All The Devils Are Here The Hidden History Of The Financial Crisis

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Latashia Vailes says...

I thought it would take a couple of decades of perspective to tell the full story of the crisis. Meanwhile Michael Hirsh's Capital Offense (which covered the story from Washington), along with The Big Short by Michael Lewis (focusing on a few offbeat portfolio managers), Justin Fox's The Myth of the Rational Market (which went deep into intellectual history and gave testimony from many of the people who invented the theories), The Quants by Scott Patterson (working from the equations out) and Glenn Yago and Franklin Allen's Financing the Future (which traced the story from prehistory into the future and emphasized the positive side of financial innovation as much as the negative side) were the best available accounts. All had stylish writing, great stories and thorough research to cover important aspects of events.



Without taking anything away from any of those books, All the Devils are Here manages to cover every important financial aspect of the crisis. To be fair, it doesn't go into as much history or theory as Justin Fox, Michael Hirsh or Yago and Allen did, and it's not as great a story as Michael Lewis and Scott Patterson extracted. It covers the crisis and only the crisis and is too detailed to be as much fun as Lewis and Patterson.



You won't find gigantic surprises in this book, the usual suspects are examined: originate-to-sell, government-sponsored entities, political pressure to increase homeownership and provide jobs and perks for politicians and their friends, rating agencies, mathematical models divorced from commonsense and reality, CEO's remote from their businesses, and all sorts of people chasing profits and supressing doubts. What this account adds is nuance and balance. Different things mattered at different times, and in most cases there were at least some positive aspects. Things that everyone agrees were bad usually turn out to be bad in this account, but often in slightly different ways than is commonly assumed. Not all doubts were supressed, and a comforting number of people acted with honor and wisdom rather than short-term focus on profits or votes (not a decisive number, unfortunately, but comforting compared to popular conception).



If you read one book to understand the crisis, I recommend this one. Your understanding will be much deeper if you read all the ones above, and those might be better choices if you're interested in the crisis in some larger context, like the history of finance or political decision-making. But this is an amazing accomplishment, to distill this complete and even-handed a story while the fallout is still falling and few participants have had a chance to reflect on events and add perspective. No doubt there will be better histories in the future, but I'll bet the authors will all start by reading this one.

Posted on June 22, 2011

Francisco Zinz says...

Wall Street seems to float in an ether above Main Street, ubiquitous but at the same time untouchable. So translating the fog behind the 2008 financial crisis into language everyone can understand is a daunting task. In their new book, veteran journalists Bethany McLean and Joel Nocera slam dunk this difficult project.



The authors turn CDOs into something that makes sense, CEOs into the fallible humans they are, and even transform the government into a place readers can picture. The result is a book not only on the causes of the financial crisis, but commentary on corruption, systemic hubris, and human nature itself.



Granted, not all the players in the financial crisis are covered, making this book a supplement to existing (and worthy) tomes on Lehman Bros., Bear Stearns and others. What McLean and Nocera do cover, they line with such thorough detail that I learned reams of important new facts about the crisis.



Note that the book covers media whipping boys like Goldman Sachs and AIG in a more nuanced light. This helps business-minded readers understand how leadership and company culture contributed to the firms' post-crisis fates.



One of the book's most valuable contributions, besides its coverage of Fannie and Freddie, was Roland Arnall's Ameriquest. This corrupt company, heavy on cheating and cocaine, was one of the dirtiest players in the financial game. Yet the media and government-which ended up giving Arnall a post as US ambassador-continue to overlook it.



It's easy to say "systemic hubris," but much harder to describe what that looks like in real life. McLean and Nocera do this well. After finishing the book, I ended up with a big picture view of the financial crisis, of the humans whose greed built the straw house that burned in '08.



I followed the financial crisis while it was happening, and frankly always felt like pieces were missing. The books that I read after the financial crisis covered certain bits in detail, but I still had no bird's-eye view. Finally, "All the Devils Are Here" provided it (although, as mentioned, it didn't cover all the players in detail. That probably would have made the book 800 pages long). I highly encourage anyone who wants not only a chronology of the financial crisis, but a valuable look at human nature, to pick up this book.



(Review by Drea Knufken)

Posted on June 23, 2011

Artie Sa says...

This book is exactly what we needed. Real people doing actual researching and telling us the truth about the financial crisis. Why it happened, who did it and the ultimate reveal that this mess was totally engineered to make a few even more wealthy.



Jon Stewart did a great interview with these two. Check it out at [...]

Posted on June 25, 2011

Lindsy Winfield says...

I am only about 40% through this book but I had to stop and give it 5 stars! This is an excellent and balanced account of the events, laws and business practices that led up to the crisis. This is not a book that over-simplifies the crisis with terms like "Wall Street Greed". Instead, it sheds light on all the variety of players that it took to create this mess: Fannie/Freddy, The Sub-prime companies (many you probably never seen mentioned in press), policies and laws that go back to the Clinton era, failures of regulators and the justice department, the Fed, Banks, Wall St., the Rating agencies and of course, the general publics own stupidity.



If you are willing to accept the fact the the answers to the cause of the crisis are not simple and you "can handle the truth" then you must read this book.

Posted on June 26, 2011

Terrell Zisser says...

"All the Devils are Here" is a very ambitious book that attempts to weave together a wide range of narratives into a single story that explains the financial crisis. In general, I think the book does a very good job of taking on this challenge, but there is no way to get around the fact that it is a complex undertaking.The book takes a full 8 pages just to list the "cast of characters."



The story begins with the invention of mortgage-backed securities in the late 1970s and traces the founding and evolution of Fannie Mae and Freddy Mac. We learn about innovations in risk management and derivatives at JP Morgan and how they created the first credit default swaps and then later lured AIG into the game. Also covered are greed and mortgage fraud at Ameriquest and the failure of the ratings agencies to do anything close to an adequate job.There is also a lot of material on internal politics at Wall Street firms and especially how the risk management process at Merrill Lynch was undermined.Much of the story has been written about extensively elsewhere, for example how the Greenspan/Rubin/Summers trio pushed back against regulation of derivatives.



While "All the Devils are Here" offers one of the broadest takes on the financial crisis, I think it still fails to address one of the "devils" -- or perhaps even the elephant in the room. The book focuses entirely on the financial sector and misses the larger, structural shift that has occurred in the overall U.S. economy. That shift has been driven primarily by globalization and technology and the result has been stagnant incomes for the vast majority of people while a tiny few have seen their incomes explode. That left the middle class with little choice except to borrow in order to maintain their lifestyles. I think it is important to understand this broader trend toward income concentration because it shows no sign of abating and may well lead to another crisis. For more on this issue and the danger we may face in the future, I would also suggest reading this book: The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future



Read "All the Devils are Here" for a good overview of the major players in the crisis and how they interconnect. However, it's important to keep in mind that the real causes of the crisis cannot be divorced from the long term changes that are occurring in the economy as a whole.

Posted on June 27, 2011

Oretha Bartosiewicz says...

1.I'm disappointed that people are using this as a pulpit to complain against ebook pricing.The authors put a lot of time and effort into creating this text only to have it rated low by users for a completely different issue.It's like picketing a car dealership over the price of bananas.



- If you want someone to blame, go to the publisher, they are the ones that set the prices.

- If you want someone else to blame, go to Apple, they are the ones that renegotiated ebook pricing with publishers after Amazon had been driving it to almost and across the board pricing

- Amazon responded by not selling books for a day (i believe it was one publisher) to make a point.



While I appreciate the frustration of the Kindle owners (I personally own a Nook and paid as much) I also value the integrity of a review system and that if you dilute it then it's power is lost.Keep the reviews coming, just for the right things.



2. I've seen a couple of the reviews of this book and i would say they provide a fairly good level of review, so I will comment on them.In general I think this was a well written book.It keeps things understandable, things that are extraordinarily complex, but in a way that anyone can basically understand.They provide a good definition of the characters and put it in a timeline that keeps it interesting and climactic.Some reviewers commented that they didn't find blame, or they blamed the wrong people.I saw it differently in that they presented the significant characters and what they perceived they did along with commentary from others.I don't see that they blamed any one figure, but to not at least see some players as guilty is naive.But I think that you could spend a lot of words on the blame game and not really accomplish much more.There were a lot of folks at fault, all up and down the chain.And i think that's the point, there are lots of folks to blame for many different aspects.To me it's more a culmination of all the mistakes, intentional and unintentional, but that they were almost additive in the end.It's a remarkable chain of events and remarkably unfortunate.



-m

Posted on June 28, 2011

Georgette Klepacz says...

This is the story of how the financial meltdown came about. It begins at the beginning and continues until the end. It is a carefully constructed chronicle of the systemic greed and hubris, clueless shortsightedness and incompetence that brought the U.S. financial system to its knees. Although well written, and reads like a novel, it still is not an easy read and in the end it fails to place or assess blame. The authors make clear that the fundamental hidden assumption that drove the collapse (and that proved to be fatal in the end) was the notion that home prices would continue to rise indefinitely. Feeding this assumption were a host of enabling factors, most of which straddled the borders of both immorality and corrupt business practices. Every one of the participants listed in the book was in part complicit and culpable. Yet the authors "pulled their punches" when it came to assessing blame:



Loan standards were weakened until they were non-existent. Lenders, as well as the recipients of loans, were both drunk on the home-lending madness, which driven by Congress and Freddie Mac and Fanny Mae, became a national orgy. The ratings of the rating agencies were worthless primarily because they not only lagged the housing market but at the same time depended on and mimicked the very company and markets they were trying to rate? Rules regarding capital requirements became worthless, and thus increasingly were skirted - as was generally true with other aspects of the process. This continued throughout the evolution of the process.



The train of "packaged loans (virtually worthless paper)" were leveraged to the sky, without even a semblance of an institutional safety net. Insurance on the loan packages, and the CDOs, too were inherently worthless. Bankers lied to themselves and to their buyers, just as the buyers lied to themselves - all in an orgy of deception and self-deception that constituted a cycle that could not be either turned around or turned off.



Homeowners were greedy & irresponsible borrowers: The mortgages they owned, were not bought, they were sold to them; and what the owners got in turn was not a home but a piece of paper that became worthless as soon as the ink dried. Regulations were in place sufficient to manage the process, but were not enforced. Nor as the book makes clear, can we ever guarantee that any regulations ever will be enforced. Or for that matter, can we guarantee that any rating agency can exist as a truly independent and thus valid rating agency.



In the end, the CDOs amounted to a clever version of a Ponzi scheme - primarily because they did not bring in capital, only provided prices for more and more markets, so that banks could hedge and leverage their exposure, brokers could get paid their lavish bonuses -- allowing everyone to ignore the inevitable and live with their heads in the sand for another day. They did this until the collapse finally brought the whole scheme down.



The authors cover each area with the technical skills of the consummate experts they are; and with a political sensitivity that finessed the issue of blame and culpability. This was the only aspect that actually annoyed me: Even though they named all of the players, they left it up to the reader to draw conclusions about the guilt or innocence of the players. Thus, they were much too careful in avoiding engaging in finger pointing. I ended the book with a very uneasy feeling that all this work was in vain: At some point blame must be assessed if systemic problems of this nature are to be fixed once and for all, and if similar ones are too be avoided in the future. Three stars.

Posted on June 29, 2011

Carmelina Liston says...

This is a review that I wrote for Huffington Post.



Don McNay







When New York Times columnist Joe Nocera told me that he was taking an extended leave to write a book (with Bethany McLean) about the financial crisis, I wished my friend well.



In the back of my mind I was really thinking that the last thing the world needs now is another book about the financial crisis.



I was wrong.



We needed this book. All the Devils Are Here is the best business book of 2010. Gary Rivlin's Broke USA is a close second.



McLean and Nocera have the same skill set. They know how to tell a story. In Devils, they put numbers and nuances into a human drama and wrote a business book that is as riveting as an adventure novel.



After reading such books as Andrew Ross Sorkin's Too Big To Fail, Michael Lewis's The Big Short, Gregory Zuckerman's The Greatest Trade Ever and Roger Lowenstein's The End of Wall Street, I thought the financial crisis had been completely covered with great books by great writers and there wasn't anything else left to say.



McLean and Nocera were able to build on the story and trace the crisis back, 30 years ago, to its roots.



I had expected the book to be well-written.



Bethany McLean was the co-author of the monster best seller, The Smartest Guys in the Room. Her work at Vanity Fair and Fortune has always been first rate.



It's rare for me to agree with CNBC commentator Jim Cramer about anything, but he is correct when he calls Joe Nocera, "The best business writer alive." Nocera's 1994 book, A Piece of the Action: How the Middle Class Joined the Money Class, is considered one of the best business history pieces ever written.



What makes All the Devils Are Here my top pick is noted in its subtitle: it truly is "The Hidden History of the Financial Crisis."



It's easy for us in the media to vilify key players in the financial crisis. Goldman Sachs and Hank Paulson are particular punching bags of mine. McLean and Nocera give a straight down the middle view of all the players. It seemed to me that the authors viewed Paulson as a well- intentioned and, possibly, heroic figure with some fatal flaws. I'm not buying a kinder, gentler Hank Paulson, but McLean and Nocera don't argue a viewpoint. They tell a story and give the readers something to think about.



Some of us want to tie the financial crisis to Wall Street and Washington. Others want to blame greedy and ill-informed consumers, rouge traders and brokers, out-of-control lenders and people with a Pollyanna view of the world.



McLean and Nocera make a convincing argument that it's all of the above. And more.



The authors do an excellent job of taking us to the roots of the financial crisis. Businesses were too concerned with immediate profits and with lapdog regulators and friends in Washington. Greed led to stupidity at every level, be it a 25 year-old mortgage broker making six figures or the heads of Wall Street firms such as AIG and Goldman Sachs.



The authors show how efforts to goose the housing market at Fannie Mae and the Federal Reserve Board lead to tons of unintended consequences.



McLean and Nocera have ferretted out the root causes and given us something to think about as we move toward the future.



The unique view of history, research, and detail alone would make this a great book. It is the writing style and flow that make it a masterpiece. Once I received the book, I could not put it down until I hit the ending, 380 pages later.



Like The Smartest Guys in the Room or A Piece of the Action, I suspect this book will have an impact far beyond the literary world.



Although they don't tell us an idea where to look for angels, I feel certain that all the devils are here.



Don McNay, CLU, ChFC, MSFS, CSSC of Richmond Kentucky is an award winning financial columnist and Huffington Post Contributor.

Posted on June 30, 2011

Ellamae Lighty says...

All The Devils Are Here is by far the best book on the financial crisis.It details the history of what led to this crisis in an understandable and interesting manner.I suggest that everyone read this book.Once again, Bethany McLean demonstrates why she is America's top business journalist.

Posted on June 30, 2011

Tennille Aaberg says...

"Devils" is a compelling read because it shows the role that human nature played in the debacle.Whether it's the hubris of CEOs who refused to listen to dissenting voices, the envy and competitiveness of those who saw the huge profits their competitors were making, the greed of those all the way up the chain of command who chose to remain ignorant about the shoddy loans underlying their business, or the naivete of borrowers who thought they could get something for nothing, nobody comes out looking good.It's not an easy read - understanding some of the financial transactions can take a little work for those who are not experts, but it's well worth the effort.



Some reviewers complain that the book does not place blame where they feel it belongs.I found the authors' reluctance to place blame a strength rather than a weakness.Books that harp on who's to blame get read mostly by people who already agree with the authors' conclusions, and that doesn't advance the debate.In contrast, this book describes who did what and lets readers draw their own conclusions about culpability.While the human stories are what keep you turning the pages, along the way the general reader will learn quite a bit about the mechanics of how the industry worked and what went wrong.However if it's only the technical aspects that interest you, there are other books that go into more depth and have clearer explanations.



The financial crisis was complex, and this book avoids the trap of over-simplification.Rather than telling you what to think, it leaves you with a lot to think about.

Posted on July 6, 2011