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A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers

3.87  ·  Rating details ·  2,758 ratings  ·  196 reviews
One of the biggest questions of the financial crisis has not been answered until now.  What happened at Lehman Brothers and why was it allowed to fail, with aftershocks that rocked the global economy? In this news-making, often astonishing book, a former Lehman Brothers Vice President gives us the straight answers—right from the belly of the beast.

In A Colossal Failure of
Hardcover, 368 pages
Published July 21st 2009 by Crown Business
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Amit Mishra
Jun 12, 2019 rated it really liked it
This is just another fantastic book on business. This will let you understand the basic technicality of Lehman Brothers failure. It has shown some methods and some empirical evidence to understand the crisis that has taken the form of the world depression.
Sep 12, 2013 rated it did not like it
Shelves: non-fiction, business
This to make it simple is a stupid book written, stupidly by someone who very well could be extremely dense.

I have developed in my middle age an addiction to reading books about businesses and the fun stuff they get up to. In general the best of these are written by journalists who know the subject, know the players, are expert in bringing the arcane to life. Examples of excellence in this genre abound Too Big To Fail by Andrew Ross Sorkin was great, The Smartest Guys In The Room by Bethany Macl
Jan 01, 2011 rated it did not like it
Shelves: non-fiction, business
The author of this book is so irritatingly arrogant and self-aggrandizing that he loses all credibility. His ferocious attempts to constantly include himself so as to appear important and relevant to the story are distracting and unnecessary. I am embarrassed for him. It felt like one of the valets at the White House claiming to be an "insider" during the Monica Lewinsky affair.

Rather than let the incredible events during this period speak for themselves he inevitably tries to shoehorn some pers
Alok Mishra
Oct 04, 2018 rated it really liked it
Though such interests are not common in the field I explore, I am sometimes interested in understanding the market. This is one book that I randomly picked in an old book market in Patna and believe me, it certainly is a book worth reading! Amazing analysis!
Mar 11, 2010 rated it it was amazing
Lawrence MacDonald, a former VP at Lehman Brothers, recounts his rise within the broker profession and the precipitous fall of Lehman brothers which he blames almost entirely on just eight people, including Richard Fuld. They were the ones promoting over-leverage and investment in risky investments such as CDOs and CDS's

It's interesting, because intentionally or not, we are given insight into MacDonald's mind and watch the erosion of ethics of his own behavior and that of those around him. No on
Robert J. Sullivan
Mar 19, 2011 rated it it was ok
Part autobiography, part analysis of the collapse of the Lehman Brothers that led to the collapse of the US economy, this book might serve better as an examination of one person, Lawrence G. McDonald, and his pathologies. McDonald was a broker for Lehman and might be a poster child for cleaning out the whole lot of Wall Street brokers. He's sexist ("The last good decision your wife made was to marry you"), racist (when people find out how bad adjustable rate mortgages are, he suggests they passe ...more
Jun 30, 2010 rated it it was ok
Too much of the book is spent puffing up the author,
yet one more wall street hooligan who thinks he's worth $1,000,000 plus a year just because he's so...
nothing really.

He claims to be an insider because he worked a couple of years as a trader, but he had no access to upper management either while working for the firm or when writing the book.

BUT, the book does have several fine points.

1. Yet one more example of how an incompetent corporate leader claws his way to the top and is impossible t
May 08, 2015 rated it it was ok
Ok, until the last chapter I would have said that I did not like the tone of the book, full of arrogance, despise for enemies and brownnosing to friends, but then I read that this was not really the work of the trader, but of Patrick Robinson, ghost writer (and best seller writer) for him.

About the content: It could be much much shorter. No need to repeat everything thrice. No need to repeat in every chapter how awful the CEO and President of Lehman Brothers, and how correct but helpless McDonal
Nov 27, 2010 rated it it was amazing
1. If you are a member of a group, that group counts as one and only one adviser. If you want many advisers, they can't be members of the same team. It doesn't work. You get groupthink and exile of naysayers.

2. "Post Hoc, Ergo Propter Hoc" is the eternal financial fallacy. X has never happened so we don't need to worry about it happening. In this case, real estate has never fallen more than a small percentage so it never will. Regarding the status quo as self-explanatory is the road to perdition
Savinipop Savini
I just read the prologue of this book, and I'm sick of it already. In the first three pages he actually posses the idea that the feds decision to let Lehman Brothers fail may have been because of a personal beef between Lehman’s CEO and Paulson early that year. Then he says it might have been Bushes fault for not allowing Lehman to file chapter 11. Then he spends the next few pages blaming Bill Clinton for repealing Glass-Steagall(Which is partially true) Funny how he hasn’t pointed the finger a ...more
Sep 21, 2009 rated it really liked it
This was a good read and described how Lehman Brothers, an investment bank that has been around for over 150 years, collapsed and declared bankruptcy. It was mostly due to the two men at the top who stopped leading and did what they wanted to do, disregarding good lending practices and earning easy money. They took these bad practices to the extreme. It was quite similar to what happened at Enron and was totally avoidable, but due to the pride of the leader at the top, the company collapsed and ...more
Jay Connor
Aug 12, 2009 rated it really liked it
"A Colossal Failure of Common Sense," though seen thru the lens of Lehman Bros. excesses, a great read for those who believe Capitalism need not = greed. Getting beyond the narrator's narcissism and only adequate writing, is well worth the effort. Makes an upside down value system of celebrity models and multi-million athletes seem quaint. Making $ billions off of puffed up securities based on mortgages sold to railroaded poor, and then when the house of cards falls, blaming the poor and receiv ...more
Oct 10, 2009 rated it it was amazing
Wow. A real-life techno-thriller, made even more horrifically fascinating because we all lived through these bewildering events. McDonald uses plain English to describe the murky financial instruments upon which the world's biggest economic bubble was based, and offers clear answers to the question "What the hell went wrong?" Required reading for anyone who owns stocks or bonds. ...more
Oct 27, 2009 rated it it was amazing
Excellent description of the market and what caused the collapse of 2008. I know more about securitizations and credit default swaps than ever before. The author is also a very good storyteller. It's easy to read and entertaining. Highly recommend. ...more
Nov 21, 2014 rated it it was ok
Everyone on Wall Street, including the author of this book, is a huge asshole.
May 01, 2014 rated it it was ok  ·  review of another edition
(Caveat: I will probably feel very different about this book one day, but these are my thoughts for now, FWIW. I felt like writing a critical review rather than just a substance review.)

This story was fascinating like most well-told insider stories. Certainly the arrogant and ignorant CEO and chairman of Lehman Brothers, Dick Fuld, and his clueless sidekick, president Joe Gregory, overrode common sense with their greed and ambition -- as many, many other financiers did in the environment that cr
John Venable
Aug 22, 2011 rated it really liked it
I really enjoyed reading this, certainly not because Mr. McDonald was a great writer, but it *is* a great story.

The negatives first.
• The author uses more cheesy metaphors than a southern used car salesman (see what i did there?). Sometimes they work, sometimes not, but it doesn't matter because he'll try again in 2 pages.
• The book starts a bit slow, but I think the author wanted to establish his credibility, which is fine, but it didn't flow as well as the later stuff.
• HIs conclusions a
Apr 03, 2011 rated it liked it
A fascinating book when understood from the perspective of the author, an upper-level manager at Lehman Brothers. McDonald opens the book by blaming HUD under Clinton for forcing banks to lend to middle- and lower-income families to increase home ownership. His tirades wrap up the book by blaming the Fed and Treasury under Bush for not taking additional actions to save Lehman Brothers. However, the other 80% of the book sings the praises of investment bankers, the brilliance endowed within, the ...more
Jun 04, 2010 rated it really liked it
An excellent audiobook which can be quite suspenseful even tho you know the ending in advance.
I liked this best of the 3 I've read so far about the Financial Crisis that came to a head in 2008. Others are House of Cards and Too Big to Fail. I may have liked this best due to its being written by someone who is neither super high up in the company, nor a professional writer. Rather Lawrence G. McDonald was a trader and thus a true insider at Lehman. Has some wonderful human interest stories about
Rodney Harvill
Mar 27, 2018 rated it really liked it  ·  review of another edition
Shelves: economics
In this book, Lawrence McDonald describes events within Lehman Brothers and within the American and global financial system in the years leading up to the 2008 market crash and the bankruptcy of Lehman Brothers. Given that Mr. McDonald and many people he knew and respected lost their jobs as well as the value of Lehman stock options they had received as part of their compensation, he has a toolshed of axes to grind and minces no words. That said, it is interesting to get the perspective of an in ...more
Sheppard  Hobgood
Apr 15, 2010 rated it liked it
Nice easy business reading, if there is such an activity. This is a repeat of the never ending human "sheep" story. One particularly dominant sheep, Richard Fuld of Lehman Bros., leads all of the other banker sheep to the edge of the cliff while happily bleating until the very moment it's too late to turn back. It happened with Hitler and probably Atilla the Hunn. Should it be any less surprising with the banking industry? Glass Steagall should never have been repealed. My hero, Bill Clinton, bl ...more
Jul 05, 2011 rated it it was amazing
Fascinating book. If I have one complaint, it is McDonald's ideological axe with (to paraphrase) $400,000/year Kmart cashiers, i.e., lower-middle and working-class mortgage borrowers. Statistics show that many of these people made payments faithfully as long as they could, only faltering when mortgage resets forced their backs to the wall. Those of us who are more reasonable and less elitist place blame on people who were flipping houses, or buying strings of properties as 'investments'. And let ...more
Sep 06, 2009 rated it really liked it
Shelves: non-fiction, audio
McDonald tells the story of his fight to achieve his goal of becoming a Wall Street Trader and describes the industry trends and legislative changes that would set the stage for the largest ever bankruptcy in the U.S. A self-described vulture, McDonald and his coworkers made billions of dollars (for Lehman, millions for themselves) by predicting when companies would fail (or at least tank). From this viewpoint, they could see the huge problems with issuing/trading subprime mortgages earlier than ...more
Jul 07, 2011 rated it it was amazing
Shelves: ebook
This book was riveting all the way through. I randomly started reading this book and couldn't put it down. I'm a pastor, and in general read mostly pastoral and ministry related books, but I do enjoy reading outside the field too. I'm not really a financial guy and yet this book brought me right in to the story of Wall Street. I think that's where it shines. Colossal Failure tells a story. A story about a driven man (McDonald) and his passion for the world of Wall Street. Along the way he chroni ...more
The book gives a quite thorough account on the circumstances leading to the 2007 Wall Street crisis. It should have been a quarter of its length though. It becomes quite evident that the author and former pork chop salesman Lawrence G. McDonald was only a second rate trader and analyst and this book lives almost entirely from his recollection of the doings of his colleges and other Wall Street big shots. He never misses a chance to praise and to elaborate on their countless heroic feats. You nee ...more
Jul 18, 2011 rated it liked it
This book is interesting, but the author is a complete idiot. Not only does he fail to see that he and his brain-dead friends are a big part of the problem, but he has no comprehension of probabilities, a point made very obvious by the praise he heaps on his boss for falling for the gambler's fallacy---that a string of losses must be followed by a string of wins. No wonder our economy ended up in the toilet with idiots like this sucking all the money out of it. Dude, your hero was a moron who kn ...more
Aug 15, 2009 rated it really liked it
this is an excellent book about what happened to cause the recent financial miasma with a personal insight by McDonald about the Wall Street world

is informative about history and inner workings of Wall Street and a warning always to be concerned about how brokers/bankers misuse/gamble others funds without concern for anyone's benefit except their own
Susan Flahive
Aug 23, 2009 rated it really liked it
If you weren't working at Lehman at the time, it's definitely worth a read. For me, it's just rehashing what I unfortunately lived through and at times, it's hard not to get pissed off. If I were the author, I would have named the Book "A Colossal Case of Arrogance"...that's really what it was about. ...more
Mary Jo
Dec 24, 2009 rated it it was amazing
An inside view of the collapse of Lehman and the begnnings of the 2008 worldwide economic meltdown. The unbelievable greed and non reality based choices of its top managers is apparent as is the middle managers attempts to keep the ship afloat.

I am amazed that the top managers are not in jail. I guess spupidity is not a crime.
May 01, 2011 rated it really liked it
Shelves: business
I enjoyed it. I particularly liked reading about the efforts the author went through to get to wall street. It gives some great perspective as to what was going on behind the scenes leading up to lehman's failure. ...more
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