Wednesday, October 14, 2015

Morris, Wall Streeters

Edward Morris sets out to do for American finance what Paul de Kruif did for biology (The Microbe Hunters) and Robert Heilbroner for economics (The Worldly Philosophers). Through the stories of fourteen influential men, he traces “the development of financial innovations, the growth of financial markets, and the causes of financial crises.” For a variety of reasons having nothing to do with the quality of Morris’s book, Wall Streeters: The Creators and Corruptors of American Finance (Columbia Business School Publishing, 2015) will probably not attain the stature of the works he emulated. But it puts a human face on Wall Street as few finance textbooks do. After all, finance is not simply numbers; it’s also, and even more so, people.

Morris starts with J. Pierpont Morgan. He then profiles three reformers: Paul M. Warburg, Carter Glass, and Ferdinand Pecora. Two democratizers follow: Charles E. Merrill and John C. Bogle. Then come three academics: Georges F. Doriot, Benjamin Graham, and Myron S. Scholes. And three financial engineers: Alfred Winslow Jones, Michael R. Milken, and Lewis Ranieri. And finally, two empire builders: William H. Donaldson and Sanford I. Weill. Each chapter is about twenty pages long.

Just as history can’t be carved up into discrete periods, so Morris’s “lives” don’t always begin and end in the chapters that bear their names. Morris isn’t writing birth-to-death biographies. His focus is on the effect these fourteen people had on the financial world, and effects linger and overlap.

It’s not that he ignores personalities. Morris writes, for instance, that “Milken and Ranieri had little in common. Milken was taut and slender, with a no-nonsense, scholarly mien; except when the subject turned to business, he had little to say and his social life seldom veered from small family affairs. Ranieri, on the other hand, had a Rabelaisian personality and was loud and generally uncouth. He was infamous at Salomon as the perpetrator and subject of outrageously elaborate and sometimes profane practical jokes among his fellow bond traders—while Milken, when the Drexel traders hired a stripper to dance on his desk for his thirty-eighth birthday, simply retreated under the desk with his phone and continued trading.” (p. 252) But the bulk of the chapter on Milken deals with junk bonds; Ranieri’s chapter, with the MBS machine that he started and the rise of quantitative finance. “Mortgages are math” was one of his mantras.

Experienced Wall Streeters will enjoy this book. Students of finance should be required to read it.

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