Crises in banking

By ANDREW ROSS SORKIN

Much has been written about the financial crisis, and this book has tried to build upon the extraordinary record created by my esteemed colleagues in financial journalism.

But what I hope I have provided here is the first detailed, moment-by-moment account of one of the most calamitous times in our history. Those who propel this narrative genuinely believed they were — and may have been — staring into the economic abyss.

Galileo Galilei said, "All truths are easy to understand once they are discovered; the point is to discover them." I hope I have discovered at least some of them, and that in doing so, I have made the often bewildering financial events of the past few years a little easier to understand.…

In 2007, at the peak of the economic bubble, the financial services sector had become a wealth-creation machine, ballooning to more than 40 per cent of total corporate profits in the US.

Financial products — including a new array of securities so complex that even many CEOs and directors didn’t understand them — were an ever-greater driving force of US' economy.

The mortgage industry was an especially important component of this system, providing loans that served as the raw material for Wall Street's elaborate creations, repackaging and then reselling them around the globe.

With all the profits that were being generated, Wall Street was minting a new generation of wealth not seen since the debt-fuelled 1980s.

From "Too Big to Fail"