Liar’s Poker: Rising Through the Wreckage on Wall Street (review: 4/5)

This makes the third Michael Lewis book I’ve read (see also my take on Moneyball and The Blind Side from last fall). It’s another good one. Liar’s Poker is Lewis’ first book. He writes about his years on Wall Street working with the Salomon Brothers investment firm during the heady 1980s. It’s a biography of the company’s internal breakdown and the revolutions that swept through the investment banking industry (like mortgage-backed securities and junk bonds) that made some people piles and piles of money.

Lewis’ writing is good and often funny:

The greatest of absurdity of the college investment banking interview was the people the investment banks sent to conduct them. Many of them hadn’t worked on Wall Street for more than a year, but they had acquired Wall Street personas. One of their favorites words was professional. Sitting stiffly, shaking firmly, speaking crisply, and sipping a glass of ice water are professional. Laughing and scratching your armpits are not…

I did not learn much from my stack of Wall Street rejection letters except that investment bankers were not in the market for either honesty or my services (not that the two were otherwise related). Set questions were posed to which set answers were expected. A successful undergraduate investment banking interview sounded like a monastic chant.

Lewis manages to get in to Salomon Brothers through some lucky connections, makes it through the months of lectures and hazing of the training program, and finally gets to the trading floor that’s dominated by a law-of-the-jungle ethos. Some of the best parts are these antics among the workers. People throwing phones at trainees, office pranks, verbal abuse, gluttony (“We’d order four hundred dollars of Mexican food,” says a former trader. “You can’t buy four hundred dollars of Mexican food. But we’d try—guacamole in five-gallon drums, for a start.”). It’s wonderfully disturbing.

If you are a self-possessed man with a healthy sense of detachment from your bank account and someone writes you a check for tens of millions of dollars, you probably behave as if you have won a sweepstakes, kicking your feet in the air and laughing yourself to sleep at night at the miracle of your good fortune. But if your sense of self-worth is morbidly wrapped up in your financial success, you probably believe you deserve everything you get. You take it as a reflection of something grand inside you. You acquire gravitas and project it like a cologne.

Lewis nails both the bizarre sociology inside the firm and the broader industry shifts. A lot of the stuff about mortgage bonds and junk bonds gives a good background on what’s happening on the market right now. Definitely worth reading.