“The F.C.I.C. is the first to take a close look at the missteps at Citigroup, which virtually every book about the financial crisis has overlooked. It is a devastating portrait of negligence at the top — including the once sainted Robert Rubin.”
-Joe Nocera, NYT, Inquiry Is Missing Bottom Line
Say it ain’t so, Joe!
How did you miss this? Bailout Nation, Chapter 18 is titled “Too Big to Succeed.” It is about the history of Citigroup, its numerous missteps leading up to the crisis, the role of Robert Rubin and Larry Summers in the repeal of Glass-Steagall, and Citi’s role in the collapse. (Bank of America makes a guest appearance in the last third of the chapter).
It is, to say the least, rather critical.
The Glass-Steagall repeal may not have been the cause of the crisis, but it sure as hell made the damage far worse. It allowed banks to own businesses they otherwise could not, and to manufacture and buy junk paper in quantities far greater than would otherwise have been possible.
When Glass-Steagall was in effect, Wall Street collapses were kept on Wall Street and for the most part, away from Main Street.
Do you remember the devastating credit crisis and recession caused by the 1987 crash? No, because it never happened. As Bailout Nation makes clear, Glass-Steagall was a major factor why.
Anyway, Chapter 18 is posted in our Bookshelf. And in light of the FCIC report, the rest of the book should be next in your queue.
Bailout Nation Updated Reviews
Inquiry Is Missing Bottom Line
NYT, January 28, 2011