Liar's Poker

by Michael Lewis

The situation was aggravated by the ignorance of the thrifts. The 3–6–3 Club members had not been stress tested for the bond market; they didn’t know how to play Liar’s Poker. They didn’t know the mentality of the people they were up against. They didn’t know the value of what they were selling. In some cases, they didn’t even know the terms (years to maturity, rates of interest) of their own loans. The only thing the thrift managers knew was how badly they wanted to sell. The truly incredible thing about them, noted by all the Salomon traders, was that no matter how roughly they were treated, they kept coming back for more. They were like ducks I once saw on a corporate hunt that were trained to fly repeatedly over the same field of hunters until shot dead. You didn’t have to be Charles Darwin to see that this breed was doomed.