House of Cards: a Tale of Hubris and Wretched Excess on Wall Street

by William D. Cohan
Published by Doubleday, 2009, $27.95
ISBN 978-0-385-52826-9

Reviewed by Sharon Shervington, June 5, 2009

Should accounts of the financial collapse on the Street generally leave you with more questions than answers then House of Cards is for you.  It has a lot of answers. It’s hard not to be outraged at this up close and personal look at the men who were willing to risk anything to take home a fat bonus (often as much as $15 million a year or more) year after year after year. Ok, and yes it was a power trip too. See the private jets, the private dining rooms, the Palm Beach compounds. As the implosion in newspapers continues and while other forms of media metamorphose, accountability can be a hard thing to nail down. But Mr. Cohan does an exemplary job at just that, which explains the weeks that House of Cards spent on the New York Times Bestseller List.

At 450 pages, not including sources, this is definitely a bit of a tome and a time commitment, and there are some passages that could be tightened. Still, it gives the kind of information that we all need about what is really going on in our country, and without a lot of spin. The debacle didn’t happen overnight and the book is divided not only into chapters but into three sections that explain, first what happened in the 10 days leading up to the Bear-Stearns collapse. This section lays the groundwork on a number of levels; we meet the key players – the top executives at the bank (the fifth largest investment bank) as well a brief look at the other big financial players and their leaders, other banks and investment houses and the Feds (Geithner, Bernanke etc).

Also in this section, we begin to get comfortable (as much as one ever can) with the strange and exotic instruments that were dreamed up to make astonishing amounts of money for those with access. House of Cards is able to deal with this complex and urgent material in a way that other forms of media cannot — with real depth. As such, it is an important illustration of the expanded power that books have in our democracy today. It is particularly interesting as well because, as in other media, there is now tremendous concentration in publishing. In one way that might be an advantage, as people all over the globe will have some access to identical material, and this is a crisis that has had a huge impact all over the world.

The second section of the book entitled “Why It Happened: 85 Years” is all about the culture and the shapers of the culture that led to the catastrophe. Here we learn of the firms founding and the three larger-than-life personalities that left an insurmountable imprimatur on the company even after leading it to dizzying heights. The aggression, ruthlessness, quirks and brilliance are minutely examined from management styles, to cigars, wives, bonuses and surprisingly bridge, providing the book’s juicy dish. But it is the how it was done that is the just-as-juicy meat and potatoes; the traders and brokers, the managing directors, the sale of bonds, mortgage bonds, CDOs (collateralized debt obligations) and the rest of the alphabet soup of instruments, are the code that shows just how it all fell apart. It is a heretofore secret code that has conferred great power, and requires the expertise of someone like the author, whose accomplishments span both finance and journalism, to properly decode. One comes away with the impression that “House of Cards” is perhaps too generous to describe it all. And that everything floated dangerously close to a crapshoot. Leverage ratios, for example, were at times at something like 40 to one, which to put it more plainly means there were slim assets indeed to back up the billions of dollars of deals that were occurring on a daily basis.

All in all, this is a perfect storm of the worst that could happen in global finance with conditions including deregulation, politics, personality and plain old greed leading to a catastrophic payday.

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