Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System from Crisis — and Themselves

by Andrew Ross Sorkin

At the time, Wall Street believed fervently that its new financial products—mortgages that had been sliced and diced, or “securitized”—had diluted, if not removed, the risk. Instead of holding on to a loan on their own, the banks split it up into individual pieces and sold those pieces to investors, collecting enormous fees in the process. But whatever might be said about bankers’ behavior during the housing boom, it can’t be denied that these institutions “ate their own cooking”—in fact, they gorged on it, buying mountains of mortgage-backed assets from one another. But it was the new ultra-interconnectedness among the nation’s financial institutions that posed the biggest risk of all. As a result of the banks owning various slices of these newfangled financial instruments, every firm was now dependent on the others—and many didn’t even know it. If one fell, it could become a series of falling dominoes. There were, of course, Cassandras