Stocks And Bonds

Liars Poker Rising Through the Wreckage on Wall Street

Liars Poker Rising Through the Wreckage on Wall Street

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.

User Ratings and Reviews

5 Stars They made the mortgage backed securities
Michael Lewis’ story of investment banking in the 1980s deserves it classic status.

He writes about the investment bank Salomon Brothers from 1980 to 1987. The first years of Lewis’ (nonfictional) story the bank does tremendously well, growing to the largest investment bank on Wall Street.

This fantastic growth is due mostly to the bond trading department. The new monetary policy paradigm, introduced by Fed chairman Paul Volcker, means interest rates vary wildly. That opens the door to trading opportunities.

In 1979 Lew Ranieri is made head of the mortgage operations of Salomon. He hardly makes any money before the Congress gives tax incentives to the savings and loans, if they sell their mortgages, in 1981. The development of the mortgage securities market is vividly described, and very interesting to read today.

From 1985, Salomon gets into trouble. The cunning Michael Milken makes junk bonds the new fad, and steals customers and traders away from Salomon.

Michael Lewis, the author, quits in 1988, and that ends the book. Salomon goes on until it is acquired by Travelers and then Citigroup in 1998.

Liar’s Poker is easy and fun to read, despite being accurate and rather specific on many issues of bond trading. I would recommend it to anyone interested in the development of modern finance. It made me understand the crisis of 2009 better.

4 Stars Peeling a Banana
I am only half the way through the book and I have learned more about trading than the past 20 years. Like everyone I believed in the orderliness of the market. This book gives you great insight into the large trading companies like Salomon Brothers and the practices of the mortgage market. You will walk away with your head shaking. Incredible book.

Marty Lenow

5 Stars Informative and entertaining
Great read and good inside look at Wall Street in the 1980s. Haivng just finished Barbarians at the Gate (which I also highly recommend), I was searching for a similar read. An attorney for the RJR Special Committee recommended Liar’s Poker as a great view inside. He was dead on.

4 Stars First-ever financial thriller - Historic
Liar’s Poker goes down in history as the first-ever “high financial thriller” of the non-fiction variety. The first fiction thrillers were Zero Coupon (1993) by Paul Erdman and my own Lost Trust: The Great Credit Crisis (see 25-Feb-09 PR: http://www.mmdnewswire.com/book-lost-trust-author-lang-gibson-4662.html). When just a kid in college, I remember my godfather giving Liar’s Poker to me for Christmas, and it was the book that first got me excited to work in the institutional bond side of the business (1990-2008). Despite Michael’s brilliant marketing abilities and warnings about Wall Street greed (as well as my own efforts to warn the relevant parties about subprime CDOs), we are now sadly witnessing the quick evaporation of Lewis’s bond business (along with the economy). Some forces are too powerful to override.

While Liar’s Poker does not explain brilliant things about Wall Street that you cannot learn from reading the news, it teaches the material in a far friendlier fashion. Lewis is able to translate his fantastic sense of humor onto paper better than most (why he was a good salesman for his short stint at Solly). As for the relevance of the book’s material to the present day, there is a huge difference that many customer reviewers are missing. Lewis wrote about the creation of mortgage-backed securities (MBS), which slice and dice interest-rate-sensitive prepayment-risk. By contrast, subprime ABS tranche out credit risk, a far less forecastable and riskier event, especially with no economic data on national home price declines. Even more, the subprime ABS were packaged into my product, subprime ABS CDOs. That extra leverage from the extra layer of securitization (and the higher risk from subprime defaults vis-a-vis prepayment risk) was the medicine it took - along with absent regulation, where the Govt feigned the opposite - to blow it all up.

5 Stars This explains a lot!
This is a prophetic story. Michael Lewis is a gifted writer. The ethos of our "credit society" is revealed, in no uncertain terms. A must read for all.

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