House of Cards by William Cohan

Any of the readers who have been reading my columns know I have been reading several books recently on the financial crisis. The latest book I have read is House Of Cards by William Cohan. The book is a tale of Bear Sterns, beginning in 1923 and ending in March 2008 with their acquisition by JP Morgan.

This book is written from a slightly different perspective from the previous books I read on the financial crisis. The previous books I reviewed were written by former Lehman Brother employees and the books were their firsthand accounts of the collapse of their firm. House of Cards is not written by a former Bear Sterns employee. The book is written by a journalist who had extensive access to insiders at the firm. This list includes Jimmy Cayne(former CEO), Sam Molinaro(former CFO), Paul Friedman (former COO of fixed income), and Robert Upton(former treasurer). The author also had access to some high profile people outside the firm including Larry Summers, Timothy Geithner, Meredith Whitney, Steve Schwarzman. Generally I prefer books written by insiders especially since they have a better grasp on finance. However, I enjoyed this book very much and the author seemed to have a good understanding of finance.

The book is divided into three parts. The first part details the last days of the firm in March 2008. The second part of the book is an extensive history of the firm including a personal history of former CEO Jimmy Cayne, and several founders and former CEOs of the firm. The last part of the book details the last several years of the firm starting with the September 11 attacks and details the mistakes of the firm that led to its downfall.

Whenever I do a book review I like sharing interesting details that I learned from the book, which I was unaware of previously. The author provides a thorough account of a huge legal mistake made by the JP Morgan legal team prior to their purchase of Bear Sterns. JP Morgan offered to buy Bear Sterns for $2 and guarantee Bear Sterns trading obligations until the deal closed. JP Morgan’s lawyers forgot to add to the contract that if shareholders rejected the deal JP Morgan would still have to guarantee Bear Sterns’ trading obligations. Bear Sterns management discovered this error and eventually forced Jamie Dimon (CEO JP Morgan) to agree to a higher price of $10. Needless to say, Dimon was furious at the lawyers for this several hundred million dollar error.

I loved the book and I only have two criticisms. The first criticism is I think the author went into too much detail in the second part of the book detailing the history of many important people at Bear Sterns. Although, I think it was appropriate to include a brief history of people like Jimmy Cayne (former CEO), the Cohan went into too much detail about their personal life. My second criticism is the layout of the book. Considering I was not too familiar with the history of Bear Sterns I would have liked the third part of the book to come before the first part of the book. When I was reading the first part of the book I was confused since I did not know many of the Bear Sterns management that the author mentioned. This is not too big of a problem, because you can read the last part of the book before the first part, which I recommend for anyone interested in the book.

Overall, I enjoyed the book a lot. I would recommend the book to anyone interested in the collapse of Bear Sterns and the causes of it. The book is very long; it is not a quick weekend read .If you are looking for a book like that this is not the book for you. However, if you want a detailed explaining Bear Sterns’ mistakes during the housing bubble and extensive details of the last days of the firm before it was purchased by JP Morgan, this is book is perfect.

Anyone who wishes to purchase the book on can do so by clicking on this link

House of Cards: A Tale of Hubris and Wretched Excess on Wall Street