If you want to know what the big Wall Street bond firms were like, before the MBAs took over, this is the book. It's a great portrait of 1980s Wall Street, the way that traders and investment bankers used to appear (in the eyes of the young MBAs they hired) and the ridiculous training that newcomers received. It's not a pretty picture, but if you want to know what happened recently you have to remember that the current mess happened when a different group was in charge. That group included Michael Lewis's peers, the well educated, affluent Ivy Leaguers who run Wall Street today and took the places of the BSDs. (Lewis's term meaning big, swinging...well you get the idea.) The current mess was also created by the banks, who were just beginning to enter the market in the 80s.
Engaging as it is, studying Liars Poker to understand today's Wall Street is like studying the Carter Administration (before the Reagan administration privatized a thousands of governmental operations) to find out how federal government "really works." Who were the BSDs that Lewis describes? In 1975 a white man (and you had to be both) with smarts and a recent degree in any subject from a state college, could get a job at a bond firm by using connections. Connections were everything. This guy's boss probably did not have a college degree. (The college degree jobs went to stock brokers and private and commercial bankers.) The key talent for 1970s traders on the way up was the ability to crunch numbers very quickly without pencil and paper. By 1985, with talent and nerve, the bond trader who had started ten years before, could be making millions for himself and for his firm.
This guy was the BSD that Lewis describes. And this guy hired the MBAs who were only beginning to have a foothold when Lewis worked at Salomon.
Michael Lewis tells the engaging story of how a talented MBA joined Salomon Brothers and was simply astonished by the culture. What he describes isa culture where a formal education takes a back seat to chutzpah. Lewis's descriptions of uneducated, but astonishingly rich, men doing things like meeting the Queen Mother in England, are hilarious.
What Lewis cannot tell you (because the book was published so long ago) is how Wall Street replaced those guys with men and women who look and sound like Lewis. Salomon, once a firm of 7000 headed by its founder, is now part of Citigroup. The BSD's with their coarse language, huge lunches and cigars have been replaced with highly paid MBAs who know exactly what looks bad on an expense report, would know what to say to the Queen Mother. Is this better? Well, it's different.
I worked on Wall Street, at big banks and at Salomon, before and after the change.
The typical BSD that Lewis describes couldn't get a job on today's Wall Street. The Liar's Poker portrait of the gross, uneducated, cigar smoking, overweight middle-aged trader is something that every firm makes it a point to avoid. Firms hire young people (emphasis on young) with fantastic academic backgrounds and Hollywood good looks. Traders today are still mostly male and white, but they come from affluent, highly educated backgrounds. The firms hire more women and minorities from the best schools so while the numbers still show mostly white men, the annual report pictures and the EEOC audits go better. Sexual harrassment, which was rampant in the 80s still happens (as it does everywhere) but because of huge lawsuits, firms have HR departments that will come down on any employee (includng traders) like a ton of bricks if the firm's money or reputation are put at risk.
The current Wall Street mess wasn't created by Liar's Poker crowd. Trading with computer models was something few understood. Today's trader is tied to his computer and Blackberry and there is no assistant to enter the tickets. There are no tickets to be hidden or manipulated. By the early 90s the BSD's described in this book, older men with their lightening fast calculations, street smarts, nerve and passion for the game, had all but been replaced by Harvard, Yale and Wharton MBAs.
When this book was written the Mortgage Backed Securities Market was just taking off. Most banks were still holding their loans on the books, not selling them bundles. Fannie Mae still thought it was part of the government and hadn't gone completely off the reservation. It was the Michael Lewis's peers, the ones who did not get out when he did, along with a myriad of other people involved in mortgages and credit, who caused the current mess.
Liar's Poker is Michael Lewis's account of his brief time spent working at Salomon Brothers, one of the premier trading firms of the 1980s. The book follows the author's quick ascent in the company at a time of unprecedented profit and excess. Throughout the book, Lewis serves as the only real "constant" in the environment as we experience the unnaturally quick growth and evolution of the Salomon money-making machine. His tale of immense wealth and undeserved gain is a bit … more
This was a very good read. It kept me entertained the whole time. I came away from it with a better understanding of the bond market and many of the Wall Street firms. I read the book after having it recommended by a friend who has a friend that made a killing as a bond trader. He was constantly relating stories from his days trading, and said the book was very close to the way it was when he was trading. Even if it is only half true, I realize that … more
Liar's Poker is to the 80s what Frank Partnoy's F.I.A.S.C.O is to the 90s, with the notable exceptions that Liar's Poker is well written, it's funny and its author obviously understood what was going on. Where Partnoy (unwittingly) portrays himself as an impressionable geek, Lewis by deliberately painting himself that way is a disarming and likeable narrator. If skulduggery on the trading floor is your bag, then this is the book for you - give Partnoy's feeble impression the swerve.
As described by Lewis, liar's poker is a game played in idle moments by workers on Wall Street, the objective of which is to reward trickery and deceit. With this as a metaphor, Lewis describes his four years with the Wall Street firm Salomon Brothers, from his bizarre hiring through the training program to his years as a successful bond trader. Lewis illustrates how economic decisions made at the national level changed securities markets and made bonds the most lucrative game on the Street. His description of the firm's personalities and of the events from 1984 through the crash of October 1987 are vivid and memorable. Readers of Tom Wolfe's The Bonfire of the Vanities ( LJ 11/15/87) are likely to enjoy this personal memoir. BOMC and Fortune Book Club selection. - Joseph Barth, U.S. Military Acad . Lib., West Point, N.Y. Copyright 1989 Reed Business Information, Inc.--This text refers to theHardcoveredition.