RISK AWARENESS – BOOKS OF INTEREST
    This is a list of books that provide interesting insights about the banking industry and risk assessment. The
    comments are from published reviews or publisher notes....

    Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the
    FinancialSystem--and Themselves
    by Andrew Ross Sorkin 2009
    In one of the most gripping financial narratives in decades, Andrew Ross Sorkin-a New York Times columnist and
    one of the country's most respected financial reporters-delivers the first definitive blow- by-blow account of the
    epochal economic crisis that brought the world to the brink. Through unprecedented access to the players
    involved, he re-creates all the drama and turmoil of these turbulent days, revealing never-before-disclosed details
    and recounting how, motivated as often by ego and greed as by fear and self-preservation, the most powerful
    men and women in finance and politics decided the fate of the world's economy.

         A Demon of our own Design- Markets, Hedge Funds, and the Perils of Financial Innovation.
      John Wiley & Sons, 2007.
    "Mr. Bookstaber is one of Wall Street's 'rocket scientists'--mathematicians lured from academia to help create      
    both complex financial instruments and new computer models for making investing decisions. In the book, he
    makes a simple point: The turmoil in the financial markets today comes less from changes in the economy--
    economic growth, for example, is half as volatile as it was 50 years ago--and more from some of the financial
    instruments (derivatives) that were designed to control risk." (The New York Times)

    When Genius Failed : The Rise and Fall of Long-Term Capital Management
    by ROGER LOWENSTEIN
    Roger Lowenstein, the bestselling author of Buffett, captures Long-Term's roller-coaster ride in gripping detail.
    Drawing on confidential internal memos and interviews with dozens of key players, Lowenstein crafts a story that
    reads like a first-rate thriller from beginning to end. He explains not just how the fund made and lost its money, but
    what it was about the personalities of Long-Term's partners, the arrogance of their mathematical certainties, and
    the late-nineties culture of Wall Street that made it all possible.
    When Genius Failed is the cautionary financial tale of our time, the gripping saga of what happened when an elite
    group of investors believed they could actually deconstruct risk and use virtually limitless leverage to create
    limitless wealth. In Roger Lowenstein's hands, it is a brilliant tale peppered with fast money, vivid characters, and
    high drama.

    Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron  (A commercial documentary
    film of the same name was released in 2005 with excellent reviews - the DVD was released in Jan 06)
    by Bethany McLean, Peter Elkind 2004
    Until the spring of 2001, the Houston energy giant Enron epitomized the triumph of the new economy. Feared by
    rivals, worshiped by investors, Enron seemingly could do no wrong. Its profits rose every quarter; its stock price
    surged ever upward; its leaders were hailed as visionaries.
    Then a young Fortune writer named Bethany McLean wrote an article posing a simple question - How, exactly,
    does Enron make its money? - and the company's house of cards began to collapse. Though other business
    scandals would follow, none has had the shattering effect of Enron's bankruptcy, which caused Americans to lose
    faith in a system that rewarded top insiders with millions of dollars while small investors, including many Enron
    employees, lost everything.
    Despite enormous media coverage of Enron, the definitive story of its astonishing rise and fall comes alive for the
    first time in this gripping narrative, by McLean and her Fortune colleague Peter Elkind. Drawing on a wide range
    of private documents and well-placed sources, many of them exclusive, McLean and Elkind lead you behind
    closed doors and deep into Enron's past, to pierce the veil of secrecy that has surrounded the company's inner
    workings and corrupt culture.
    The Smartest Guys in the Room is fundamentally a human drama -- of people drunk on their own success, people
    so ambitious, so certain of their own brilliance, so fueled by greed and hubris that they believed they could fool
    the world. The book explores the motives, thoughts, and secret fears of a fascinating array of characters.

    Conspiracy of Fools: A True Story  -- by Kurt Eichenwald
    Not as good as The Smartest Guys, but an interesting book about the personalities at Enron (AZ)
    This enormous, intimate blow-by-blow of Enron's implosion gets as close to what actually happened, in terms of
    people making (bad) decisions in real time, as anyone who wasn't there with a concealed video-phone possibly
    could. Having combed endless documents and interviewed countless principals and peripherals, Eichenwald (The
    Informant) presents short declarative sentences (and lots of sentence fragments) that may have run through the
    heads of men like top executives Skilling, Lay and Fastow as they managed to cook a very large set of books, as
    well as men like Stuart Zisman, a lawyer in the firm's wholesale division who wrote an early memo titled "Overall
    Book Manipulation" that stated "the majority of investments being introduced to Raptor are bad ones."

    Infectious Greed: How Deceit and Risk Corrupted the Financial Markets (Henry Holt) 2003
    by Frank Partnoy
    Partnoy's previous book, F.I.A.S.C.O., was an inside story of a Wall Street derivatives trader. It argued that
    recklessness and lack of regulation made derivatives trading (trading financial instruments that have no intrinsic
    value) a threat to the financial system. Turning from autobiography to history, this new work makes the same
    points by examining financial disasters caused by derivatives of the last 15 years. "Patient Zero" is Andy Krieger,
    whose $80 million mismarking of currency options embarrassed Bankers Trust in 1988. Partnoy profiles other
    derivatives abusers, too, including Nick Leeson, who bankrupted Barings Bank;
    Robert Citron, who did the same for Orange County; and Joseph Jett, whose "forward recon" trades helped end
    the independent existence of Kidder Peabody and Long Term Capital Management. These accounts of 20th-
    century disasters are neither original nor deep, but readers interested in the subject will be pleased to see the
    links among them.
    Taken together, common features emerge that are hard to see in detailed accounts of individual collapses. For
    example, Partnoy makes a revisionist case that credit rating agencies and federal regulators, including Alan
    Greenspan and Arthur Levitt, bear most of the blame. The author carries his story into mid-2002, evaluating
    Enron, WorldCom and Global Crossing. His analysis here is more original, reversing the popular perception by
    claiming Enron was a profitable company that should have survived, while WorldCom and Global Crossing had no
    economic substance.

    F.I.A.S.C.O.: Blood in the Water on Wall Street (W.W. Norton) - 1999
    by Frank Partnoy
    Fiasco is an insider's diary, a shocking education in the jungle of high finance in the 1990s from New York to
    Tokyo. It tracks the progress of a young Morgan Stanley salesman as he learns the ropes of this sophisticated
    and ruthless web, where billions of dollars are lost in the creation and trading of securities so unlikely and so
    complicated that almost nobody understands them. Frank Partnoy presents a world filled with feral "rocket
    scientists" - the clever masterminds who persuade unsuspecting victims to buy derivatives (whose value is linked
    to or "derived" from some other security). These salesman often joke about their creations as weapons of mass
    destruction; and, in fact, the clients are often "blown up" or have their "faces ripped off." Against such well-trained
    salesmen, buyers often don't stand a chance, and the actual fiascos involve well-publicized losses at Orange
    County, Barings, Procter & Gamble and many others. Frank Partnoy's book is partly comical and brims with
    incredible characters, but his revelations should stir fear in anyone who owns mutual funds, stocks, or even
    insurance.

    In an Uncertain World: Tough Choices from Wall Street to Washington
    by Robert E. Rubin, Jacob Weisberg
    Rubin's fundamental philosophy is that nothing is provably certain. Probabilistic thinking has guided his career in
    both business and government. We see that discipline at work in meetings with President Clinton and Hillary
    Clinton, Chinese premier Zhu Rongji, Alan Greenspan, Lawrence Summers, Newt Gingrich, Sanford Weill, and the
    late Daniel Patrick Moynihan. We see Rubin apply it time and again while facing financial crises in Asia, Russia,
    and Brazil; the federal government shutdown; the rise and fall of the stock market; the challenges of the post-
    September 11 world; the ongoing struggle over fiscal policy; and many other momentous economic and political
    events.

    The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance
    by Ron Chernow 1991
    The winner of the National Book Award and now considered a classic, The House of Morgan is the most ambitious
    history ever written about an American banking dynasty. Acclaimed by The Wall Street Journal as "brilliantly
    researched and written," the book tells the rich, panoramic story of four generations of Morgans and the powerful,
    secretive firms they spawned. It is the definitive account of the rise of the modern financial world. A gripping
    history of banking and the booms and busts that shaped the world on both sides of the Atlantic, The House of
    Morgan traces the trajectory of the J. P. Morgan empire from its obscure beginnings in Victorian London to the
    crash of 1987. Ron Chernow paints a fascinating portrait of the private saga of the Morgans and the rarefied
    world of the American and British elite in which they moved. Based on extensive interviews and access to the
    family and business archives, The House of Morgan is an investigative masterpiece, a compelling account of a
    remarkable institution and the men who ran it, and an essential book for understanding the money and power
    behind the major historical events of the last 150 years.

    The Volatility Machine  Emerging Economics and the Threat of Financial Collapse  (recommended by
    Andy Roy)
    Michael Pettis Osford University Press May 2001
    This book presents a radically different argument for what has caused, and likely will continue to cause, the
    collapse of emerging market economies. Pettis combines the insights of economic history, economic theory, and
    finance theory into a comprehensive model for understanding sovereign liability management and the causes of
    financial crises. He examines recent financial crises in emerging market countries along with the history of
    international lending since the 1820s to argue that the process of international lending is driven primarily by
    external events and not by local politics and/or economic policies. He draws out the corporate finance implications
    of this approach to argue that most of the current analyses of the recent financial crises suffered by Latin
    America, Asia, and Russia have largely missed the point. He then develops a sovereign finance model, analogous
    to corporate finance, to understand the capital structure needs of emerging market countries.  Using this model,
    he finally puts into perspective the recent crises, a new sovereign liability management theory, the implications of
    the model for sovereign debt restructurings, and the new financial architecture.

    Tearing Down the Walls: How Sandy Weill Fought His Way to the Top of the Financial World. . .and Then
    Nearly Lost It All
    by Monica Langley March 2003
    TEARING DOWN THE WALLS reveals: •The behind-the-scenes workings in the executive suites of Wall Street
    companies that have suffered a drastic decline in investor/consumer confidence •The real story behind Weill and
    star analyst Jack Grubman's effort to get his toddlers into the posh 92nd Street Y pre-school •Why Citigroup
    received the stiffest fines for biased research (they just settled for $320 million on 12/20) but Weill did not (as was
    originally speculated) face personal charges •How future control of Citigroup was determined by a ballroom brawl
    •How Sandy Weill almost lost the top spot of the merged Travelers/Citibank to Citi's CEO John Reed. And how
    former Secretary of the Treasury,
    Robert Rubin played a deciding role •How Sandy Weill's management style is supremely effective and rivals that
    of Jack Welch  

    Competitive Strategy: Techniques for Analyzing Industries and Competitors
    by Michael E. Porter  The Free Press 1998 (revised from 1979)
    Now nearing its 60th printing in English and translated into nineteen languages, Michael E. Porter's Competitive
    Strategy has transformed the theory, practice, and teaching of business strategy throughout the world.
    Electrifying in its simplicity -- like all great breakthroughs -- Porter's analysis of industries captures the complexity
    of industry competition in five underlying forces. Porter introduces one of the most powerful competitive tools yet
    developed: his three generic strategies -- lowest cost, differentiation, and focus -- which bring structure to the task
    of strategic positioning. He shows how competitive advantage can be defined in terms of relative cost and relative
    prices, thus linking it directly to profitability, and presents a whole new perspective on how profit is created and
    divided. In the almost two decades since publication, Porter's framework for predicting competitor behavior has
    transformed the way in which companies look at their rivals and has given rise to the new discipline of competitor
    assessment.
    More than a million managers in both large and small companies, investment analysts, consultants, students, and
    scholars throughout the world have internalized Porter's ideas and applied them to assess industries, understand
    competitors,, and choose competitive positions. The ideas in the book address the underlying fundamentals of
    competition in a way that is independent of the specifics of the ways companies go about competing.
    Competitive Strategy has filled a void in management thinking. It provides an enduring foundation and grounding
    point on which all subsequent work can be built. By bringing a disciplined structure to the question of how firms
    achieve superior profitability, Porter's rich frameworks and deep insights comprise a sophisticated view of
    competition unsurpassed in the last quarter-century

    And the Money Kept Rolling In (And Out) -- Wall Street, the IMF and the Bankrupting of Argentina  This
    2005 book is authored by Paul Blustein, who is a staff writer at the Washington Post.  The book is published by
    Public
    Affairs and costs US$27.50 and is 235 pages long (279 pages including chronology, notes and index).

    Extraordinary Popular Delusions and the Madness of Crowds.  This book was first published in 1841 by
    Charles McKay.  It is currently available in paperback with a forward by Andrew Tobias.  "Why do seemingly
    intelligent people form seething masses of idiocy when they engage in collective action?  Why do financially
    sensible people jump lemming-like into hare-brained speculative frenzies?