The End of Wall Street [Hardcover]

Roger Lowenstein (Author)

Book Description

Release date: April 6, 2010

Watch a Video

Download the cheat sheet for Roger Lowenstein's The End of Wall Street »

The roots of the mortgage bubble and the story of the Wall Street collapse-and the government's unprecedented response-from our most trusted business journalist.

The End of Wall Street is a blow-by-blow account of America's biggest financial collapse since the Great Depression. Drawing on 180 interviews, including sit-downs with top government officials and Wall Street CEOs, Lowenstein tells, with grace, wit, and razor-sharp understanding, the full story of the end of Wall Street as we knew it. Displaying the qualities that made When Genius Failed a timeless classic of Wall Street-his sixth sense for narrative drama and his unmatched ability to tell complicated financial stories in ways that resonate with the ordinary reader- Roger Lowenstein weaves a financial, economic, and sociological thriller that indicts America for succumbing to the siren song of easy debt and speculative mortgages.

The End of Wall Street is rife with historical lessons and bursting with fast-paced action. Lowenstein introduces his story with precisely etched, laserlike profiles of Angelo Mozilo, the Johnny Appleseed of subprime mortgages who spreads toxic loans across the landscape like wild crabapples, and moves to a damning explication of how rating agencies helped gift wrap faulty loans in the guise of triple-A paper and a takedown of the academic formulas that-once again- proved the ruin of investors and banks. Lowenstein excels with a series of searing profiles of banking CEOs, such as the ferretlike Dick Fuld of Lehman and the bloodless Jamie Dimon of JP Morgan, and of government officials from the restless, deal-obsessed Hank Paulson and the overmatched Tim Geithner to the cerebral academic Ben Bernanke, who sought to avoid a repeat of the one crisis he spent a lifetime trying to understand-the Great Depression.

Finally, we come to understand the majesty of Lowenstein's theme of liquidity and capital, which explains the origins of the crisis and that positions the collapse of 2008 as the greatest ever of Wall Street's unlearned lessons. The End of Wall Street will be essential reading as we work to identify the lessons of the market failure and start to reb...

Editorial Reviews

From Publishers Weekly

Lowenstein (When Genius Failed) offers an overview of the causes and consequences of the financial crisis that rises above the glut of similarly themed books with its juicy behind-the-scenes detail and thoughtful analysis. He sets out to prove that the current financial difficulties began long before the summer of 2008, and long before the failure of Lehman Brothers. He begins with the history of Fannie Mae and the rise of mortgage-based securities and a dangerously burgeoning housing bubble, and hits the high points of the 2008-2009 news cycles, including Washington Mutual's unwise loan strategies, the panic following Bear Stearns's near-demise, a rash of foreclosures, TARP, and the woes of Citigroup. The insider knowledge lends flavor and context to many of these stories—a ranting Jim Cramer, Ben Bernanke's loss of confidence, and Alan Greenspan's astonishing 2008 testimony to Congress. Lowenstein's strong knowledge of the source material and flair for the dramatic—and doomsday title—should draw readers who still wonder what went wrong and how. (Apr.)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

From Booklist

Lowenstein has written four books on business trends and financial crises and has written for the Wall Street Journal for more than a decade. Although the events leading up to the financial crisis of 2008 have been chronicled from many angles, Lowenstein takes a deeper look at the systemic oversights that led up to that event. The media often blames the bankruptcy of Lehman Brothers and the failure of AIG for the calamity that froze credit markets and ground the economy to a halt, leading to record job losses and the worst downturn since the Great Depression. But the structural damage to the financial system had already been in place by then, brought on by the speculative bubble in real estate nationwide, which was accelerated by lax regulation in subprime mortgages and the securitization of mortgages and endless derivatives, which spread the risk like toxic waste throughout the financial system. Lowenstein does a great job of explaining all this in understandable terms that unobtrusively avoid the injection of emotion and politics. --David Siegfried

See all Editorial Reviews

Product Details

• Hardcover: 368 pages
• Publisher: Penguin Press; First Edition edition (April 6, 2010)
• Language: English
• ISBN-10: 1594202397
• ISBN-13: 978-1594202391
• Product Dimensions: 6.1 x 1.2 x 9.2 inches
• Shipping Weight: 1.4 pounds
• Average Customer Review: 4.2 out of 5 stars  See all reviews (54 customer reviews)
• Amazon Best Sellers Rank: #376,671 in Books (See Top 100 in Books)

More About the Author

Discover books, learn about writers, read author blogs, and more.

Most Helpful Customer Reviews

193 of 198 people found the following review helpful

4.0 out of 5 stars The Origins and Story of the Financial Crisis April 6, 2010

By AdamSmythe

Format:Hardcover|Amazon Verified Purchase

One of the differences between Roger Lowenstein's 2000 book, When Genius Failed, and his latest book, The End of Wall Street, is that when Genius was written it plowed a lot of new ground describing the events that led up to (and followed) the collapse of the improbably-named Long Term Capital Management (LTCM) hedge fund back in 1998. (At that time, the LTCM saga was a very big deal, although the seriousness of the event has certainly been eclipsed by the more recent financial crisis.) The fact that Lowenstein was--and remains--a gifted writer just made Genius all the better. Today, in contrast, the events of the recent financial crisis are reasonably well known, and I've lost count how many books have been written on the subject. Is there room for one more? Sure. However, don't expect blinding revelations. Really. There is little new material that you probably haven't seen elsewhere. Fortunately, The End of Wall Street is well written, as you would expect from Lowenstein, so be prepared to enjoy a thoughtful, well-researched and engaging story. I haven't downgraded The End of Wall Street because it isn't the first book on its subject (although some may want to do that), but rather have rated it on the basis of how enjoyable it is. Frankly, I don't think it's quite up to When Genius Failed standards, but it's still a good effort.

This 298-page book begins with a list of its cast of characters that's over eight pages long. However, many of them--like Ben Bernanke, Warren Buffett, Jamie Dimon, Barney Frank, Timothy Geintner, Alan Greenspan, Larry Summers and others--hardly need an introduction. Lowenstein accurately tells the reader than it wasn't so much what followed the Lehman Brothers failure that was most important, but what preceded it. So we go back--way back--to the history of Fannie Mae and Freddie Mac. Fannie, for example, dates back to 1938. (Freddie was created in 1970.) Latter, in 1968, Lyndon Johnson wanted to sell shares to the public in order to get Fannie off the government's books. Obviously, Fannie wasn't all good news, even back then.

Although I am taking some liberty at dividing the book, here are some of the main topics through which Lowenstein tells his story: (1) Fannie, Freddie and the somewhat toothless and ineffective OFHEO (Office of Federal Housing Enterprise Oversight) that was created to watch over them; (2) Subprime loans, complete with the stories of Angelo Mozilo, Countrywide's CEO, NINA (no income, no asset) loans, New Century Mortgage, CDOs, etc.; (3) Other lenders, including JP Morgan and its more cautious CEO, Jamie Dimon; (4) Lehman before its fall; (5) The increasingly aggressive and competitive atmosphere among major banks, with special emphasis on CitiGroup; (6) The government takeover of Fannie and Freddie; (7) Lehman's collapse and its many aftershocks; (7) Hedge fund turmoil; (8) The TARP; (9) The Wachovia deal; (10) Bernanke and Paulson; (11) The Great Recession; and (12) The end--of Wall Street. It's not the really the end of Wall Street, of course. This is literary license. Interestingly, Lowenstein includes mention of Hyman Minsky's provocative "Instability Hypothesis," which is plus for the reader.

The book starts and ends with mention of Robert Rodriguez, the manager of two mutual funds for First Pacific Advisers (and amateur race car driver). According to Lowenstein, here was a man way ahead of his time in regards to seeing the building financial crisis. That may well be true, but Mr. Rodriguez isn't quite the investing genius he may seem in the pages of this book. In 2008, for example, with the conservative Mr. Rodriguez's stock-oriented mutual fund approximately 40% in cash for most of the year, he managed to lose almost 35%, compared to the (100% invested) S&P 500's 37% loss.

In closing, if what you are looking for is a lot of fresh meat regarding the recent financial crisis, I wouldn't buy this book. However, if you enjoy reading a lively, well-written and solidly informative summary primarily of the events that led up to the crisis, this is a good choice.

39 of 44 people found the following review helpful

5.0 out of 5 stars So far, the definitive book on our Great Recession and its causes April 14, 2010

By John E. Drury VINE™ VOICE

Format:Hardcover|Amazon Verified Purchase

Roger Lowenstein, an accomplished journalist on issues related to high finance and Wall Street, pens a concise, analytical and thrilling overview of our Great Recession culminating in the pinball like events of September and October 2008. While his protagonists are Paulson, Bernanke and Geithner, he neither fawns nor is overly critical, providing understanding and appreciation to their roles and the outcomes of their policies. He examines the excesses of Fannie and Freddie and the legislative refusal of Democratic Congressional leaders to reign them in. He examines the vital role of the three major rating agencies and how their failure to flag the vulnerabilities in the mortgage securities contributed to the mess. AIG and its tentacles in all areas of the financial world are probed making its highly controversial bailout understandable. When Paulson yanks its blameless president's multi million dollar bonus, the reader murmurs "ouch." Lowenstein ferrets into Morgan Stanley's teetering position explaining its final sale of stock to the Japanese. The Big Three's 10/13/08 meeting with the banks forcing the federal government's investment in them is the capstone of governmental intrusion in this time of crises. He deftly plays out his timeline from 2007 through the Obama election never allowing the reader to get lost in the narrative. Without explication, for an adroit writer like Roger Lowenstein is too subtle, it is clear that the events of this two month crisis period keyed the election of Barrack Obama. His superb closing chapter ends with an observation about the prominence of finance in the last two decades and how its central role has diminished now; thus, the title of the book. The future ramifications of the Great Recession can neither be wholly foreseen nor predicted but Lowenstein does an excellent job of forecasting the future by explaining the past.

20 of 22 people found the following review helpful

3.0 out of 5 stars From Icarus to Cassandra May 22, 2010

By Etienne ROLLAND-PIEGUE

Format:Hardcover|Amazon Verified Purchase

When Genius Failed, Roger Lowenstein's previous book on Wall Street, was a tale of hubris. It told the story of the rise and fall of LTCM, a hedge fund led by financial superstars, which failed and was bailed out in 1998 because its managers had placed excessive trust in their models. They thought they had found the ultimate money-making formula, but they fell on the rare event nobody had anticipated: the Asian financial crisis and Russia's default on its government bonds.

The book had a hero: John Meriwether, the brilliant bond trading manager who assembled a team of financial whizkids and Nobel prize winners. John Meriwether gained a measure of fame in Michael Lewis' book Liar's Poker, where he is described by Lewis as a Salomon Brothers fixed income guru and master of Liar's Poker, a game of bluff involving the guessing of numbers on hundred dollar bills which came to define the money culture of Wall Street at that time. Meriwether had grown up a bit by the time he created LTCM, but When Genius Failed retained the youthful energy that made trading floors sound like a college students' lounge, brimming with practical jokes and laughter. Greed and arrogance were tempered by team spirit and irreverence.

By contrast, The End of Wall Street is a story of cynicism and abuse, deception and fraud. The youthful enthusiasm is gone, and all is left are the cold calculating strategies of consenting adults bent on abusing each other. In Lowenstein's rendition, Meriwether was a modern Icarus, who burned his wings by trying to reach the sun. In The End of Wall Street, the book's hero is a modern Cassandra who regularly warns his contemporaries on upcoming catastrophy. This prophet of doom is named Robert Rodriguez, a fund manager who appears at every juncture of the book to foretell the troubles ahead. He interprets a nightmare on Fannie Mae and Freddie Mac's absence of audited financial statements as a fateful omen and moves clear of their government-backed debt as early as 2006. He warns of an "absence of fear" and scrubbs his bond portfolio clean of "suspicious" mortgage-backed securities in mid-2007. He consistently underscores that the core issue of the crisis is capital deficiency and not just liquidity, well before the Fed and US Treasury became ready to consider injecting capital in banks. But he is an outsider to Wall Street, and all he can do is haplessly watching the crisis unfold from a distance, while protecting his investors from the ripple effects.

To me, the most eye-opening chapter was the one on the subprime lending boom. Here I learned about NINA loans (as in "no income, no asset", referring to loans for which the borrower did not provide documentation of either) and option ARMs (for "adjustable rate mortgages") and other financial products from hell by which borrowers usually ended up owing more than they had borrowed. The method by which lenders ensured that borrowers would use their property as a primary home, described by one commercial agent as a "very serious process", was reduced to, simply, checking a box. The waiting period by which borrowers who had filed a personal bankrupcy could qualify for credit was shortened from two years to just one day. Clients could state their income and wealth without being asked to document it, making some credit officers refer to these so-called stated loans as "liar loans".

The weakening of standards and suspension of disbelief by which bankers usually scrutinize potential borrowers was not reduced to the mortgage industry. It was also extended to complex financial products, for which high ratings replaced independent judgment, and to the whole financial system that was believed to have reached a state of permanent stability, leaving the risk of a serious downturn definitively behind. High leverage and excessive risk-taking was fueled by excessive trust in the market and by Wall Street's indulgent compensation practices. And regulation of derivative products was seen as not only unnecessary, but also as potentially damaging.

The End of Wall Street is not the best book on the 2008 financial collapse. The author couches his story in moral overtones and vents his indignation at every corner, with rather gratuitous attacks on academics such as Milton Friedman and Michael Jensen. The day-to-day account of the events immediately preceding and following the Lehman shock have been described in more detail elsewhere, and sometimes read like a me-too account. The title greatly oversells the book, and no attempt is made to explore the overall significance of the disappearance of investment banks from the American financial landscape. Likewise, the web of cross-obligations and the countless conflicts of interests that still mar Wall Street and make its banks too connected to fail are not touched upon. The author concludes, without further elaboration, that "the Wild West model was supplanted with a more European-seeming arrangement, in which a few elite players thrived within government's embrace". I am not convinced.