The Incredible Inside Story of the Collapse of Lehman Brothers

Larry McDonald writes a book about the Lehman collapse that is entertaining and humorous, which is amazing considering he is writing about fairly complicated financial matters. I know many of the people he writes about, and he truly catches their essences well. Patrcik Robinson has done it again. I enjoyed Lone Survivor, but this book is even better. I am glad that I added it to my summer reading list!

ordered this book the evening before Christmas Eve, shipped ground. Did not expect it to arrive, but there it was on Christmas Eve morning! Excellent condition, fast service. Will use them again in a heartbeat.

the author came across as unlikeable and pompous. the book is self-aggrandizing and repetitive and treads the same groud frequently. the overall story is told much more interestingly in fool's gold and house of cards.

This is not your average "business book" but rather, something more. The author is a great story teller while describing what it was like to be a crew member on the deck of the titanic. Funny, riveting and factual account of the fall of the 4th largest investment firm creating the largest bankruptcy in U.S. history and how it almost toppled the worlds economies. Bring it to the beach or settle into the hammock this summer and feel what it's like to be in the belly of a beast named Lehman. This is a great page turner.

As a Wall Street recruiter, I understand the terminology and the acronyms used on the Street. Kudos to Larry and Patrick for writing this incredible journey of Lehman's rise and fall for the masses. This book is written for everyone and everyone should read it.

Pamela Mead Urisko
Devonwood Search

Just be forewarned the author is a Mick Sammy Glick and consequently a bit hard to swallow. He actually thinks he is a courageous warrior on the Wall St. battlefield. He never figures out that he never risked a thing except other people's money and his own think pathetic trading career. As the ex Treasury Secretary Paul O'Neil said about Wall St. jobs: most could be learned in two weeks.

The author does get into the inside of what it was to work for the nut based Lehman. However the reader must understand this isn't a tragic tale but rather one of 'just desserts.' Most get what they deserve a few don't and the company goes out of business. Thank you Jesus. Not a bad end for a bunch of screaming financial morons who essentially just bet other peoples money. Too often and sadly it was 'our money' and our economy that thye ruined.

There are valuable lessons here. #1) The reader will quickly understand that never but never should a dime of pension money be given to the gamers at Goldman Sucks or any other Wall St. firm. Put the money in T Bill and forget about it. #2) Do not trust anyone on Walls St. One of the authors genius bosses goes to an Indian gambling Casino and is quickly down 165K but being a brilliant trader (the bum got away from Lehman with most of his money) he takes over the whole blackjack table and wins his moeny back and then some. Phew. Apparently this brillian risk taker never knew that at a casino the house takes 5% of your money at each hand. Ya cain't win sucka.

But this boys will be rich boys tale is facinating cuase really in the end you know you'd meet an better/equivalent bunch of guys at any midnight basketball game anywhere in America. You will never hold Wall St. in awe again.

So read this tale and learn. But remember the people you are going to meet are almost all white trash except for the Lehman corporate diversity guys who I guess were black trash.

I'm bit surprised by the negative reviews, as this is a funny, well-written, and lively account of the collapse of Lehman Brothers -- as well as an absorbing story about the author's career in Wall Street leading up the Lehman. McDonald explains the basics of investment banking and the mortgage fiasco with wonderful clarity. He is persuasive in telling how hubris can cause very smart people to continually repeat the mistakes of past bubbles. One really doesn't know one's in a bubble at the time, and the power of self delusion as well as the desire to make some money while the going is good (since no one can predict when the downturn will come precisely) explains how this could have happened.

McDonald hates the CEO of Lehman and puts far too great an emphasis on his personal foibles. However obnoxious, Fuld was not the problem -- the culture was. Also, McDonald condescends to Fuld, instead of recognizing that his approach explained the success as well as the ultimate failure of Lehman. These starry eyed leaders who make their own reality can have quite a run, and often accomplish a lot in business and politics. But then outraged reality ultimately rears its ugly head, and we have depressions and wars. Makes you feel a bit queasy about the current political climate.

McDonald is too quick to blame subprime on the poor who took out the NINJA loans (No Income; No Job; No Assets). The mortgage crisis was not simpy the $400,000 per year bus driver. It was the middle class who rode that bubble by trading in homes for McMansions and then losing everything in a falling market. The NINJA loans were just one dramatic excess, and it is too pat to blame everything on the poor who thought they could magically become rich. The problem was with everyone who rode the wave in some form. Also wholly unconvincing is the explanation that Treasury Secretary Paulson just plain did not like Fuld. Come on. Finally, having shown the complete absurdity of Lehman's leveraged balance sheet, I don't buy for a moment that there was a way to save Lehman and that the politicians created the 2008-09 collapse by not buying out Lehman. Things just would have been made worse.

These flaws make this a four star rather than a five star book. This is unfortunate, as the book is wonderfully entertatining, and what is good in the book is quite good. .

there are tons of books about 2007 subprime disaster and this is just one of them describing the start/success of a young man witnessing the insanity of Wallstreet investment practice since 2000, then his entry of LM to witness further production and selling of Wallstreet WMD products such as CLO, CDO, AMBS, NINJA, Alt-A, RMBS, etc...that are sold to the void..and his witnessed (not directly) of Dick Fuld's atrocity to the company, to the world, and to himself that pushes the end of LM...great book to keep because this book is more like real event, but read like a financial crime novel..(real though)...

The author wrote in the Prologue to this 2009 book, "If only (CEO) Dick Fuld had kept his anger, and rudeness under control. Especially at that private dinner in the spring of 2008 with Hank Paulson, secretary of the United States Treasury. That was when Fuld's years of smoldering envy of Goldman Sachs came cascading to the surface and caused Paulson to leave furious that the Lehman boss had disrespected the office he held. Perhaps that was the moment Hank decided he could not bring himself to bail out the bank controlled by Richard S. Fuld." (Pg. 3)

He argues that in the 1990s, "Banks were compelled to jump into line, and soon they were making thousands of loans without any cash-down deposits whatsoever... Mortgage officers inside the banks were forced to bend or break their own rules in order to achieve a good Community Reinvestment Act rating... Easy mortgages were the invention of Bill Clinton's Democrats." (Pg. 4)

He observes, "this was the starting point of America living in a false economy... All bubbles, down the centuries, have started that way, leading to the inevitable time when people begin to think it's normal, that nirvana has finally arrived... people all over the planet began to believe this was a brand-new easy-money world. But of course it wasn't." (Pg. 77) He recounts, "the Lehman mortgage guys wore those smug expressions as they walked through the hallways, supremely confident... they became... demigods who rubbed shoulders with the mighty, who saw, and sometimes even spoke to, Fuld and Gregory... Whatever they needed... they got." (Pg. 110-111)

He notes, "We all had an uneasy feeling... Because we were all far more grounded in reality, we found it impossible to ignore the risks inherent in these modern forms of hypertrading, where rules were bent and tried-and-true methods went straight out the window." (Pg. 170) Of conversations with subprime brokers at New Century, he recalls, "I asked them if they gave much thought to the possiblilities of defaults when the [interest] resets began. They dismissed this... 'Not our concern, pal. Our job is to sell the mortgage policy. Period. Right after that it's someone else's problem.'" (Pg. 185)

He admits, "I hate to use the word fraud. But the CDO case comes very close, because its bedrock was a gigantic group of people... who must surely default on their repayments... My own department at Lehman was the first to know it... one year and seven months before it started to fall apart... I was right there. No excuses. Many at Lehman Brothers had heard the warnings, and all through those months heard the rumors." (Pg. 201-202) Later, he adds, "If this went the way we thought it was going, lives would be ruined. Men who had worked brilliantly and faithfully for decades could get wiped out ... People whose wealth is tied up in corporations so often leave their private stock options behind, unable to claim their rightful rewards after a lifetime of work." (Pg. 208-209)

He describes a conversation with a co-worker, "In a sense we were both in shock. Because we were each about to lose a huge amount of money, as our bonus stock would shortly become worthless... 'I guess we're finished,' she said. 'A triumph for a colossal failure of common sense.'" (Pg. 318) He asks the pertinent question, "How much did the Lehman failure cost the U.S. government in terms of massive additional bailout funds for AIG?... If Lehman was saved, do you really think it would have cost an initial $80 billion and subsequently $180 billion in taxpayer funds for the AIG bailout?" (PG. 328)

This is an engaging memoir, and will be of considerable interest to anyone studying the fiscal crisis of 2008-2009.

1. I've read the various "negative" reviews on this book and I have no doubt that those folks are correct in many of their views. However, from the average american reading this book, no can do no wrong in getting this book. It's very well written (which is very important in that many books dealing with finance can get overly too technical in their pursuit of being "correct" and in the end being a good substitute for a sleeping pill) and enlightening to those of us who are novices in the world of serious finance.
2. My one constructive criticism of the book is that the author never answered (to my satisfaction) how in the world, why in the world did the financial institutions lend money to people with very bad credit. He may have tried to deal with this issue, but probably done so in a technical manner. Furthermore, I'm assuming (know?) that there was the underlying political climate for which the financial institutions were "encouraged" to do this? At the end of the day, the whole thing still doesn't make any sense. I mean, most (all) people reading this book knows that in "real life", you just can't walk into a car dealership and purchase a car without having to fill out a ton of paperwork, supplying various financial statements etc... And thus, how in the world or again the more interesting question is why in the world did all these financial institutions give loans to people with high credit risk.

I'm very interested in economics and was hoping that this book could provide some insight into the collapse of Lehman Brothers. No such luck; this book is heavy on the personal anecdotes and light on analysis.

The first half of the book or so reads much like an autobiography. The author goes into the extreme things he did to try to become a trader at a major Wall Street firm. While this did help us to understand his emotions surrounding the collapse and perhaps make the Lehman Brothers collapse a little more "human," it sometimes sounds like he's tooting his own horn. Some of it is almost pathetic - for example, he repeatedly brags about working 60 - 80 hour weeks but admits in passing that his first wife divorced him after less than a year because he was working so much. That's not a reason to brag - that's a reason to get psychiatric treatment.

Even after he finishes a lot of the autobiographical details, he spends a good deal of time talking worshipfully about his coworkers in his immediate department and their alleged brilliance (of course, HIS department had absolutely nothing to do with the firm's eventual bankruptcy; they saw it coming and tried their utmost to stop it but no one would listen to them until it was too late). He later goes on to demonize the CEO, COO, mortgage-backed securities department, risk management, and just about anyone else he can think to scapegoat - but especially the CEO, who he skewers as an incompetent, arrogant jerk who managed the company into a swamp. (He conveniently does not explain how Dick Fuld, the CEO at the time of the collapse, was able to successfully manage the company for 30 years prior to the collapse).

He then goes from tooting his own horn to tooting the horn of his immediate department, going to great lengths to describe how wonderfully competent his immediate colleagues were. He claims that they saw all of the problems coming all along and did everything in their power to save the company - and if only it weren't for the other people in the company they would've succeeded.

He offers little insight into how the company as a whole worked; instead, he serves up a very parochial view of the company that seemed to view the distressed bonds desk as the center of the company.

There is still some value to this book. As I mentioned, this book does a good job showing the "human side" to the Lehman Brothers collapse from the perspective of an insider. Just be aware that this book is much more focused on anecdotes and personal catharsis than on serious analysis.

Lehman Brothers was a merchant bank for 158 years until 2008. In the end the CEO was Richard Fuld. A desire hatched in the Clinton administration to increase home ownership backfired. Securitization of mortagages was a later wrinkle. McDonald made an arduous climb to employment with a major Wall Street player. His circumstances, the child of divorce with dismal schooling and prospects, are familiar problems, regrettably.

The author provides an explanation of convertible bonds anyone can follow. Early in his career McDonald moved from Merrill Lynch in Philadelphia to one in Cape Cod. After three years there he switched to the brokerage house of Smith Barney. Mc Donald left the Cape to move to Greenwich to form a start-up using the internet to compile information about companies issuing bonds. The author and his partner were in the midst of a boom when the site was started in 1997. The company got noticed in the WALL STREET JOURNAL and on television.

In 1999 Morgan Stanley decided to buy the company. McDonald and his partner went to work at Morgan Stanley. The partner left because he could not stand the corporate way of doing things. McDonald's father identified for him the dot-com bubble. He also blew the whistle on the repeal of the Glass-Steagall Act. When a subsequent regulatory development, Sarbanes-Oxley, dried up the corporate bond market, securitization filled the gap. The credit boom began in 2003 with interest rates kept low by the Federal Reserve Board.

A friend advised McDonald there was a place at Lehman for him. Securitized debt was a bonanza by 2004. During the mortagage mania McDonald and others investigated shorting the homebuilders. Later Mike Gelband would explain at a meeting of traders that derivatives in the property business provided an unacceptable, (false), stimulus to the economy.

Near the end top positions at Lehman Brothers were held by people of insufficient experience. In March 2008 McDobnald was released with a severance package. There were other lay-offs that week, the time of the run on Bear Stearns.

The final days of the firm are described in colorful terms. The book is exciting. Notwithstanding the fact that so many matters have appeared in the newspaper accounts, there is so much more to the story of the Lehman collapse. This is excellent.

Unlike some of the other reviews of A Colossal Failure of Common Sense, I appreciated the back story of Lawrence McDonald and how he came to be a trader at the famed Lehman Brothers. It was this story that demonstrated the high standards and reputation that McDonald held Lehman Brothers too. By building up the integrity and position in the marketplace that Lehman held, it made the fall even more incredible.

I did see a number of similarities to the book / movie, The Big Short: Inside the Doomsday Machine, but that's probably because it was the same topic and story. It was when McDonald referred to the mortgage brokers as "bodybuilders" that made me remember the same scenes in The Big Short when they were interviewing mortgage brokers in a bar. Overall, great book and had a hard time putting it down.

An interesting insider's view of the collapse of Lehman Brothers. Interesting on several points, notably that the alarm signals of the massive over-leverage of the company, and particularly its bet on RMBSs and real estate investment in general. Interesting also in that Lawrence McDonald was an unabashed keeper of the flame: a true believer in the older culture of the firm.

The dichotomy of McDonald's aspirations, however, may be too difficult to bridge. He was an avid short-seller (which many outsiders will never understand nor accept), but had no problem criticising the property people. He wanted to believe in Lehman and the value of work he was doing, but never seemed to accept that a culture without accountability seldom lives up to the idealistic fervour with which it is portrayed. He focussed on the competences of his team "in the trenches" or "on the gun deck", but never makes the link between competence and wider integrity. If he knew, for instance, that risk was being offloaded into Cayman Islands SPVs, shouldn't he have done something about it?

I appreciated his loyalty to his immediate team and his mentors. This speaks quite well of him. I also appreciated the information that there were people in Lehman aware of the problems of leverage.

For the rest: it's difficult to feel sorry for anyone, no matter how technically competent, who runs with this crowd, no matter what one's first emotions are. If you make your bed, you must lie down on it. I hope he can find something more productive to do in the future -- even selling pork chops. I hope he finds himself in some value system beyond shorting and trading.

It would be ridiculous to assume that this is going to be an objective fly-on-the-boardroom-wall view of the collapse of Wall Street. No-one who was touched by it can fail to be dispassionate about it, and this is far from being dispassionate. McDonald's prejudices and political opinions are not mine - but I can still give this book four stars. It was written by someone in the trenches, fighting battles whose strategies were determined not by him, but by others with whom he had little contact.

For people who know a little about finance, this is a great opportunity to learn more about what was going on, at the level of the trading floor, at least, in language that is easily understandable. Maybe it lacks the good humour of Michael Lewis' "Liar's Poker", but then this is not a lighthearted subject. The story of trillions of dollars of taxpayers' money going to rescue those reckless gamblers who were deemed to be "deserving" (AIG and their chief counterparties) while leaving others (Lehman) to fall to the ground is not a cheerful one.

The writing style definitely has its moments - I enjoyed the description of the mortgage desk taking their afternoon strolls on the lake in Central Park, for example. Sometimes a little too cute for its own good, perhaps, but I can imagine sitting down with McDonald over a drink or two and listening to him telling these stories in these words.

Not the only book you should read on the mortgage scam of the 2000s. Nor do you have to agree with every conclusion in it. But it is one of the "must-reads" on the list if you want to know how the world economy melted down a few years back.

There are some really great things about A Collossal Failure of Common Sense, and some embarrassingly bad ones. What's great about the book is McDonald's passionate belief in his own words, and the fact that he was NOT in charge at Lehman. If you have been reading the major books coming out of this crisis eg. Too Big to Fail, House of Cards, The End of Wall Street, you are pretty used to reading the innermost thoughts of the top guys (emphasis on GUYS btw) or at least you are used to reading the self-serving comments they make about themselves and each other. In fact I have wondered if the phrase "too big to fail," shouldn't be applied to the men in charge of this disaster. Once you become a leader of one of these firms it is completely impossible to be fired.

Larry McDonald was a trader on Lehman's Distressed Debt desk, which is probably the best thing about the book. If you were going to point to the gloom sayers in any organization, the guys in distressed debt would be the first on your list. McDonald's main point, which is that the rules of credit don't change and that bonds are debt, is the mantra of a "vulture" or distressed debt trader. McDonald would probably be the first one to agree that a distressed debt trader who sees too much debt as a disaster waiting to happen, is just doing his job--not a genius. Another thing that McDonald does, which is ridiculously overlooked in many Wall Street crisis books, is stress that the whole thing happened because there was this crazy faith that American housing prices could not go down.

The Distressed Debt desk at Lehman was the logical counterpoint to the team handling mortgage backed securities, commercial mortgage backed securities, credit default swaps and other instruments bound to drive a distressed debt guy up the wall. The most facinating part of McDonald's narrative describes the competition between these groups and the way that the distressed debt team, along with a few analysts saw the growing problem and tried, by sneaking behind management, to investigate the problem. McDonald descibes a visit to a Lehman subsidiary in California where he and a colleague visited and went to bars to talk with the mortgage salesmen who were selling risky loans. What's amazing is that not only did they have to keep their mission secret from the mortgage company, they also had to keep it secret from the mortgage backed trading team at Lehman, which would have been furious that anyone questioned their judgement.

Another good thing about the book is McDonald's use of plain English. He understands that calling debt "leverage" is a way of psychologically distancing yourself from the problem of owing too much money. He states again and again that bonds are debt, not because the reader doesn't know, but because otherwise smart people often forget that basic fact.

On the downside, McDonald's viewpoint is unfortunately as narrow as a trader's. In the first few pages of the book he appears to blame the entire problem of bad mortgage underwriting on the Clinton Administration, forgetting that when bankers don't have to worry about loan defaults (because the mortgages are sold and packaged as mortgaged backed securities) you have a recipe for disaster regardless of what the government says.

McDonald is absolutely maudalin about Lehman waxing on and on about its history and the courage of the traders and trading managers around him. He's so inured to overblown Wall Street compensation that he doesn't see how ridiculous these packages are to others. There is one point where an analyst, a young woman who, in just eight years, has made enough money at Lehman to support herself and her family for the rest of her life, decides to leave because "if you aren't going to make money, what's the point of working?" McDonald sadly agrees, sorry to see her go.

The arrogance of this statement from an employee, who has risked no capital herself, and made a very hefty amount of money from her employer, boggles the mind, and reminded me of Warren Buffet's disgust when, after handing out millions in bonuses at Salomon found that he was being treated like public enemy #1 because the traders felt that they were not being fairly compensated for what "they" had made for the firm. Well, HELLO, they didn't make a dime for the firm. They were employees who had the opportunity to help the firm make money--nothing more, nothing less.

Lastly McDonald's overromanticism of Lehman and life on the desk has him using words like "courage," over and over again. In some circumstances there was courage here, and a lot of the time there was just nerve, and a lot of smarts. McDonald feels that traders make money because of the huge responsibility they carry--but like so many traders and Wall Street people he has nothing to compare it to.

Courage? We have thousands of men and women serving in Afghanistan and Iraq right now and many make less in a year than a trader team spends having dinner at Nobu. A 25 year old Marine squad leader, who may be trying to figure out who in a village is getting ready to blow up a school, has an immense responsibility so far beyond that of a Wall Street trader that it can't be measured. And, he is usually very happy to have enough deployment pay to buy a late model used car when he comes home.

But there is a lot to be said for getting a "worm's eye view," which is what McDonald says this is. McDonald doesn't claim to know the big guys really well. He tells you what it was like to be a trader in distressed debt at a firm that went under for very stupid reasons. I'm glad I read it.

Tons of reviews have already gone over the substance of this book. It's a pretty bad book in a lot of ways: a turgidly overwritten bombastic tome that comes from a junior employee who really doesn't have much information about the company outside his narrow window beyond basic speculation.

Where it's rather interesting is as a psychological portrait of one of Wall Street's typical drones- we see an author who
1) has a massive ego, believing himself to be smarter than almost everyone around him
2) has a massive chip on his shoulder, constantly referring back to his lack of blue-chip education and his arrival into the world of the 7-figure bonus
3) really doesn't have much information about the actual workings of Lehman Brothers, but wants to appear as if he's in the center of everything.
4) doesn't appear to actually have much understanding of what he was dealing in- numerous passages point out that he spent most of his time executing the results of other people's research, and his own "research trip" to California to interview house salesmen in a bar was so ludicrously dumb you wonder if it was intended as a joke.
5) is utterly uncomprehending of how the combination of 1, 2, 3 and 4 make him look like a fool

McDonald spends a lot of time bashing the "bodybuilder" salesmen who needed no skill to push a worthless product and make a fortune doing it: anyone without his staggering lack of self-awareness would have looked in a mirror first.

This is for the audiobook version.
The Lehman Brothers collapse has far-reaching implications. There's lots of good information in this book to help people get a handle on our current financial mess. It describes part of the elephant, so to speak, but not all of the elephant.
Too often the book rudges through arcane acronyms, but there's probably no way around that. I'm glad I listened to the book because it gave me a good introduction into how the financial markets work.
But I have some major problems with the audiobook.
Two involve the writing style of Lawrence McDonald and Patrick Robinson (it's hard to know who to blame) and the lack of editing by the book editor. It seems if there's a way to say something with four words, McDonald/Robinson find a way to say it with six. As I was listening to the book I kept doing mental editing, trimming a word here, chopping a phrase there. I wonder if they rushed to get it into print so it didn't get the normal amount of editing.
And just as top Lehman executive Richard Fuld needed someone to tell him not to try to grow so quickly in the real estate market, not to get so heavily tied up with securities and to tell him to pay attention to his risk management people, McDonald/Robinson need their literary license to use metaphors revoked. Their use of metaphors wouldn't pass English 101 and especially in the audio version they were clunky. The idea with metaphors is that they fit the general theme of what you're trying to convey. Time after time the metaphors used in this book make no sense.
I have some problems with the audiobook as well. Erik Davies, the reader, has a professional voice. I understood every word he spoke. But frequently his tone did not match the book. McDonald wrote the book with humor but Davies read it straight. It's like he didn't get the joke. Even though McDonald seemed to be dry or writing with sarcasm, the audiobook reader needs to reflect the change in his voice. Davies just read it straight.
A more annoying problem was his tone of voice. It seemed to be a cross between the movie trailer narrator Don LaFontaine("In a world where a greedy CEO bullies his risk management staff. . . ) and the bodybuilding lugheads that McDonald so disdains.
Another complaint is that while most of the audio was perfect some of it sounds like they had Davies read sentences or paragraphs while talking into a portable Olympus digital recorder.
But I'm happy I listened to the book. I learned a lot. And I think a lot of other people could learn about the financial markets and the collapse as well by listening to the audibook.

This guy loses all credibility right in chapter 1. He claims to send 'thousands' of letters to various Wall Street firms. Had it ever occurred to him to call someone on a desk? Or to try to get a job as an assistant on a desk? Or just start at a smaller firm as a salesman? He's obviously trying to romanticize the whole experience with an aura of super exclusivity....getting a retail sales job a Merril Lynch in Philly or Boston is not that hard!!

Then he compares the Series 7 to taking the bar exam. Are you kidding me?? This guy is was a low level wanna be and it shows!

I was not able to handle all the over the top boasting....I didn't bother finishing this book. Don't waste your time !

A Colossal Failure of Common sense looks back at the events of the global financial crisis of 2007 and presents stories, information and analysis that are intended to shed light on those events. By describing his experiences within Lehman Brothers, that author, Lawrence McDonald, is able to present the reader with possible reasons for why Lehman Brothers collapsed along with so much of the greater financial market.

McDonald faces many challenges in presenting such a broad range of complex material. In most cases, he succinctly explains the various causes of the crash including the role of low interest rates in spurring risky investments, the bubble mentality that took hold in financial markets, the failure of Lehman management to predict or prevent the crisis within the firm, the proliferation of credit derivatives that facilitated the spread of risk, and the failure of ratings agencies to warn against this risk. Although he describes these factors clearly, he is hampered by certain choices made when writing the book. By choosing to target a broad audience with little financial knowledge and by avoiding in-depth and data-backed analysis of events, the author only partially succeeds in educating the reader. In addition, his biases are evident throughout, making it more difficult for the reader to trust that the author is providing an accurate account of the crisis. Still, the anecdotes and inside stories from within Lehman Brothers make for an interesting read. A Colossal Failure of Common Sense is an entertaining portrait of one man's experience inside the financial crisis and viewed from that perspective, it is a success.

I have a full academic review of the book at my website at: [...]

I heard Mr. McDonald speak last year and bought his book. It had been sitting on the shelf since then, and I finally picked it up. The story starts out interestingly enough. It traces McDonald's humble beginnings as a bond trader and how he eventually founded an internet start-up. He then spends the second half of the book talking about the couple of years that he spent at Lehman Brothers in the distressed debt division.

Many of the details in the book have been discussed before with better results - "The Big Short" by Michael Lewis and "Too Big to Fail" by Andrew Ross Sorkin. It talks about how the financial system was on "steroids" because of CDOs and other Wall Street financial instruments and how the management at Lehman was arrogant and just plain stupid.

My real problem with the book is the tone and flavor. McDonald makes it sound like only the "smart people" inside Wall Street with their MBAs from NYU, Columbia and Wharton understood that the real estate market would collapse. That was not the case. My friends and I might not have had the technical data in 2005 and 2006, but we knew something was seriously wrong with the economy. The book has such an aura of arrogance about it. He laments the fact that all his Lehman co-workers lost millions in stock options when the company went bankrupt, but half the book is about how his unit shorted Delta Airlines, New Century and other companies, places where people lost livelihoods and fortunes.

In addition, the book needs a serious editor. McDonald will start a story about visiting California to study the collapsing housing market and then spend half a page about his golf game and how he loved to golf at some particular golf course. Who cares! The book also gets lost in its own jargon and financial data. This is supposed to be a general interest book. Why would a general interest reader care about spreads on a particular trade? The book was supposed to be about the collapse of Lehman. McDonald really only spends a small section on the chaos of August and September of 2008 and repeats many of the stories that were already well reported in the press.

I don't normally like traders and especially people who made money off everyone else's misery by shorting anything touching mortgages in 2008, but you have to respect their work none-the-less.

I have read numerous books about the collapse of the credit markets in 2008, the bailouts, etc including Lewis' the Big Short, Cohen's House of Cards and Sorkin's Too Big to Fail. I have a 15 year career in banking and risk management and thoroughly enjoy reading about what was surely the most cataclysmic couple of years in economic history. McDonald's book was actually not my first choice but the library was wait-listing me on Devil's Casino so I grabbed this. First chapter or so, I wanted to gag. McDonald, like most traders I've worked with over the years, is way high on HIMSELF. But then I found I was impressed with his writing style and astute observations about banking and the business world in general. He's definitely wiser than the traders I worked with at large commercial banks or have read about. I would put this book somewhere below Too Big to Fail and about even with the Big Short and definitely ahead of House of Cards. McDonald is different than Sorkin or the rest in that he tells the story from inside Lehman with the perspective of a seasoned mid-high level bond trader/executive with access to some of the decision makers we have all heard about in other books. In addition, McDonald worked his way up and earned his chops (literally-- selling meat out of his car for a few years) in Philadelphia before moving onward and upward to Wall Street. Chapter after chapter, I came to respect him and enjoy his interpretation of events. I love how he goes into the blinding jealousy Fuld and other top executives with Lehman had for Goldman Sachs and Blackrock. I could not agree more. There is TONS of insane envy of those two firms in the financial world. Goldman envy affects every decision made by the others down the food chain. I also enjoyed the description of the New Century and Countrywide mortgage brokers as "body builders". Truly amazing that to trade the mortgage bonds one had to have the Series 7 license but the body builders just showed up and started selling.

Some of my favorite quotes:
Regarding the mortgage desk at Lehman: "Empty cans make the most noise"

When Lehman moved to their 7th Street office years back: "It was like moving a cathedral. The real estate was different but the holiness remained." This helped me see that money is this guy's religion. Like so many on Wall Street. Humbling to say the least!

On Fuld and Gregory: "Lehman's Board room gave them status and each of them liked that at least as much as cash."
"The words of paper tigers. Silly really. Big thoughts from little people."

Rating Agencies: "Some of the ratings had been issued on the south side of ridiculous."

Paulson's view of Lehman on that horrible September weekend when Lehman's fate was sealed and Merrill Lynch was forced into marriage with BofA: "...had arrogantly foisted most of their troubles on themselves and should just go away."

Freddie and Fannie: "...surely the most gruesomely misleading companies since Enron."

Buy it, read it, learn it. I hope McDonald writes more books!

The 80/20 rule definitely applies here: only 20% of the words were really needed to convey the story.

This book had potential, but between the self-serving "look at me!" moments (plenty of those) and the sheer vastness of the metaphors (there are war metaphors, golf metaphors, skiing metaphors, monarchy metaphors, and more ... ad nauseum), the story gets a bit lost. Not sure if Mr. McDonald or Mr. Robinson deserve the blame or need to be sent back to writing school (if you read "Lone Survivor" you know what I'm talking about).

If you're interested in one man's point of view of the Lehman Brothers disaster and can get past the "look at me!" moments, the endless acronyms, and one metaphor after another then you may find this book informative. Borrow from a friend or the library, but there are better ways to spend your money.

Well, this one certainly lived up to the bookshop advertising. Once I started, I really could not bear to put the book down.

At the outset, I must disagree with another review in the WSJ that regarded Larry McDonald's account of his early life as probably being of interest only to his family. Far from being of marginal interest, it provides the reader the essential perspective required to understand his attitudes to working life and the events he witnessed at Lehman Brothers. Amazingly, some of the most modest episodes in his early working years later proved pivotal to the main story.

I learned quite a bit about bonds too. Certainly not the most promising topic with which to captivate a reader but the basic technicalities are explained in an earthy, enjoyable way. Also, and crucially for the book's success, this understanding was just enough to make me feel like I was in the driving seat, right there alongside McDonald and his great friend McCarthy, as they pulled off two of the most spectacular trading coups that Lehman Brothers ever had.

This book really sprang some surprises. One of them was the great passion that drove the bond traders and their support people. No, really. Though the love of making money was all too clear, their passion ran way beyond coarse avarice. Instead, it inclined more to vindication of their value judgements, brought down upon a market governed by irrationality and corporate smokescreens. And the passion was all too believable, as some of their calls needed nerves of steel. It is made clear that short selling, whatever else one thinks about it, is not a risk-free method of making money. For me, the highlight of the book was a spectacular, cathartic outburst by McCarthy during a massive short. This is non-fiction but script writers for Wall Street 2 could do worse than take a few leaves from it.

In the aftermath of the Global Financial Crisis, the feelings of admiration and respect engendered by this book for financial traders and investment bankers, came as the greatest surprise. I really could not help but admire many of the people described, even though it would have been hard to work with a few of them. A picture is painted of fierce cameraderie usually to be found only in the armed forces. According to McDonald, high intelligence, hard-headed realism, and principled, rational motivation were abundant in the middle and senior ranks of Lehman Brothers, and indeed, these virtues were even coupled with modesty in some cases. The main story is one of the increasingly desperate attempts to marshal these qualities and steer a deeply-divided firm away from danger, all of it foreseen well before the GFC.

In telling his story, he does not deny or diffuse our anger but rather, he deflects it toward the executive management on the top floor. Plenty of blood-boiling fuel is provided to confirm our worst prejudices, but McDonald and his colleagues boo and hiss the top dogs on Floor 31 along with the rest of us.

And yet ....and yet ... the praise I have for Larry McDonald's story is tempered by the conflicting emotional directions in which it led me.

First, the book invoked the thrill involved in massive short selling of bonds of a target corporation. The aim is quite cold, calculating and explicit; to make the backside drop out of the bond price, drive the corporation to bankruptcy and then clean up when the bond price falls below liquidation value. This, we are encouraged to think, is the way to establish the true market value of a bond and if the corporation has really been financially imprudent it only has itself to blame for the consequences. Any responsibility for the devastation this can cause to the target's employees is then seen to fall on the corporation's shoulders. McDonald's accounts of these market plays are truly gripping, but they do not encourage the reader to dwell upon the wider consequences.

However, when Lehman Brothers becomes the troubled corporation, the sentiment is quite the opposite. Events unfold like a slow-motion train wreck combined with Greek tragedy, where people, rather than money become the main focus. And McDonald really does feel for the individuals involved. He knew them as personal friends and his sympathy with their plight undoubtedly comes from the heart.

The inconsistency comes dangerously close to hypocrisy. The line taken by McDonald avoids this but only narrowly. Firstly, he does acknowledge that lines on financial charts no longer appear to him as simply abstract ideas, but as issues with human consequences that he now understands all too well. Secondly he makes it clear that allowing the collapse of Lehmans solved nothing but instead hurt everyone else world-wide, and unnecessarily so.

And therein lies his final and most important point: the tragedy was not simply that the collapse happened but that it did not have to happen.

I bought this book expecting to read what went on on the trading desks before the bankruptcy as someone who worked at lehman but not directly involved with the front office. But instead this book is 60% of author's autobiography up to landing a job at lehman (no offense to the author, but noone cares), 30% describes a couple of random winning trades while working at lehman (again noone cares). Only 10% of this book actually had something to do with the title - failure of lehman. And the author was laid off one year before the bankruptcy, so the actual details I bought this book to read, was barely mentioned in a few pages, mostly look like a copy paste from the fortune/wsj article that was published. There was certainly nothing new nor inside look.

This book has a very misleading title in order to sell more copies, the actual content has VERY LITTLE to do with the failure of lehman or the days leading up to it. It was a waste of time, reading about this junior trader's ego and his childhood etc...i bought this book to read what went on in the trenches during the final days of lehman.

First of all, I thoroughly enjoyed the book and gave it five stars. It is a page turning narrative and is well within the grasp of the layman. I have read other reviews of this book and I certainly am not at all in agreement with the main criticisms which contend that this book is an exercise in egocentrism. The author goes into great lengths to extoll the brilliance and research abilities of those above him, and puts them in the limelight even more than himself. One might say he merely profited on the advice of those whose forte was the long view. The author also goes into detail to bring out the personal shortcomings of those at the very top of the pinnicle (Fuld et.al.) who ultimately brought the firm down, mainly the stubborn refusal to listen to those who really had their ear to the ground. I most heartily recommend this book to those who want a birds eye view of the credit debacle as it slowly unfolded. It should also be noted that other books on the subject also ascribe the main cause of the crash to the same set of circumstances, despite some of the objections of the politically correct reviewers, to whit: giving irresponsible loans to the poor and the lower segments of our economy(the trailer park trash).

This book was somewhat entertaining and interesting for its anecdotes but has very little value as a true tale of what went wrong at Lehman and the US financial system culminating in the crisis of 2008. I was looking forward to reading the "inside story." But it quickly becomes obvious that McDonald almost constantly exaggerates, offers opinions in place of facts, and really had little inside knowledge beyond what was happening on his own trading desk, rumors and scuttlebutt, and some juicy factoids fed to him by (mostly unidentified) more senior people who actually were "in the know." He was fired six months before the firm went down, and apparently could not get himself another job, so he wasn't a real witness to anything that happened in its last days. He is obsessed with pedigree, dutifully recounting the education of various personages as if it makes them smart and admirable that they went to Harvard or Wharton or wherever, as opposed to what these people did to build careers, and wears a gigantic ego on his sleeve. But the ego seems to be misplaced. Would Lehman really have laid him off if he was making money hand over fist for the firm from his perch on the bond trading floor? Would he have spent the rest of the year unemployed if he was a master of the universe? I think not.

(Not to mention that he is an admitted huckster who proudly tells of how he lied his way into the securities business, got his job at Lehman -- as a Vice President on the convertible bond trading desk, supervising no one, not an "executive" -- because a more talented high school buddy brought him in, and was axed shortly after his buddy quit.)

I found the book just interesting enough to keep reading by skimming through all the vitriol, blowhard asides, and tabloid-style hyperbole. But I was offended by the constant use of insults to substitute for analysis and a true explanation of why Fuld, Gregory, and others are the villains of the story. And the biggest problem is that it offers nothing of substance to explain why Lehman failed and the foundations of Wall Street shook that wasn't already widely known and reported in 2008. Was it a panic run on the bank? Was McDade held back by Fuld in his effort to downsize the balance sheet? Why couldn't McDonald's "heroes" (Alex Kirk and Mike Gelband) save the bank when they were brought back in after Gregory walked the plank? The discussions of credit derivatives, which obviously were a major part of the problem, are dangerously shallow and in some ways inaccurate (e.g., he lumps CDOs, synthetics, and MBS all together, and never bothers to explain the rationale behind AAA ratings for senior MBS and CDO tranches -- to him it is just "greed").

In sum, if you really want to understand what went wrong on Wall Street and led the system to come unhinged in 2008, this book won't do it. You are far better off reading Michael Lewis's brilliant and very entertaining "The Big Short" and Gillian Tett's really insightful "Fool's Gold" -- the latter of which comes closer than anything I've read to explaining how the better part of a generation of traders and risk managers created a monster out of mortgages and deceived themselves as to its risks.

I purchased this book with positive enthusiasm, since it was touted as being authored by an insider with specific knowledge. I had a lot of dealings with Lehman, and still hold some of their senior debt.

Instead, what I read was a statement of the obvious. The reasons for Lehman's collapse, as highlighted in this book, are not only widely known, but extremely intuitive. The author had no sort of inside knowledge or insight. Thanks Captain Obvious.

As I struggled through the book, I realized that the author was a junior trader in distressed debt. You have to be kidding me? That explains the poor and often inaccurate descriptions of various types of collateralized bonds.

Now that some real inside information is starting to come to light (Repo 105, Mathew Lee), one can confirm that there are far more, substantial facts on the Lehman failure.

If you know little about the workings of the debt market, you can be sold this story as believable and insightful. That is too bad. By looking at the many 5-star ratings this book has received, a lot of people are being misinformed. My advice to those that fall into this category is sit-tight, and wait for a better explanation to be authored. It'll come soon enough.

If you have experience in capital markets, in particular MBS, you will be very frustrated. If you crack the cover, remember these words, "I warned you."

It is undeniable that McDonald is great saleman. The proof is sitting in my circular file.

I completed the book, offering the author an opportunity for redemption. It was painful, and he disappointed.

Having over 15 years of internatial brokerage and asset management experience under my belt, I am able to almost unmistakably indentify true reasons of writing another financial blockbuster after reading just a few first pages. I acknowledge Mr. McDonald's truly impressive background and inclination to narrative style, however, distancing from the author's credentials the book lacks any spice such as enlightening conclusions, forward-looking statements, etc. For this purpose I treat it as a "timeless memoirs" of a relatively young man with lotsa peculiar Lehman insider stories without which the book would have been rather plain and, judging by degree of verbal anger emanating in the pages dedicated to description of its last CEO Dick Fuld and "that daughter of Russian-born owner of a Los Angeles grocery store Roberta Achtenberg", reminding a public complaint in view of an open letter.

Lawrence McDonald was a bond trader at Lehman Brothers during the critical years before the collapse. He provides us with fascinating insights into what was going on at the firm and how its collapse came about. If you want to know more about what it is we have just been through with the American economy, this is one of the books you should read.

The book has four interweaving threads that each contributes its part to making the book interesting and valuable. The author tells us the story of his life with his childhood as the son of a man who traded as a bear. Mr. McDonald learned from his father, and after a youth spent meandering a bit, he ended up wanting to get into trading. We follow him through sales, how he became certified, and how he aggressively and creatively got his first gig on Wall Street. He made his first big splash by staring a web service that rated convertible bonds. He and his friend were so good at helping the public avoid buying bad deals that Morgan Stanley bought them. We also get to follow him to Lehman Brothers where he got to work with his childhood friend, and brilliant trader, Larry McCarthy. McCarthy, along with Mike Gelband, and a couple of others are the primary heroes of the book. I think one of the attractive aspects of this book is McDonald's being open about his triumphs and goofs and freely identifying others as heroes while leaving himself primarily in the role of witness and reporter.

The second thread in the book involves his time at Lehman and how he became aware of the massive problems Fuld and Gregory were creating by buying massive amounts of real estate paying top dollar at the top of the market using borrowed money. Needless to say, Fuld and Gregory are the bad guys in the book and the author lays the failure of Lehman at their feet, not only because of their bad business decisions, but also because of their personal arrogance. If Fuld had taken offers to sell Lehman, he could have saved not only the company, but also the money of people who had their life savings in Lehman stock. More than that, the author shows us how the contagion of Lehman's failure contributed to the near collapse of the global economy.

The third thread is the explanation of the investment vehicles and corrupt rating companies that allowed Lehman (and other companies) to massively leverage their assets and pretend that it was all riskless. At the end, Lehman was leveraged more than 44 times their actual assets. As you read about the creation of the CDOs, SIVs, CMBs, and the off book Caribbean banking hideaways Lehman used to hide their losses, you may well become physically ill. Be forewarned. This is crazy stuff that helped contribute to the destruction of your own retirement accounts. He also shows us why repealing Glass-Steagall was an awful notion that led directly to the massive risk taking by all banks and put tremendous pressure on investment banks to compete by taking on more and more leverage.

I think the wrong lesson to draw from this book is that this collapse is the inevitable results of "Reaganism" or "capitalism". No, it is not. True capitalism involves risk and reward. It involves losses as well as profits. What Fuld and others in the current financial (and big business regime) have done is to gather outsized rewards for themselves while transferring the risks and losses to you and me. That is not capitalism. nor a free market. It is a distortion of capitalism and free markets by using distorted regulations (where good regulation is really needed) and complicit politicians to distort markets and honest risk taking. Markets require market discipline. Bad decisions must be paid for and it should be paid for by those who made the bad decisions. In a more sane time bankers were risking their own money (and their depositors' money, to some extent) and wanted to be sure it was safe and would be paid back. When Fuld et al could make themselves into potentates using other people's money and could pretend that there was no real risk, the market discipline and personal responsibility were destroyed.

This is a very good book and I encourage everyone to read it. While there is a tiny bit of investment jargon, you will pick up on it easily and find that learning what was really going on in the Wall Street banks is worth the effort. Be warned, though, what you will read will scare you almost to death. At least it did me.

Reviewed by Craig Matteson, Ann Arbor, MI

This book is extremely entertaining despite the tragedy of its subject. It's a real page-turner (though I listened to the audio version). I learned a lot about financial transactions that I had never fully understood. The author explains these, ones frequently mentioned in the news, very simply and thoroughly. For the entertainment and educational values alone, the book is superb.

Some of the book reviews complain that the author focuses too much on his own autobiography and accomplishments. I'm interested in people, and I found that these sections helped me to understand the subject of the book, by getting a better understanding of the type of person who becomes a Wall Street trader. Plus, they were fascinating.

I have no inside knowledge of what really happened at Lehman, but I find the author's account quite credible and likely. Of course, for any historic event, it's good to read a multitude of accounts.

A Colossal Failure of Common sense looks back at the events of the global financial crisis of 2007 and presents stories, information and analysis that are intended to shed light on those events. By describing his experiences within Lehman Brothers, that author, Lawrence McDonald, is able to present the reader with possible reasons for why Lehman Brothers collapsed along with so much of the greater financial market.

McDonald faces many challenges in presenting such a broad range of complex material. In most cases, he succinctly explains the various causes of the crash including the role of low interest rates in spurring risky investments, the bubble mentality that took hold in financial markets, the failure of Lehman management to predict or prevent the crisis within the firm, the proliferation of credit derivatives that facilitated the spread of risk, and the failure of ratings agencies to warn against this risk. Although he describes these factors clearly, he is hampered by certain choices made when writing the book. By choosing to target a broad audience with little financial knowledge and by avoiding in-depth and data-backed analysis of events, the author only partially succeeds in educating the reader. In addition, his biases are evident throughout, making it more difficult for the reader to trust that the author is providing an accurate account of the crisis. Still, the anecdotes and inside stories from within Lehman Brothers make for an interesting read. A Colossal Failure of Common Sense is an entertaining portrait of one man's experience inside the financial crisis and viewed from that perspective, it is a success.

I have a full review of the book on my website at:

[...]

There are multiple reasons and systemic causes for a total collapse like what happened at Lehman Brothers and the author addresses them all openly, honestly and educationally. Fabulously written history of how Lehman collapsed. And his inside story of how he got fired from Lehman when they knew exactly that the company was going down and they try to evade their positions to avoid a total collapse.
Please buy this book, keep it near you for your entire career, read it regularly and remember why it is important to be honorable to all relationships and finish where you want.
Absolutely loved the book! I recommend it to anyone that loves to know about the recent financial meltdown and the world of Wall Street!

I loved the way the author, Mr. McDonald, weaved together the story of his life - he didn't follow the traditional path to Wall Street - and the story of the fall of Lehman Brothers and the making of the financial crisis that, I think, changed the course of history.

Mr. McDonald's view is not one-dimensional, in that he sees many causes for Lehaman's collapse. (Though I wonder if his dislike of Lehman's chairman is a bit over the top.)

Also, though sometimes I had to reread some parts, I learned a lot about the world of finance, so this book is educating and well as entertaining.

In the end, this is not just a story of Wall Street, but a story of one man's journey of overcoming obstacles only to find, unexpectedly, disillusionment and then a sort of redemption.

To me, one of the themes of this book is: Be careful what you wish for. You may get it.

This book is written very well and provides lots of information in a way that is understood by anybody from a high-school graduate to a business manager. I saw the authors on book t.v. and was glued to their lecture and couldn't wait to get the book. The thing that grabbed me was a co-author stating that this book was written to be more like a novel than a technical handbook on what happened. He said that a carpenter (?) told him that 'this book made me understand finance'. That , plus the paragraph or two that he read aloud (very exciting), sold me.

I recommend this book highly. It is a page-turner; you won't put it down until you've finished. Some reviews have 'accused' the author of being a mere low-level employee (elitism at its finest). It is the 'mere low-level employees' who usually have a much better understanding of what is going on than upper-level management. In fact , it is probably a more interesting read than had it been written by someone on "the 31st floor".

My spouse read a few pages of it and has asked to take it with on plane business trip; so it does grab you. Of course the author has an ego; we all have egos; ego adds excitement and personality to the story. Who wants to read a book by somebody who has no ego? Not me anyway.

Try it, you'll like it.

.

This book is fairly easy to follow. It starts out with the authors life and how he ended up at Lehman's. Unlike some of the other reviewers, I thought this part of the book was integral to the rest of the story. It really made the story personal, so that I was right there with the author, through all of his successes and failures. I laughed and cried with him. It was not a dry factual book that is so boring, you can hardly make yourself pick it up. I stayed up half the night to finish it, but finally had to go to bed. Then, I woke up the next morning early, and like a child at Christmas, could not go back to sleep until I finished reading it. As other reviewers have commented, he has interviewed numerous people to get his facts, and his facts are correct!! There is no conjecture here, he has dates time and numbers, all in the correct order. This book will make you run the gamut of emotions, and in the end, you will be terrified that this could have happened in the USA, and you will wonder when (not if, when) this will happen again.

Richard Fuld's bias for bigness, greed even in disaster, and righteousness in failure distorts the realities of human failure and moral absence. These weaknesses have been captured in Mr. McDonald's fascinating account that won't let you put the book down. The story is compelling, honest and scary. It is more than the realization that greed left unchecked once again destroys more than those involved in its acts. Mr. McDonald's book is a significant accomplishment for current and future generations and should be required reading for all Board of Directors, Director's Colleges, Executive Education forums and College Business courses. Mr. McDonald was at the right place, at the right time, did the right things and now tells us how wrong overcame right and hurt so many, so quickly.

I saw a board of directors at Lehman Brothers that is a sad and truthful reflection of many companies. Their lack of action to reign in Mr. Fuld forces the reader to wonder where corporate governance really exists. It forces an incredible inside examination of the reader's courage. It challenges you from the beginning by placing you in the rooms, seeing the walls, visualizing the tenseness, being on the phone calls, hearing the stress, being in the meetings, witness to un-tempered power, seeing the indicators of abuse, deception and fraud, reporting your concerns and smelling the dung excreted from those entrusted to lead. You know it is real, you feel the forces of being dismissed as a person, and know that Mr. McDonald is right that common sense is absent as well as common dignity. Fuld and his team of cronies including the Board should be seeing each other today through bars. You also see and feel passion, love, respect and friendship and trust that Mr. McDonald received first from his parents and then gave to those he served with and for.

There are usually, and understandably, multiple reasons and systemic causes for a total collapse like what happened at Lehman Brothers and Mr. McDonald's account addresses them all openly, honestly and educationally. I received back more value than the cost of the book in the first chapter. Each reader should come away bound by renewed moral principals that ensures where they end is in line with where they began; innocent of corruption, unwaivered by greed and focused on what is right in their success and the success of those they are entrusted to serve and lead.

May Mr. McDonald be blessed forever with the strength received from his family, friends and his entrusted readers. Buy this book, keep it near you for your entire career, read it regularly and remember why it is important to be honorable to all relationships and finish where you want.

Neil Brereton Jackson
Board Risk Consultant
XCEO Inc.

Lawrence McDonald and Patrick Robinson do a terrific job at explaining the events, decisions, and hubris that lead to the collapse of Lehman Brothers and the ensuing aftermath that made the whole world shudder. The authors give the reader a detailed look at the events that shaped the culture of carelessness and greed, the various forces around the world and within Lehman itself, and the people who made or failed to make key decisions. They intimately describe analysts, traders, and managing directors at Lehman who predicted the catastrophe and did what they could to forewarn the leadership of the impending dangers, as well as people who continued to dismiss such warnings as rubbish until the clock of doom ran out.

The subject is poignant, the flow of the narrative is smooth, and the occasional humor is punishing and razor-sharp. As a standalone point, the depiction of "Mighty King Richard", or Dick Fuld, CEO and Chairman of Lehman who is responsible to a great extent for the demise of the prestigious 150-year bank, give this book tremendous value.

An important take away from their story is that not all at Lehman Brothers and Wall Street shared the voracious greed so frequently associated with traders, bankers, and brokers.

Alongside telling the Lehman story, Mr. McDonald gives an account of his own arduous journey to Wall Street, the Mecca of finance where the alleged guardians of people's money lived and worked. Working with the best of the industry at Lehman Brothers was a fulfillment of his dreams and he tells how he got there.

This book has many lessons for the astute and the auspicious and is a very enjoyable read.

GL

The narrative of this book is extremely painful. It was a kin to a bad case of IBS. I am uncertain as to the author's motive of littering the prose with Americanism. It was an excruciating experience and in my opinion unnecessary. Was the style of writing meant to evoke the bravado of Wall Street? Or perhaps the constant array of stylised American vernacular was meant to evoke the imagery of the protagonist's surly road to success selling pork, whilst coping with an absent father and constantly aiming for something more. It is perhaps the all too common cliched story of the rags to riches self made man in 20th century America that I found thoroughly nauseating.
I would however have dismissed the author and his story had I not heard of it first on an episode of BBC World News Hard Talk. Sure he appeared cocky and on the verge of doing the "I told you so" song and dance. But there I saw a man who was articulated and perfectly unimpaired by the unutterable lexicon of post-war Americana. I hope he wasn't compelled by his editors to produce a narrative to appeal to middle america, who needed an outlet to distill their anger and to find some sort of answer in the wake of the GFC.

This book offers a rare insiders view inside the collapse of a Wall Street machine. Personally, I found this one of the better explanations of what went wrong in the GFC.

McDonald's own personal/professional back story as well as government policy and company history are provided to set the scene and help explain why the financial system was able to end up in such a mess. Don't get me wrong, this is no essay - it's also an enjoyable read too, as McDonald recounts stories and emotions along the journey.

McDonald and Robinson explain and reiterate basic investment concepts throughout the book making it easily accessible for the uninitiated as well as an interesting read for experienced investors.

While the book primarily deals with McDonald's and his colleagues own experiences and frustration at the financial crisis, the concepts of corporate responsibility, governance and risk management apply to many other situations for businesses around the world.

I would recommend this book to anyone in finance or business, investors (to help understand risk) or anyone who would appreciate an insight of how things can go right, and how they can go so wrong in the business and investment worlds.

The lessons learned in hindsight, from both McDonald and his colleagues, will be as relevant in years to come as they were when Lehman Bros collapsed.

:: "Anybody can make history; only a great man can write it" Oscar Wilde.

This book gives the reader the ability of both mentioned above. Lehman Brothers made the top lines but the author's are the ones that gave the reader the ability to read not only the facts and figures but also the behind the scenes intra dialogues and commotion especially at the 31st floor of Lehman headquarters.

Good insight on the decision making process that led Lehman to fail. Good touch upon the human aspect, how it played it's part in this mega failure and most importantly how it created most of the financial problems in Lehman.

Greed,human passions, failure of hindsight and COMMON SENSE are the words that brilliantly describe what to Lehman and are the words that so tremendously present the whole story, what happened and how it came to happen.

Lawrence McDonald's insider view gives the reader action packed first seat and make him fully engaged, just like being in the trading floor. You can actually hear the voices, you can actually feel the pressure and the stress of the certain days that were the final ones for Lehman, you can actually see how the people at Lehman felt when the iceberg was not so far away,but the boat was not steerable anymore. The collusion was sure but for the captain of the ship, Titanic was too big too fail... ::

A must read section of the book: The final chapter

Not only is this an amazing story and an incredibly well written book, but the author is a genuine class act! Upon my finishing the book I was feeling the urge to reach out to larry and introduce myself and ask some questions. Only a few hours after reaching out to larry via email I got a reply back, and larry even consented to sign my copy of his book! Great book! Great story! Great guy!

An insider's look at the failure of Lehman Brothers. It is very similar to "Liar's Poker", but it obviously operates in a more recent timeframe.

It follows a trader, Larry McDonald, from his early beginning hopefully looking through the windows of investment banking, to suddenly being squarely in the centre of the biggest storm since the Great Depression. He tells his story in an engrossing manner, and I found myself unable to go to sleep until I had finished "just one more chapter".

As can be expected, the book is deeply critical of (CEO) Dick Fuld's strategy; increasing leverage beyond biblical proportions, and ousting anyone who dared to criticize his actions - a strategy that ultimately sealed the fate of the 4th biggest American investment bank.

We sleepwalk, skim-reading the complexities of life, transfixed by our own micro-bubbles of the everyday. Just once, in a fleeting existence, a book comes along which grabs you by the lapels and offers a lightning strike of insight into an otherwise murky world. Larry McDonald's insider record of the collapse of Lehman Brothers (written with Patrick Robinson) does just that! An uncomfortable yet fascinating factual thriller, McDonald and Robinson take us on a darkly comedic,surreal and often shocking drive through the realities of the recent economic calamity. From mortgage mania, insane housing bubble and leveraged buyouts to daisy chains of credit default swaps disappearing up the backside of the global economic system, McDonald's expose is compelling. The book is a must read for any economics student who gambled their future on some limp-structured, self-serving, ideal academic model, or anyone interested at all in how our financial world - read 'our world' - is actually organised and operated

The level of analysis was lacking and showed a clear political bias rather than a depth of thought. I recommend "Too Big to Fail" by Sorkin for an account that cares more about chronicling the history than flogging a political agenda.

I've heard that other books (Murder of Lehman Brothers-?) offer a better accounting of the facts behind the Lehman collapse, but this was an entertaining audio-book read which kept me occupied during a long car ride. It not only covers the Lehman collapse iteself, but also the general events surrounding the economic Armageddon we are still slugging through, including the aftermath and kangaroo-court bankruptcy trial in NYC. This event allowed for the executive branch to take over a significant chunk of the economy with little public understanding of the situation or debate, and the author's discussion of the events surrounding those fateful days are a compelling read. At least the politicians were not made to sound like heroes, but the author is somewhat charitable in his characterization of Henry Paulson as a free marketer (HA!). Also noteworthy was the authors early story about his web site, 'convertbond dot com,' which was bought out by Morgan Stanley at its peak.

Hence, for entertainment value and a reasonable summary of events, I think it was worth the price. But regarding the authors role, there are some conspicuous questions.

Number one, he disdains the "bodybuilder" real estate salesmen in California for making a fast buck when the getting was good. He claims disgust at their allegedly dishonest tactics and utter ruining of many families while raking in cash. In fact, I sensed raw envy coupled with cultural elitism. The author was a degreed professional, not some nouveau riche white trash meathead. But were all of these salesmen totally dishonest? By the authors own description, things were so easy in the mortgage and housing business back then that they really didn't need to cheat. That was left up to the buyers themselves who filled out the liars loans to qualify for the property. Frankly, I'm a little tired of hearing about 'predatory lenders' - what about the predatory borrowers who should have known they could not afford a $400k McMansion on a pizza delivery job? But I digress.

The author blames the bodybuilder salesmen for taking advantage of a hot real estate market. Well, um, DUH they're real estate salesmen, not financial advisors - what did he expect them to do? So long as they did not commit fraud against the banks or the buyers (and some did this, no doubt), who could blame them for making hay while the sun shined? The author was no different than the bodybuilders, he just thought of himself as a higher order. He stayed in the game right up until he was canned. Later in the book, he talked about his millions in Lehman options going up in smoke after the collapse, but I bet he's still pretty comfy, financially; even more so after the release of this book. Who paid for all that? Was it not made possible by products he sold, which were directly connected to the bodybuilders? If he were so repulsed by what he saw when visiting California he should have left the trading business altogether. Instead, he sounded a bit sad when it all fell apart. Sorry Larry, you can't have your cake and eat it too.

Number two, the writing style, as another reviewer pointed out, was probably made to make the author sound a lot cooler than he really is (and to have us believe he really went around declining chances to bang hot CNBC anchors). The vapid military analogies and comparisons of his dad to John Wayne were undoubtedly the product of the co-author who writes books about SEALS (coincidence?). But it probably did make it more interesting to read about what might be an otherwise dull subject and perhaps even duller people. One look at the picture of the author and you can tell he wasn't getting any girls without that fat Lehman check and a few cocktails at a pricey Manhattan bar. Hey, if a few creative metaphors can make you sound like a financial Brad Pitt, go for it I guess.

Finally, the stories surrounding authors early life gave me mixed feelings. The part about his growing up in a bad part of Worcester Mass was well told and worth the price of the book. I absolutely loved the detail of the time, place and events. Having grown up not far from there around the same time as the author, it was a very welcome treat. That location (Lincoln Village) really was a total drug and crime infested dump! Conveniently enough however, the author blames his less than stellar academic performance on his unfortunate location, and not because he was lazy or not so bright. Though I don't think he's stupid, teenage lazyness is not out of the question. I guess we have to take his word that his bad academic performance and inability to score an ivy league slot was beyond his control yet within his mental ability.

Overall, there may be better books as far as complete factual accounts, but thanks to some creative co-writing, this might be a better read for the non-professional financial reader.

More than anything else, this book made me appreciate how well written some of the other business books I've read are. I appreciate that it's impossible to be completely objective, and the author is perfectly entitled to his own opinions. But somewhere along the line, he stops even trying, and the book becomes more of a personal rant than a recounting. He spends just a bit too much time and effort trying to portray himself as one of the "good guys", and he thinks you should pat him on the back because he cares about people. Like other reviewers, I thought it was pretty rich that he was a fan of free markets right up until the point that it hit his own pocketbook, and saying that Lehman's failure was Paulson's fault was quite an interesting statement.

Also some interesting failures of editing - clearly could have used a bit more proofreading. There's one point where the same several sentences are used multiple times in a page - you can tell there was some copy and pasting as they worked on structuring the narative, and they never sat down and cleaned up the final version.

I don't know if there are any other Lehman books are out there, but would probably recommend you choose one of them instead of this if you have a choice. It's not that this book is horrible, just that it's a far cry from many other good business reads.

Thirty-four minutes into the June 30, 2010 Financial Crisis Inquiry Commission's hearing on derivatives, Michael Greenberger says, "...most importantly read 'A Colossal Failure of Common Sense' by Lawrence McDonald, a trader, an officer within Lehman who blames credit default swaps for bringing Lehman down." I'm happy I took Mr. Greenberger's advice. This entertaining, often disturbing book is a must read for anyone interested in an inside look at the culture of Wall St. and how it influences our economic future. If you happen to work at a company headed for its own Lehman type crisis let me know. I will try to deliver copies to the key decision makers.

Dave Berdych (@dryMAILman on Twitter)

I got this book to understand what the Lehman brothers did as a company and this author drove me insane with his stupid style of writing. For example he would quote his buddy using all these vulgar words which was not necessary to make a point.

Another thing that drove me crazy about this book is that it mentions many unimportant points that does not pertain to the Lehman story.

Why would we care if the author had "Chinese food to the left, printers to the right,..."?!!! This drove me insane!!

I'm on page 43 and I still don't know what Lehman brothers did. Some earlier reviewers mentioned this author took the opportunity to fill this book with his personal life which we DON'T care.

I wanted to read a book on the Lehman brothers, not on this author!

(Please note the constant sarcasm)

I shall tell you my complaints now.

How dare you inform me, a common simpleton, of the collapse of a giant bank that perhaps helped send our county into an economic tale-spin?

I prefer to wade in confusing of the current state of things.

Really knowing the current situation and its causations are worthless. There are people who are paid to analyze and act in my best decision. I mean, obviously Fuld and a good portion of the financial industry was there watching out for me. They all were filled with the American dream: Self interest and self advancement. Bigger the better I always say.

And also! Mr. McDonald, how dare you let this book become entertaining and interesting. Who do you think you are marketing to? The people who are uneducated on the financial situation and are seeking to know a little more? Obviously that was not me. Here I am, just a simple economics major who does not want to learn about the crisis by reading lots of different books on the situation. Do you really think I want to supplement my education to strive for advancement in the future working world? How dare you educate me on the absurdities that were happening at Lehman Brothers? I swear.

Perhaps here's another thing, this information on your life! Why would I want to know about your past? Do you seriously thing I would want you to prove your veracity and provide a genuine description of your past? I just want to read a book from a Harvard grad who got a wonderful job handed to him right out of college! He obviously would have more life experiences to supplement the book and connect with a common man audience. Seriously. Give me the man with at least a $200,000 degree.

You want more? This reliance on analysts! Research? When was that ever helpful? Instinct and reliance that if you simply keep buying things would turn out better. Research is not necessary for that. You would've learned that if you were handed more things in life. Hah, research. I laugh.

Simply hated it. I couldn't put it down that's how much I hated it. I went and talked to all my friends about how much I hated it. So much hate for this book. Had no relevance to the modern world, was not even a bit informing. Hated the way he wrote. Who writes in an intelligent and interesting tone anymore? It just is disgusting.

I'm with all the big wigs on Wall-Street. Let's run for the hills acquiring companies on the brink of failure. Leverage the company more and more, throw my money in your bank account. I feel you know better what to do with it.

Don't read or buy this book. Bad idea.

(I hope you enjoyed the obvious sarcasm. Now in all seriousness, I recommend this book to all. If you're a simple citizen, read and learn from this book, and then recommend it to all your friends. If you're a humble bank exec, read and learn from the past mistakes, pretty please? Thank you and good day. Go out and buy!)

This book was an easy read, and got pretty intense towards the end.
I remember when everything he mentions in the book was happening because I too was working at a Brokerage Firm.
Towards the end of the book, I experienced terrible hyperventilating/anxiety attacks because I clearly remember 2007-2008, and the events that led up to the crash.
The Broker/Dealer I worked for shut down in early 2009, and I lost my job.
It was a sad time for me, but I'll always have fond memories of the "good times".
Nevertheless, a great read which you can knock-off in a week-end.
The story IS riveting!

This is extremely well done account of Lehman Brothers. What academic accounts of financial disasters usually miss is the speed with which established institutions (especially financial) collapse. This melt-down was avoidable and the book explicitly details the critical mistakes, hubris, etc that led to the disaster. For those subject to an MBA degree, every business policy course will celebrate visionary CEOs such as Bill Gates and Jack Welch, there are empire builders like Dick Fuld - a fact that screams for corporate governance reform.
This book should be required reading.

A Colossal Failure of Common Sense is an amazing recollection of both facts and people's attitudes in the lead up not only to Lehman's failure but it also gets right to the heart of the Global Banking Crisis. Larry G McDonald "tells it as it was" and for anyone now involved in any large Investment Banking business, or indeed any Govt Treasury/Regulatory Dept, it is a must read.
Experienced Bankers will say "well i knew that".Some may also well reflect that "those so and so's in the Credit Dept were actually right"!However those prepared to admit this will be few and far between as not many Banks put risk assessment before the golden rewards.
It is also a fascinating insight to blinkered and power crazy senior management - Fuld and Gregory - and a master lesson in what is NOT the role of a Board and NXD's.
Personally i find it difficult to believe that the NXD's did not question the strategy of Lehman's more obviously and more so that the whole Banking community supporting Lehman's Balance Sheet did not see through the obvious flaws in the business - Management and model - much earlier.
A visit to Stockdale should be the reward in any competition for aspiring young Investment bankers.

I very much enjoyed reading A Colossal Failure of Common Sense by Lawrence McDonald. His book provides a very readable, sometimes humorous, instructive account of the collapse of the market and organizational dynamics at Lehman which many will relate to from their own experiences.

In some respects it is five stories intertwined. You learn how difficult it is, and how hard-working and creative you have to be, to earn a spot with a major investment bank if you are not groomed for the street via the right schools and universities or through other connections.

You appreciate the fortitude of some of these traders to stand by their analysis either at the casino gaming tables or on the trading desk when the rapidly deteriorating position on a massive bet would make most men fold. You realize how smart some of these people are and develop some appreciation for the hard work and thorough analysis undertaken to truly understand a position or market. If you have never seen it before, you see how a handful of misguided characters can "pour on the coal" and turn a steadily performing company into a run-away freight train. Finally one sees how difficult it can be to slow down the freight train once the few professionals, long sounding the alarm bell, manage to convince and activate a critical mass of their contemporaries to the looming disaster.

I am so disappointed that I purchased this book. The research and editing are shabby. The first few chapters about the author's uninteresting career path are useless.

Crtically, McDonald's view on Lehman and the financial crisis cannot be accurately described as from a priviliged vantage point. He may have had a building pass (for just 4 years) but that's about as "inside" as he got. He was in an nonessential role amidst a department pretty far away from the fray and he was two/three/four levels removed from being "in the room" as the crisis unfolded.

Most disappointing is that McDonald knows almost nothing about which he claims expertise - how to do research, how to trade, how the markets work, what drives security pricing in stocks and bonds and everything in between, etc.

I have never written a book review on the store but felt compelled to offer an opinion here because this book is so bad. There are many better takes on the crisis that provide true insight to the generally curious and the financially sophisticated. Please don't waste your money on this travesty.

I had heard about McDonald's book through a network of very saavy business professionals. We had exchanged opinions on what caused Bear and Lehman to collapse so spectacularly providing the sparks that nearly destroyed our banking system. Lawrence McDonald does an outstanding job of framing the larger picture of what led up to the debacle as well as pertinent details to bring the reader on to the trading floor with the best analytical business minds of their time. For anyone aspiring to the highest levels of Wall Street financial companies, this is essential reading to gain insight into the thinking and pressures of work at this level. As an MBA, this was a staggeringly brutal summation of failure with lessons for all. Great read!

I could barely make it through the first 50 pages of this book because, from the start, the author seemed like an insufferable know-nothing who saw a chance to cash in on the demise of his old firm. I don't have an axe to grind with Lehman, the government, other banks or anyone else for that matter, but I turned to this book hoping for an interesting and clear insider explanation of Lehman's failure. Instead, I got a poorly written, self-serving account that didn't go beyond what I could have cobbled together from various Wall Street Journal and New York Times stories. Thank goodness I checked it out from the library and didn't pay for this book in any other currency than the time I can never get back.