
This was a good book! Well, I guess we should backtrack since I never seem to get to the point right away. Back in the day when I worked at Jones, I can tell you my happiest days at work were when Wall Street was collapsing during 2008. See, I quite enjoy blood in the streets especially if it is not my blood. So when the investment banks like Merrill started falling like dominoes and then AIG took a dirt nap, I was ecstatic. Does not the misquoted ancient Chinese proverb go something like "may you live in interesting times"? These were definitely interesting times!
Oh and it is a complete study about the dysfunctional nature of some organizations and I am a five dollar whore for organizational behavior (cheap and easy). Without bad mouthing any organization in particular, I would highly suggest anyone who is considering working with or for Bank of America to read this book first. But it is not just me that is all "wow" about the book - Bloomberg named this one of the 30 best books about business (GRANTED Bloomberg was partially owned by Merrill Lynch before the wheels came off that train and they are always presented in a good light in the book so there MIGHT be a little bias however I would agree so maybe they are just right).
Oh, maybe you don't know what the hell I am talking about because you don't follow stuff like this. Well let me tell you! So you know when your dog could get a mortgage or credit card back in the middle of the last decade? Well that money they let fido had to come from somewhere and often where it came from was investment vehicles called "CDO's". A CDO (or also known as "Collateralized Debt Obligation" is a pool of mortgages or other loans. Some of the water in that pool is like Evian. Some is like toilet water. Most of it is like the average water out of your tap. The more Evian and less toilet water, the safer the investment is because the repayment of the underlying mortgages or loans is more expected and therefore the rate of return is lower. Well what happened is that these investment banks started with using mostly Evian and found out that the rates of return (because they were so safe) were low (lots of parentheses I know sorry - investment lesson: the lower the risk of losing your money, the lower the rate of return. The higher the risk of losing your shirt, the higher the expected return). ANYWAY, the investment banks soon started running out of Evian and were greedy so they started putting together these CDO's with mostly city water and more and more toilet water. Well, those are risky because it is more likely that Fido is going to default on his mortgage than Bill Gates right? Start writing risky paper and things are bound to go awry.
Well, Merrill Lynch was a good company but that was before Stan O'Neal, the former CEO that led Merrill to the wolves. He was a hard charger and really only thought about himself. All of his decisions were based on the premise of "how does this help or hurt me and my career". Lovely example of leadership. I would actually go as far as to say that it is the SUNY school of leadership but O'Neal did not go to SUNY (you get mad bonus points if you get this reference without assistance). During O'Neal's reign, he took a blind eye to the important job of oversight of his firm and let the head of his fixed income area (which would handle CDO's) amass what was known as the Voldemort Book. The reference is to Harry Potter but that is what they called it. It was a secret portfolio of high risk CDO's (called CDO^2) that were a bit outside the compliance department. Well, that book of business was to the wonderful tune of oh, about 30 billion dollars. Quickly the floor fell out of the housing market and people started in droves to default on their mortgages and as such, these investments lost a majority of their value.
Now I could explain how this is problematic but the important point here is that it was bad for Merrill as a publicly traded company. They needed to raise capital and fast. Now there are two ways really to do this - sell more stock or get a business partner. Well, by now the board of directors at Merrill had enough of Stan and kicked him to the curb (after he pocketed something like 183 million dollar severance package) and brought in John Thain of the NYSE fame. Thain also was all about himself but he was a smart man and when the situation (aka losses) from the CDO's started to spiral out of control, he sold the soul of Merrill Lynch to Bank of America for some magic beans.
Now BofA came in and it was fun times! I will say that Bank of America has a very interesting HR department! Imagine being a executive with the bank and being followed all day/every day by a shadow from HR. Would that not be nice and comforting!
Anyway, I am not giving all of it away - you will have to go read it for yourself but it is a great book about Wall Street and Organizational Behavior. I give it:
"Vroom, Vroom, Vroom, Vroom" (4 out of 5 "Vroom's" on the motorcycle scale of awesomeness)























