After reading The Big Short, which was about the people who made money on the recent financial crisis, it felt right to read “13 Bankers” about the people who caused the crisis, lost a fortune on it, and then made a fortune on the Fed system for fixing it. Or at least that’s how the authors seem to explain the role and outcome for the 13 biggest banks in the nation.
Simon Johnson and James Kwak are unlikely to get invitations to a Wall Street executive’s party anytime soon. They’ve written a book that traces the deregulation of the financial markets, which was done in the name of free markets. Then they outline how that deregulation has allowed the rich to get richer and the banks to become “too big too fail.” It’s a scathing study on the excesses of Wall Street, the ineptness of government regulators, and the short sightedness of politicians. Naturally, I enjoyed it.
It’s a fascinating book for people like me who deal with banks regularly, but it might be a bit too detailed for others. Which is a shame, because the message of the book needs to be heard by all. Johnson & Kwak make a powerful argument that American finances have become little more than an oligarchy much like a developing country and their rich elite. They describe the bankers financial games as nothing short of musical chairs for banks, with one or two losing each round but the others benefitting enormously. They point out that any industry that thinks it will always be bailed out by the Federal Government will take huge risks that sooner or later blow up on them. And they point out that all this is exactly what happened.
I really enjoyed this book. I didn’t agree with everything in it (at times they sounded a bit like left leaning ideologues). But it was hard to dismiss their arguments or argue with their logic. Well worth reading.
