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“What we thought was a surprise, others did see coming,” <i>Too Big to Fail</i> author Andrew Ross Sorkin said of the 2008 financial meltdown.

Andrew Ross Sorkin

Kellogg Distinguished Lecture Series: Andrew Ross Sorkin

New York Times reporter and bestselling author reveals the drama behind the 2008 financial crisis

By Amy Trang

2/12/2010 - New York Times reporter Andrew Ross Sorkin says he “freaked out” in September 2008.

 
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 That month, Sorkin covered the bankruptcy and eventual dissolution of Lehman Brothers. AIG received a multi-billion-dollar bailout from the government. Mortgage buyers Fannie Mae and Freddie Mac were nationalized.
 
There were rumors that other banks were going under and that the U.S. was only hours away from a total economic meltdown. The troubling financial events played out like a movie in Sorkin’s mind.

His wife said it sounded more like a book.

Sorkin took that suggestion to heart and turned the real-life drama into Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System – and Themselves, published in October 2009.

The mergers and acquisitions reporter translated nearly 500 hours of interviews for the 624-page book to describe what happened during the financial meltdown of 2008 and thereafter.

“I wanted to bring the public behind the scenes, behind the headlines,” said Sorkin, who interviewed more than 200 people for the book. “I wanted to make it personal and human. It was a human drama about people who thought they were too big to fail.”

Sorkin, also the editor of the online financial report DealBook, was the latest speaker in the Kellogg School’s Distinguished Lecture Series. He talked to students Feb. 9 in the Thorne Auditorium at Northwestern University’s downtown Chicago campus, home of the Kellogg School’s Part-Time program.

Sorkin said he modeled his book after the movie “Crash” and sought to show how very different people’s stories eventually intertwined. He also wanted readers to draw their own conclusions as to the actions of the protagonists, including Lehman Brothers Chairman and CEO Richard Fuld and Treasury Secretary Henry Paulson.

“I wanted to let people make their own judgment about the situation,” Sorkin said. “It’s like a Quentin Tarantino film, where everyone walks away thinking they saw a different movie. I wanted the book to be like that.”

He said there were many surprises that came out of the crisis and his research — including the extent of the government’s intervention. For example, the Troubled Asset Relief Program (TARP) was announced publically in September 2008 — but Sorkin learned that a similar program had been discussed by the Treasury Department in a secret memo in April of that year.

Sorkin also said the government — in particular, Paulson — became a deal machine, trying to orchestrate mergers to save Lehman Bros., talking to Bank of America, Barclays and businessman Warren Buffett.
“You realized that the government knew more than they were leading on,” Sorkin said. “What we thought was a surprise, others did see coming.”

The Kellogg Distinguished Lecture Series features preeminent thought leaders from the worlds of academia, journalism and business. Speakers in the 2009-2010 series include New York Times columnist Gail Collins; Donald Kohn, vice chairman of the Federal Reserve Board of Governors; author, professor and Pentagon consultant Bruce Bueno de Mesquita; Promod Haque ’83, managing partner at Norwest Venture Partners; and Jean-Claude Trichet, president of the European Central Bank.