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No More Heroes

Michael Lewis tries hard to pluck champions from the financial crisis in his new book, The Big Short, but overlooks the most weirdly authentic hero of all.

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As stories go, the financial crisis has had one major deficiency: no heroes. Sure, cases have been made for Ben Bernanke and Hank Paulson and their efforts at yanking the world economy back from the precipice. But equally strong arguments have been made that both men were too complicit in the run-up to the crisis to deserve much credit for putting out the fire with bucketloads of other people's money.

Most of the hero worship, therefore, has been lavished on those who actually did see the crisis coming. In his excitably named book The Greatest Trade Ever, Wall Street Journal reporter Gregory Zuckerman lauded a scrappy band of hedge-fund managers, anchored by now-billionaire John Paulson, who saw the collapse coming and managed to profit from it.

Michael Lewis, the great narrative-nonfiction master of our time and a heroicizer nonpareil (just ask Jim Clark or Billy Beane), covers much the same territory in his new book, The Big Short, which shares a few characters with Greatest Trade Ever, like Greg Lippman, a flamboyant bond trader at Deutsche Bank, and Michael Burry, a former neurosurgeon with Asperger’s. Lewis treats them as a group of brilliant oddballs who made a mint while the rest of us freaked out. Because of this and their opposition to a Wall Street establishment he considers corrupt, he views them as the conscience of their profession. But should we?

Lewis’s main character is a former research analyst for Oppenheimer named Steve Eisman, whose own wife describes him as “sincerely rude.” Precisely because he was so disinterested in getting along with others, Eisman was able to detach himself from the industry groupthink and appreciate the spectacular risks of the growing subprime lending market and how securitization disguised these risks. It was very hard to bet against this market until Eisman then discovered the beauty of credit-default swaps, a form of insurance that institutions such as AIG sold against fixed-income securities. For Eisman, the great thing about CDSs was that you could buy the insurance without owning the securities, and thus rake in the profits if and when the securities dropped in value. As the years went on, Eisman amassed a huge cache of these swaps, mostly against mortgage-backed bonds. When the credit crisis hit, it was as if he held flood insurance on all of New Orleans right before Hurricane Katrina, without actually owning a single house that, like, needed to be rebuilt or anything. He made a killing, as did the handful of others whom Lewis champions.

In Lewis’s telling, this merry insurgency fleeced all the hucksters and ignoramuses who were trying to fleece them, and there’s a certain David-versus-Goliath pleasure in their victory—but all they did was get rich. No concerted effort was made to alert regulators or the broader public. Lewis’s heroes engaged in activities that were fundamentally the same as the rest of Wall Street’s, which he describes as “getting rich shuffling bits of paper around to no obvious social purpose.”

If Lewis had wanted a more authentic hero, he should’ve written the book about Madoff whistle-blower Harry Markopolos, who, with not enough help, wrote his own. Markopolos is an extraordinary character with a complex array of motives. A hard-nosed military reservist whose dad owned a diner in Erie, Pennsylvania, he first became aware of Bernie Madoff when his employer, an options-trading firm based in Boston, asked him to devise a financial “product” that could match Madoff’s returns. Markopolos couldn’t do it, and deduced that Madoff must be a crook. Thus began a failed decadelong campaign to arouse the interest of regulators and journalists. Pride and a sense of fairness, as much as anything, were the driving factors.

For all this, Markopolos is not a mass-market figure. He’s too weird and off-kilter. At one point, after years of frustration, he admits that he “had worked out my plan to go to New York and kill” Madoff. But unlike the gung-ho pessimists who populate Lewis’s book, he’s no cynic. He’s a closet optimist, so he closes his book with a list of reforms needed to protect the world from future Madoffs. It doesn’t make for scintillating reading, but it displays an interest in something other than his own net worth, and in the context of Wall Street, that is heroic.


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