13 Bankers: The Wall Street Takeover and the Next Financial Meltdown
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13 Bankers: The Wall Street Takeover and the Next Financial Meltdown

3.85 of 5 stars 3.85  ·  rating details  ·  1,683 ratings  ·  160 reviews
In spite of its key role in creating the ruinous financial crisis of 2008, the American banking industry has grown bigger, more profitable, and more resistant to regulation than ever. Anchored by six megabanks whose assets amount to more than 60 percent of the country’s gross domestic product, this oligarchy proved it could first hold the global economy hostage and then us...more
Paperback, 336 pages
Published January 11th 2011 by Vintage (first published 2010)
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Leo Jacobowitz
Is the American form of government a democracy and secondarily, is the economic system a market capitalist one?

According to the authors of 13 bankers the answer to both questions is a resounding, "No!" Kwak and Johnson are well known in financial circles for their highly influential blog, the Baseline Scenario. The authors clearly detail the causes behind the global financial credit crisis which has persisted since 2008. To the authors, the primary reason for the crisis can be traced to the poli...more
Kathy Scantle
The authors' basic premise in this book is that the only way to prevent future financial crisis is to downsize banks that are too big to fail. They describe the history of banking in the US concentrating on the presidencies of Jefferson, Jackson, Teddy Roosevelt, Franklin Roosevelt, Reagan, George H. W. Bush, Clinton, George W. Bush and Obama. The authors see the big banks as oligarchies with enormous political power. (Surprise, I laugh.) The book was tedious reading at times and I'm glad there...more
Elaine Nelson
Some things that I bookmarked while reading:

"the core function of finance is financial intermediation -- moving money from a place where it is currently not needed to a place where it is needed. The key questions for for any financial innovation are whether it increases financial intermediation and whether that is a good thing." (continues to talk about "innovations" in credit cards mostly being ways of making pricing more complex)

"much of the positive effect of homeownership is due not to owner...more
Converse

I don't know why I keep reading about the financial crisis of 2008, it just makes me angry. Anyway, this is a one of the several good books I've read on the subject. It has a longer term focus than some, including a section on the history of banking in the United Staes since the founding of the republic, and doesn't give a blow by blow description of what happened in the week that Lehman brothers failed. Rather, it is more about how the banks and the regulatory system got into this fix in the f

...more
Laura
Rather than a review of 13 Bankers, I am wrestling with understanding the response to the book. It makes me feel like I’m missing something and did not get the secret decoder ring.
Unlike most books that explore the 2008 financial collapse, this book looks back to the political viewpoints of Jefferson and Hamilton. In a nutshell, Jefferson didn’t trust big government. In addition to that, he didn’t trust any highly centralized power and this included the banks. In contrast, Hamilton did trust a...more
Douglas White
While I think this book is a good history of the regulation changes that occurred in banking from the mid to late 90s, I do not think this book does that great a job explaining the recent banking crisis. The authors clearly believe that the changes in regulation and lax regulators caused the crisis and that better/stronger regulation would fix it. They however fail to explain how if the regulators are so co-opted by the big banks that regulation on its own will work. I also feel that the authors...more
Steve
What happens when free market true believers meet predatory bankers? Financial oligarchy, says Former IMF economist Simon Johnson and that describes the USA today. For example, how many high-level government officials are former Goldman Sachs people? Lots. And if the government officals aren’t Wall Street insiders, they are free market ideologues. Take Alan Greenspan for example. He was apparently so convinced that markets could regulate themselves that he believed rules against fraud were unnec...more
Satyaki Mitra
This book penned by two of the most vocal commentators on the 2008 financial crisis, takes a systematic approach to uncover the causative factors which helped trigger the crisis and brought the entire American economy to a standstill.

The book starts with the origin of modern banking in the United States, dating back to the late 18th century and the First Bank of the United States, and henceforth goes on to narrate the influential role that finance would come to play in the future; the contrastin...more
Lobstergirl
Oct 29, 2011 Lobstergirl rated it 5 of 5 stars  ·  review of another edition
Recommends it for: Everyone
Shelves: business-finance
This is a superb explanation of how the supremacy of Wall Street, and its cosiness to Washington, helped cause the financial crisis, and made true reform afterward much more difficult. Johnson and Kwak go back as far as Thomas Jefferson and Andrew Jackson to examine the nexus of politics and banking. They explain why bankers and politicians are so close, and why politicians always seem to bend to the will of the banksters: it's not just about campaign contributions (traditional capital), or the...more
Raghu
This is the best book I have read on the recent financial crisis of 2008. The authors present a historical study of how and why it happened and show why it will happen again if the US govt does not go through with breaking up financial institutions which are 'too big to fail'. Both the Bush and Obama administrations have allowed the big banks to remain BIG thereby allowing them to bring the world economy into crisis again by taking the extraordinary risks that they took to get us there in the fi...more
Tommy
This book was terrific overview of the history of the US financial system going back to Hamilton and Jefferson and goes in depth to describe how we got where we are. Simon and James do an amazing job of diagnosing the problems.

They contend that too big to fail banks simultaneously pose too much systemic to the economy AND have too much political sway to make effective regulation and oversight possible. This is very much in line with the views of Nobel Prize winners Joseph Stiglitz and Paul Krug...more
Greg Linster
Oligarchy, n., a government in which a small group exercises control especially for corrupt and selfish purposes.

The United States is ruled by an oligarchy that, despite almost wrecking the world economy, has only grown more powerful and more resistant to change. Perched atop this structure are 13 bankers who are involved with the six mega-banks (Bank of America, JPMorgan, Chase, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley) that have been rendered “too big too fail”. How did this h...more
Dan
Johnson presents a clear critique of our current financial system. It's no surprise that the financial services industry wants to take big bets with borrowed money, take home outsized profits, and socialize the risk. The real surprise and tragedy in this book is the extent to which the policy makers in the US, UK, and other democracies -- whether they are from the parties allied with business or "progressives" -- fail to imagine any other system. And don't count on much popular support for refor...more
Mary
I think this is the best book on the economic meltdown as it provides historical, political and societal context. It reminds me that the proposed financial fixes are unlikely to fix the broken system.
Ob-jonny
This is a very smart book describing why the financial crisis happened and why it will likely happen again because of how little has been done with the so-called financial reform.
Rob
Simon Johnson should run Treasury.
Justin Tapp
Johnson and Kwak's blog was essential reading during the financial crisis, and is still quite educational. This book is also required for Money & Banking in the fall. (I'm a bit sad because I went way over the Amazon clipping limit, so 314 of my highlights are invisible via the website.)

Johnson approaches the U.S. financial crisis from the point of view of a former Chief Economist of the IMF. That perspective allows him to see the irony of how the U.S. and the IMF advised East Asian countrie...more
Jeff
This book provides a strong argument for better regulation of financial institutions and markets. The authors pose the ideas of democracy and free markets in opposition, citing trends over the past 100 years of institutional lobbying, congressional campaign donations, deregulation, and soaring profits for firms. Americans have changed their perception of Wall Street as well. What was once considered scandalous compensation for executives in investment firms in the 1980s is now worshiped and expe...more
Tim
There are so many perspectives with which to view the 2008 financial crisis. Some, like Andrew Ross Sorkin's TBTF deal with the banking and government personalities who made key decisions (or non-decisions) around the headline events of the crisis. Others dive deep into the technical details, covering items like the miscalculation of risk in super senior tranches of synthetic CDOs. Many of these treatments deal with proximate causes of the crisis. 13 Bankers though creates a narrative around how...more
Lynn
Before opening the book I knew what I was getting into. The two authors were guests on Bill Moyers and I chalked up their more blatant biases as deference to Moyers. It was unlikely that I would find a fair account of the financial crisis, but I hoped to obtain a clear understanding for the reasons why most of the blame should be placed on Wall Street. I did obtain a clear understanding of the thought processes of the authors, but they were not clear or honest when supporting their beliefs about...more
Frank Staheli
Although I do not agree with some of the suggested solutions for the financial problems in our country, I agree with the sentiment of the book, that Too Big To Fail is Too Big. This book is well worth reading. Its identification of the history and problems of Wall Street is, I think, very accurate.

I would rather have allowed the big investment banks, like Goldman Sachs, to fail, whereas the authors think that regulatory law should be modified to not allow such entities to own assets equaling mor...more
0spinboson
Paints an interesting, but partial picture of the crisis and its run-up.
Informative treatment of the aspects of regulatory capture, as well as some of the details of banking and the new products that were being sold. However, the book has rather less to say about the ideology that underpins the behavior, why the behavior became so prevalent, and, most importantly, why there was a desire to be able to sell (and buy) (synth) CDOs, etc. in the first place. There was a reason why there was suddenly...more
Diane Paoni
Excellent primer for where money comes from that fuels the economy. Did you know your paycheck doesn't exactly come from your employer, it comes from the commercial paper companies use for day to day cash flow? Which is based on money market funds. Meaning bad things happening in the money markets impacts your employer's ability to make payroll. Details like this inform the reader of why the crisis of the 13 largest US banks impacted the real day to day economy. Its not just all big picture econ...more
Max Novendstern
There are a lot of reasons to care about -- and be angry about -- America's outsized banking sector. A short list might include:

- financial bubbles, moral hazard, systemic risk
- massive misallocation of talent
- rising social and economic inequity and the gutting of the middle class
- a new golden age of greedy self-regard, the 1980s till now

This is all quite right, more or less -- but 13 Bankers suggests that there is more: a financial sector that's "too big to fail" is a threat to our liberty....more
Michael
I came to this book after reading some lucid, solid commentary on Kwak and Johnson's blog, The Baseline Scenario.

The book is a serviceable overview of how the federal government came to see the largest banks as "too big to fail," and more broadly how Wall Street has wrapped Washington in an embrace - of money, ideology, and familiarity - that keeps out any serious consideration of common sense reforms, much less populist ideas about how banking and finance ought to serve the country rather than...more
Brian
One of the most scholarly books on the financial crisis, Johnson and Kwak reference nearly every sentence in the book. This puts a flavor of simply documenting a series of pieces of information behind the book, rather than telling a compelling story. The information is good, though I can’t imagine reading it as the first and/or only book on the financial crisis. They do an excellent job of stating the fact that this challenge of large banks in America is not original; they cite at least three ot...more
Paul Hinman
There was quite a bit to really love about this book. The authors do a great job of examining the causes behind the 2008 financial collapse - from identifying the policies and political philosophy that shaped the regulatory environment of the past 20-30 years, to describing the actual financial "innovations" and products that increased risk to unsustainable levels.
What I found particularly enlightening were the authors proposals to prevent a similar crisis going forward, and address the underlyi...more
Todd Martin
I would not categorize “13 Bankers” as ‘interesting reading’; it’s about as dry and factual as a book could be. However, for those with a background in finance, it does do a good job documenting the failures that lead up to the financial collapse and the failures of those in charge to enact meaningful reforms. There are no surprises though – there was a general consensus in both government (among both political parties) and in business that free markets could regulate themselves (they can’t) and...more
Collin
I liked this book, but I think reading two complicated, (at least for me) books about finance in a row(the other being "the big short") was a bit to ambitious. This started out with a chapter with a brief history of financial crisis in the US (which it turns out there were quite a few). It then went on to eexplain exactly how we got to where we were in 2008, why it happened, and who was responsible. What I got from this book is that basically nothing has changed in the world of corporate finance...more
Gregory
From http://weeksnotice.blogspot.com/2010/...

I read Simon Johnson and James Kwak's 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, which is a very good, albeit repetitive (in the sense that they repeat certain points over and over), overview of the 2008 economic crash, focusing on the problem of having a small number of financial institutions that are "too big to fail." It is not a fun read, particularly since the recently passed financial reform addresses the problem only...more
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Simon Johnson is a British American economist. He currently is the Ronald A. Kurtz Professor of Entrepreneurship at the MIT Sloan School of Management. He has held a wide variety of academic and policy-related positions, including Professor of Economics at Duke University's Fuqua School of Business. From March 2007 through the end of August 2008, he was Chief Economist of the International Monetar...more
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