Nomi Prins has
many years of experience in banking, mostly with Bear Sterns, but she ended up
as a managing director at Goldman Sachs. The timing of her move to Goldman
couldn't have been worse. She arrived there in 2000, just as the market bust was
getting started and when all the financial scandals were soon to hit the fan.
She confirms that she felt like a token amidst all the white male managing
directors. She didn't last at Goldman long. It is hard to describe exactly what
her book is about, but it is easy to recommend it.
The book does several things. The one that it does really
well—and the reason I recommend it—is provide a front row seat on what is
going on competitively in the banking industry following the 1999 repeal of
Glass-Steagall. The newly formed universal banks like Citigroup and JP
Morgan Chase have large balance sheets that allow them to tie low interest
loans to investment banking services and steal business from traditional
investment banks like Goldman. Loan tying is illegal but extremely difficult
to prove. Prins is a professional writing for professionals. Loan tying is a
controversial topic, and her employer was on the loosing end. Reading her
account is like meeting a senior banker from a competing firm for drinks and
just listening to her tales—she is timely, insightful and very informative.
Contents
Prologue: midsummer night's dream
Introduction
1. The bank wars
2. Scratching backs:
banks and corporations
3. Deregulation
and creating instability
4. Enron,
energy, and entropy
5. Telecom
implosion
6. Examination and reform?
Notes
That material takes up about half the book. As for the rest,
it is a mixed bag. Following a mildly entertaining prologue, the book opens
with an introduction that I assume the publisher insisted Prins write to
give the book popular appeal. It is a polemic about fraud, manipulation and
corruption. It is written for the Budweiser crowd, so be sure to skip it.
Closing chapters of the book delve into topics like Enron,
accounting fraud, the market bubbles and hyped analyst reports. This
material is competently presented, but Prins is speaking largely from second
hand experience. If you already know about these topics—these days, who
doesn't?—you will find yourself skimming.
As an author myself, I know the challenges of writing a good
book while satisfying the peculiar demands of a publisher. With this book, I
wish Prins could have focused more on her banking experiences and left out
all the populist Enron-bubble-fraud stuff. She hardly relates anything about
her own personal experiences, which I am sure many less experienced readers
would have appreciated. That being said, much of this book is fascinating
and informative—well worth a careful read. [12/3/05]
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