Jan 17, 2020dixithanoop rated this title 3.5 out of 5 stars
What better way to start 2020 than by raising self-awareness but not being blanched about an impending recession? :) Why Wall Street Matters is a book that helped me do just that. The author, William Cohan is known for his business books, one of which is also a winner of Goldman Sachs Business Book Award ('The Last Tycoons' - about Lazard Freres & Co.), and this is book belongs to the same shelf both in content and its quality.
The majority of the book is objective, explaining the history of Wall Street (from the time there was literally a wall), the early wild-west like era (wild-Wall?), the creation of Fed after 1907's recession, its failure to stop the Great Recession etc.
In all those chapters, the book virtually looks like the Wall Street equivalent of Neil deGrass Tyson's 'Astronomy for People in a Hurry'. But that all goes away in the las chapter, which explains author's ideas about how to solve the Wall Street greed issue. Clearly, the author has made it very obvious that he's against Elizabeth Warren and Bernie Sanders's policies of breaking-up big banks, or even their support for condemning banks to ultra regulations. The author makes it very clear that the book is pro-Wall Street, pro capitalism, and particularly pro innovation in Wall Street (which I'm a big fan of).
I got to learn a lot of stuff on investment banking from this book - the The Glass-Steagall Act of 1933 which separated investment banking from customer facing retail banking, which is why we have J.P.Morgan Chase and Morgan Stanley as separate entities today; what necessitated the setting up of Federal Reserve; how recessions and bubbles way predate Wall Street, like Tulip bubble in Netherlands way before Wall Street even existed etc.
But my favorite part of the book is the penultimate chapter - "Innovations", that elaborates how some of the causes of 2008 financial crisis were first literally very innovative tools of investment banks. Junk Bonds that came out of Drexel Burnham Lambert, Blythe Masters's genius idea of Credit Default Swap while at JP Morgan, Lewis Ranieri's idea of Mortgage Backed Securities etc are the main ones.
Overall, if you want to get an idea of a capitalist's view on how Wall Street is not solely responsible for the crisis of 2008, this book is for you!