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House of Cards: A Tale of Hubris and Wretched Excess on Wall Street Paperback – February 9, 2010
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“Cohan's epic account chronicles a watershed moment in Wall Street history.” —The Boston Globe
"Masterfully reported. . . . [Cohan] does a brilliant job of sketching in the eccentric, vulgar, greedy, profane and coarse individuals who ignored all these warnings to their own profit and the ruin of so many others."--Los Angeles Times
"A masterly reconstruction of Bear Stearns’ implosion—a tumultuous episode in Wall Street history that still reverberates throughout our economy today. . . . First drafts of history don't get much better than this." —Bloomberg News
“This book is so rich, so flavorful, so instructive, and so fully and compelling cast that a reviewer hardly knows where to begin.” —The New York Observer
"Cohan vividly documents the mix of arrogance, greed, recklessness, and pettiness that took down the 86-year-old brokerage house and then the entire economy. It's a page-turner . . . offering both a seemingly comprehensive understanding of the business and wide access to insiders. . . . Hard to put down." —BusinessWeek
"[A]n authoritative, blow-by-blow account of the collapse of Bear Stearns." —The Washington Post
“Cohen’s autopsy uncovers all the symptoms of a walking disaster.” —Newsweek
"A riveting blow-by-blow account." —The Economist
About the Author
Top Customer Reviews
Cohan writes with great flair and a style best compared to celebrity profiles in Vanity Fair. He clearly had extraordinary access to former BSC execs, especially Paul Friedman and Jimmy Cayne. It seems like one of these two is speaking in verbatim quote most of the time. I learned a lot and thoroughly enjoyed reading the book. That said, I'm not comfortable with the book. It's half the story selected because the bits make for a dishy, dirt rich read. To me, Cohan was more concerned about writing a best-seller than he was about telling the whole story in some sort of reasonable context.
I agree with the reviewer that said the book was rushed into print. The editing, especially in the second half is pretty bad. There are repeated references to antecedent events that must have ended up edited out, e.g. a reference to "the Tuesday 'Times' article" when there was no prior mention of any such article- stuff like that. There are many occasions where the events are conformed to the narrative and Cohan bounces around in time and sequence and new players come into the story seemingly out of nowhere.
I also got the feeling Cohan wasn't a master of his subject matter at times and "blew through" an event or key concept. If I were in the audience and Cohan was presenting his book, my hand would have gone up and I would have said, "Wait a second, . . ."
The first third of the book covers the last 10 days of the firm and spends a majority of its time talking about the repo market, without any explanation of how the market works or what its abundant jargon translates into English as. Without a Money & Banking text at their side, 98% of readers will be lost and left to focus only on personality clashes, amazingly foul language (even in the context of a trading floor) and petty intrigues. I think that is what Cohan wants.
On the plus side, Cohan lets former BSC CEO Jimmy Cayne speak and speak and speak. Cohan doesn't need to hang Cayne, Cayne hangs himself.
Cohan only quotes sources who blame the sub-prime debacle on lending to minorities and the poor. That contention has been thoroughly debunked with lots of hard data. Cohan ignores that and in doing so does a disservice to minorities, the poor and readers who want to understand what happened.
The book is 30 or 40 hours of page turning reading pleasure. However, it is not the definitive historical text. Before you read the book spend 30 minutes on the net refreshing yourself on the repo market, its participants and mark to market accounting.
Bear Stearns had survived every crisis of the 20th century, including the Great Depression - without a single losing quarter - until the end of 2007. In 1997, Bear Stearns had helped pioneer the subprime mortgage-backed security by serving as co-underwriter on a $385 million offering. By the mid-2000s, it was the market leader in this segment.
The focus of the book is the last ten days of Bear Stearns, leading up to its absorption by J.P. Morgan at a fire-sale price ($10/share, down from $167; less than the value of its $1.5 billion office building), greased by $30 billion in Federal Reserve funds. (The Fed was worried that a bankruptcy of Bear Stearns could wreak fiscal havoc around the world.)
Just a year earlier it had been identified as "America's most admired securities firm" by Fortune magazine; in 2006 its Asset Management fees had reached $335 million. Bonuses were in the 8-figure range. Unfortunately, it was also the most heavily invested in mortgage-backed securities. Bear Stearns, like its competitors, financed itself with oversight sources (the cheapest source).
However, when analysts began questioning Bear's viability, given its shaky mix of assets, continued financing for Bear dried up, and it toppled. Amazingly, its chairman was too buy playing bridge and golf to get involved until too late; earlier he had forced out the only many who understood what was going on. The firm even turned down a last-minute offer from a Saudi Arabian for substantial financing ("not needed"). Its leadership then blamed the media and short-sellers for Bear's demise.
True, Bear's fall was quite rapid. However, there had been warning signs - problems at smaller firms with similar asset structures, rising risk premiums for its mortgage bond holdings ($50,000 for $10 million during the first half of 2007, rising to $350,000 on 3/5/08), its first quarterly loss at the end of 2008, and the downgrading of some of its bond holdings. Worse yet, Cohan also alluded to failing to conserve cash by reducing dividends and ceasing stock buybacks, as well as increasing leverage - unfortunately, it is not clear whether he was referring to Lehman, Bear, or both.
The bad news - the 468 pages, complete with endless interviews and accounts of bridge games, is a bit much. The even worse news - Bear Stearns' and others playing for billions has left American taxpayers with a debt of trillions. And we still haven't heard "the rest of the story."
Most Recent Customer Reviews
Explains to how a Leadership crisis and a lack of foresight destroys firms driven if highest levels of gross IQs !!!