Liar's Poker [Paperback]

The author traces the glorious and gloomy times of Salomon Brothers, a big financial enterprise in which he worked long enough to be able to tell this tale and become a rich man. He explains some financial innovations of Salomon brother's in lay man's terms, which makes this book very readable for all.

The author's self-deprecating humor and his vivid analysis of the people he came across in his organization make the account entertaining.

Whether or not the author's opinions on technical matters in this book are meritorious-I am not qualified to say. If you are a finance novice and curious to find out about life in that universe, you will find this book worthwhile.

Among other aspects of the firm, LP describes Solomon's Mortgage Bonds department, its influence over the savings and loans, and the effect of Fed Chairman Paul Volker's 1981 decision to let interest rates float. Lewis does a brilliant job of explaining how this lead to S&L's selling their mortgages in order to fund investments in higher yield securities.

Here's the catch: Liar's Poker appeared before the S&L debacle but it laid out all the signs needed to predict the disaster to come.

Much of the hand wringing over S&Ls in the early 90's could maybe have been avoided if the warnings given in this book had been acted upon. To be fair, the warnings are clear but they are implicit. Lewis never actually projects the current state of the S&L industry into the future, even if he does mention that the basic problem with mortgages (short term funding of long term loans) is not solved.

Good read.

Having worked on Wall Street in various client-facing capacities over the years, especially as a trader with a volatile fund, I feel the book is a bit over melodramatic and over-sensational. Are there such personas on Wall Street? Absolutley. In fact the real people on Wall Street -- the traders, the whiteshoe i-bankers, the jewish deal-makers and deal-breakers -- can be even meaner, nastier than Lewis describes. But the clownish characters he creates are probably more fiction than real. Still, his observation that most traders have huge egos and are among the most despicable human beings (despite their MBAs, Ph.D.s, or MDs) to ever walk on earth, is deadly accurate. The constant politicking is captured vividly by the author, although, again, his writing seems to border on fiction quite often.

Don't take me wrong; I think this is a must-read for anyone interested in how Wall Street breathes and works. Lewis does a fine job at exposing the disgusting nature of greed, the only thing that feeds Wall Street's daily existence.