While Pittman’s adversarial style paid major dividends, it should be obvious that his approach would not gain him the kind of telepathic rapport that Sorkin seems to have developed with the Fed chairman (“. . . the towering white peaks of the Tetons offered a majestic view, but one that no longer took Ben Bernanke’s breath away the way it once had.”)
Readers should be aware of the differences in reporting styles and understand them for what they are: a division of labor. Neither will give you the full picture; one aims to tell you what the players said, while the other tells you what they did.
But even with that caveat, TBTF does show some of the downside of relying so heavily on Wall Street insiders. For one thing, in six hundred pages, there’s surprisingly little news here. As noted, there is a torrent of previously unreported facts—but most of them amount to historical footnotes, not major revelations that alter our fundamental understanding of events. One notable exception: Sorkin demonstrates that Goldman executives’ bluster about the firm’s viability was just that—bluster. They were terrified. On most of the big questions, Sorkin’s details tend to support official versions of events (which is not necessarily a bad thing). The revisionist charge that the decision to let Lehman fail was made in bad faith is contradicted by the book’s depiction of Paulson (a “straight-shooting Midwesterner”) as selflessly and tirelessly trying to do the right thing, despite ankle-biting from the press and Congress. Likewise, Sorkin helps to debunk the theory that Goldman engineered the aig bailout with a scene that shows Geithner himself floating the idea.
It’s worth remembering at this point that it was Gretchen Morgenson, followed closely by Pittman, who first uncovered the story about Goldman’s interest in the AIG bailout back in September 2008. In a sense, the rest of the business press has been following them ever since, acting as though the information had popped up out of a toaster.
I would go so far as to say that despite the quote at the top of this story, TBTF doesn’t even deliver many warts. The catty zingers, embarrassing screw-ups, and devious maneuvers are surprisingly few and far between, though Lehman’s number two, Joe Gregory, does take it on the chin more than once.
The biggest problem, of course, is not the shortage of dirt. It is that the book requires readers to forget that virtually all of the institutions cited, not to mention several of the individuals barking out forceful commands, played key roles in causing the very crisis they are shown here seeking to ameliorate.
To say that this book suffers from its narrow focus is a wild understatement. History here begins with the collapse of Bear Stearns in the spring of 2008 and ends with the collapse of Lehman Brothers in the fall. Everybody’s scrambling, but it’s never clear exactly what caused the problems in the first place.
A Martian reading TBTF would have no inkling that Fuld, Paulson, Citigroup, and the like were essentially cleaning up their own mess. This creates a sense of disconnect you can drive a Town Car through. Take this scene at a 2008 dinner for the G7 Summit in Washington, in which Paulson shares his anxieties about leverage with Fuld:
“I’m worried about a lot of things,” Paulson now told Fuld, singling out a new IMF report estimating that mortgage-and real-estate related writedowns could total $945 billion in the next two years. He said he was also anxious about the staggering amount of leverage—the amount of debt to equity—that the investment banks were still using to juice their returns. That only added enormous risk to the system, he complained.
But it was Goldman, with Paulson at the helm, that strenuously lobbied for looser capital requirements in 2004, unleashing the sort of leverage that Paulson is seen fretting about. And it was Paulson’s Goldman (as Pittman’s reporting revealed back in 2007) that did more than its share to create the defective securities that are seen melting down in TBTF. Sorkin explains none of this.