but in 2004-2007 most mortgage involved people had almost a Jonestown belief that it couldn't happen and anyone who thought it could was defective). He gets it right that many of us were of the belief that Greenspans last act of integrity was in 1995 when he made his irrational exhuberance speach. He shows correctly that Robert Rubin was one of the most critical people involved in making the mess, though he doesn't talk about Rubin making a fortune at Goldman on Latin American Debt and then becoming Treasury Secretary under Clinton and bailing out the then exploding latin americans in 1994, effectively covering over his first involvement in a financial blow-up, which should have disqualified him from the further involvement he had in the latest fiancial disaster.

On a technical level the book gets certain trades wrong (as almost every book on derivatives written by non-derivatives people i have ever read has done this - especially another generally good book, "When Genius Fails"). Still it doesn't detract from the generally accurate chronology and causality of the still evolving credit bubble.

Charlie Gasparino's The Sellout has been more hyped on CNBC than any book that any of their affiliated personalities have ever written, and frankly, for those who have that network on 60 hours per week as I do, it may seem like it has been more hyped than Harry Potter and The Da Vinci Code combined. For those who find themselves short on time for an abundance of 500-page books about the 2008 economic crisis, I am happy to report that you will be able to do without The Sellout.

Charlie Gasparino is like the TMZ silo of CNBC. He may not be a pure gossip columnist, but the fact that some of what he reports is true does not make it a whole lot more compelling than Entertainment Tonight or E! True Hollywood Story. Gasparino is a bulldog, and he has an impressive career resume. I actually thought his last book (King of the Hill, about former NYSE head, Dick Grasso) was quite good. For some reason, The Sellout left me wanting more.

There is the possibility that I am becoming fatigued. I have read no less than 10,000 pages thus far about the economic crisis of 2008, and the book I read immediately before Gasparino's was also 500 pages (though far, far better). I found The Sellout to be incredibly redundant, and staggering in its over-simplification of nearly everything he attempts to describe. The book's basis thesis is that Wall Street has been increasing its risk and leverage levels for decades (an incontestible fact), and that Wall Street has been "bailed out" by the Fed and the Treasury before (though despite over 200 references to the Long Term Capital Management escapade of 1998 - no joke - it is incredible how unsuccessful he is in actually connecting the dots to the 2008 meltdown). I do not resent Gasparino's basic syllogism: Wall Street had been turning up the risk dials forever, and last year it all caught up with them. Pretty simple. But the book has a golden opportunity to nuance what this all means, and despite an incredibly long-winded 500 pages of opportunity, he keeps the book as vanilla as can be. Indeed, readers of this book need not be interested in how Wall Street's risk knobs were allowed to turn the way they were; rather, readers just need to be prepared to see Charlie declare war on those he personally dislikes, and completely vindicate those whom he has stayed friendly with.

My own synopsis of the 2008 crisis will reflect my own lists, but suffice it to say, there will be some overlap on my list with Gasparino's. He spends nearly 100 pages (or it seemed) lambasting Stan O'Neal at Merrill Lynch, and I am convinced that the history books will end up [properly] doing the same thing. But Gasparino provides very little support for his vicious attacks on other characters in the crisis: from Larry Fink (the CEO of Blackrock), to Vikram Pandit (the current CEO of Citibank who came on after Charlie Prince was fired), any rational reader will quickly detect that Charlie is driven by personal animosity, and not a delicate interest in objectivity. This is not to say Fink and Pandit are untouchable - they are not - but their role in creating this crisis is a footnote, and Charlie knows it. I would actually argue that, despite his willingness to call them out on occasion, Charlie is far too easy on Alan Greenspan and Barney Frank, and yet ironically, too vitriolic about others. The book comes off like he has scores to settle, and that is disappointing, because I think he has an important story to tell.

My impression is that Charlie and I see a lot of this story the same - years of disastrous government policy met head-on with a global liquidity bubble; Wall Street jumped in with eyes wide open, and Greenspan's monetary policy accelerated the fire beyond all recognition. A vast majority of Wall Street leaders - Stan O'Neal at Merrill Lynch, Jimmy Cayne at Bear Stearns, Dick Fuld at Lehman Brothers - didn't know what in the world was going on, and allowed their firms to literally implode behind their mounds of arrogance, incompetence, and myopia. There are fascinating people covered in the book, whether you find them to be villains or not, and some of those character stories are why I completed the book. But it would have been far more enjoyable if Charlie had written with brevity, with objectivity, and with clarity.
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My ongoing review series will next address David Wessel's wonderful In Fed We Trust, before reviewing the frighteningly bad Depression Era Economics from the frighteningly dangerous Paul Krugman.

I work in the industry and see Charles more often than not on my CNBC feed. Charles was to me a sort of fellow who was pretty even keel. When I received a copy of the book I was both interested and wondering if Charles would go over the top in terms trying to get your attention.

What I read was an impressive book. The writing style was intelligent and not flamboyant. This book was neither in your face or trying to sell an agenda. It was written using the style, "it is what it is." This is what I liked about the book since as somebody who is working in the industry, I was fearing that Charles would take his best shots against us. Again, this book does not hide and try to sell the market's virtues as one Goldman Sachs CEO did. It tells it as it is, which is neither good nor bad.

For me this book is comparable to "When Genius Failed", "Devil take the Hindmost", and "Against the Gods". If you like financial history as I do, then this book is for you.

Good job Charles!

As someone who works on Wall Street, I can tell you this book hits the nail on the head. The thing I found most fascinating about the book is the fact that most people on Wall Street were in denial on how the money was made- via leverage.

There are so many books in this mini-genre ... and this one is too often overlooked. If you're looking for a wickedly dark, tongue-in-cheek, in-the-know, no-punches-pulled, character-driven story that is immensely readable, then you've found it.

The most enjoyable - if such an adjective can be used to describe a reading experience revolving around this very big, very ugly story - book on the 'crisis' that I've picked up to date. And that includes 'The Big Short.' But warning: you will feel dirty, and cynical, after reading!

While the Wall Street Journal review may have said it all, after reading every page of this fast-moving book I can say that,not only does it characterize the personalities of those who brought us this financial debacle in real time, but perhaps more importantly, puts that debacle into perspective. Charles Gasparino depicts a thirty year evolution of Wall Street away from its core responsibility of serving clients, whether they be investors or public corporations who it was to advise on securing capital. He shows us that, over time, those investors and corporations were cast aside in favor of Wall Street firms self-interestedly speculating for their own account. As an author and journalist he uniquely lacks the fawning reverence over the Wall Street CEO that the rest of the media perversely have shown, which has brought to the sad state we are in. He brings down to earth those who brought the economy to its knees, those same radically overpaid folks who run what is nothing other than a casino, now funded with taxpayer money. A must read for everyone, this book will prove to top the list for decades to come for anyone who seeks a perspective on what and who truly moves the market.

What a riveting book! I don't know much about Wall Street and the financial system, but "The Sellout" broke it down in the simplest of terms. It was detailed and insightful without the erudite commentary one would expect from a book about Wall Street's financial meltdown. I loved the personal stories of the nations top CEO's and accounts of their oblivious meetings while the country's economy began cracking like a bad paint job! I felt like the proverbial "fly on the wall" as I read about secret wheelings and dealings and personal conversations among Wall Street's most influential players.

The author demonstrates that he's a no-nonsense, straight shooter when it comes to reporting the story! He seems to be a smart outsider who has somehow managed to get the inside story! As complicated as the parts are, "The Sellout" does a great job breaking down every aspect of the financial and regulatory system that led us to this hot mess without making me feel like I took an Ambien! Quite a feat!

Anyone interested in how and why the economy is in the state that it's in NEEDS to read this book!

As I have heard the author say in interviews, "This is not a textbook," and indeed it isn't. Mortgage backed securities? Don't be put off by such terms. Charlie Gasparino, a skilled reporter, is an equally excellent story teller. "The Sellout" reads like a novel with interesting characters, a compelling story arc (greed) and spot-on analysis of what went so terribly wrong.
Even the Wall Street Journal on Nov. 3rd, called "The Sellout" a "splendid account of the financial meltdown."
Gasparino deals with headlines in his day job as a reporter; so here's one headline: "Buy 'The Sellout.'"

Gasparino has done his homework and this book is a fascinating history of Wall Street risk taking, greed, massive ego's, and an out of control culture on the street. The book not only tells the story of our latest financial crisis in an understandable way, but those most responsible are clearly identifiable in this candid and fascinating narrative.

Most infuriating of all we learn that many of the people most responsible like Jimmy Cayne, Dick Fuld, John Thain, Hank Paulson, and Robert Rubin, walk away from this disaster still extremely wealthy men.

However, even Wall Street can't top the incompetence of our Financial Regulatory apparatus such as the Securities and Exchange Commission, Federal Reserve, US Treasury, FDIC, and the Office of the Comptroller of the Currency. All of these organizations were established to prevent precisely what happened. It turns out that they had no clue !

This is a fine book on the crisis.