The unfathomable failure of many of the world’s biggest banks may have shocked much of the planet, but it also gave rise to a reporter considered one of the field’s superstars. Andrew Ross Sorkin, a 32-year-old wunderkind whose rise within the ranks of the New York Times was both meteoric and unprecedented, gained unparalleled access to the upper echelon of banking titans, many of whom may be found to be the cause of the financial collapse.
Sorkin’s book on the crisis, Too Big to Fail, has courted almost as much controversy as it has praise. He spoke about everything from the financial crisis to the process of writing the book to a crowd of 278 students, faculty and members of the community last Friday in Storer Auditorium in a dialogue sponsored by the School of Communication and School of Business Administration.
According to Sorkin, the idea for the book started mere minutes after Lehman Brothers filed for bankruptcy on Sept. 15, 2008, and just hours before AIG would receive $85 billion in government funds, essentially nationalizing the banking industry and changing the face of capitalism forever. His goal, he said, was “to reconstruct the record, to take readers and the public ‘inside the room’ so we could make a judgment.”
He and a team of researchers and editors would commit more than 500 hours to sifting through information and interviewing over 200 individuals. The book, he said, is “almost a human drama” whose sequence of events resembled the movie Crash, with seemingly autonomous plots intertwining. Though the title may reference the banks themselves, according to Sorkin, “the book is about people who think they are too big to fail.”
Sorkin raised the question of moral hazard and wondered if executives will take more risk in the future knowing that the government has provided a safety net of sorts.
“The disconnect is that we’re rewarding failure,” he said. “Most of these things [events within the first days of the crisis]weren’t surprises at all.”
Sorkin is one of journalism’s most foremost experts on the financial industry and, perhaps most significantly, the crash heard round the world. He noted just how close the financial industry was to completely failing more so than it already did. One of the most shocking things that showed the extent of the crisis was the fact that General Electric was on the verge of being unable to make payroll, a finding that came just after Morgan Stanley and Goldman Sachs came within hours of running out of money.
One of the most fascinating anecdotes Sorkin mentioned was the fact that the government attempted to ease the crisis during what he calls “secret merger weekend,” in which U.S. Treasury Secretary Timothy Geithner – then chairman of the Federal Reserve of New York – attempted to orchestrate five different mergers, prompting one embattled CEO to call him “eHarmony.”
“The book has few heroes and lots of villains,” Sorkin said. The high point of the writing process, he said, was reporting itself, having to match up conflicting accounts of what transpired. The low point, he said, was actually writing it in what he referred to as a “10-month sprint.” Despite the many sleepless nights, he calls the book “the most exciting thing [he’s] done thus far.”
On the future of Wall Street careers – a subject sure to interest many UM students – Sorkin said, “I suspect jobs on Wall Street will be more difficult to come by, especially now. I also imagine that Wall Street will be less desirable to students in the future because the super-sized bonuses that attracted so many graduates will likely be less.”
Sorkin also discussed the criticism that he is too close to his sources.
“It’s fascinating to be on the other side of the pen,” Sorkin said in response to that claim. “This book, by default, was about trying to get you ‘in the room,’” so spending countless hours with these figures was necessary. “If you want to capture the nuance, you have to be right there… Many people [in the book]come off pretty badly, so I’m not sure they’d agree.”
Chris Hughes, a sophomore in the College of Arts and Sciences, found the insight into the writing process fascinating.
“I thought it was interesting to get a glimpse into his process, how he structured the book and his inspiration for it,” Hughes said.
Junior Mikhalina Novikava, a finance major in the School of Business Administration, agreed with Hughes’s take on the event and believes that having a thorough understanding of the crisis is imperative for anyone hoping to enter the business world in the future.
“The event offered a great opportunity to learn more about Mr. Sorkin’s point of view on the financial crisis and the steps he believes are necessary to bring about a healthier economy. I was interested in the presentation and the book because Mr. Sorkin has the credentials to deliver valuable insight and the right sources to back him up. I definitely plan on reading Too Big To Fail over winter break.”