Library:Liar's Poker
| Liar's Poker: Rising Through the Wreckage on Wall Street | |
|---|---|
| Author | Michael Lewis |
| First published | 1989 |
| ISBN | 978-0-393-02750-1 unverified |
| Role | Primary source |
| Domains | Business, Finance & Scams |
| Tactics | Fraud or Scam Propaganda Technique |
Liar's Poker: Rising Through the Wreckage on Wall Street is a 1989 book by Michael Lewis.
Summary
Liar's Poker is Michael Lewis's memoir of his years as a bond salesman at the investment bank Salomon Brothers in the mid-1980s. Lewis joined the firm after studying art history at Princeton and economics at the London School of Economics, and within a short time was selling bonds to institutional investors and earning large bonuses. The book, his first, describes a culture of aggression, bravado and cynicism, and how salespeople were encouraged to profit at their customers' expense. It became a bestseller and remains one of the most widely read books about Wall Street.
Salomon Brothers
In the 1980s Salomon Brothers was one of the most powerful firms on Wall Street, dominant in bond trading. Lewis describes its trading floor as a loud, competitive place where the most successful traders were celebrated. He recounts the training program for new recruits and the firm's internal hierarchy, in which traders and salespeople jockeyed for status and money.
The mortgage bond machine
A central part of the book describes the rise of the mortgage-backed bond, pioneered at Salomon by a department led by Lewis Ranieri. The department bundled home mortgages into securities that could be traded, creating a huge and profitable new market. Lewis shows how the complexity and novelty of these instruments gave traders an advantage over their customers. The same market would later be at the center of the 2008 financial crisis, which Lewis described in The Big Short.
Selling to customers
Lewis writes candidly about being encouraged to sell bonds that the firm wanted to get rid of, sometimes to customers who trusted him, and about how the firm's interests and its clients' interests often conflicted. He describes salespeople "blowing up" customers, persuading them to buy securities that later lost value. The book's title comes from a gambling game played by traders using the serial numbers on dollar bills, and Lewis relates a story of a challenge involving the firm's chairman, John Gutfreund, and the bond trader John Meriwether.
Relevance to Bullshitopedia
Liar's Poker is a first-hand account of how a financial culture can reward deceiving customers while calling it salesmanship. It helps explain why the advice of salespeople whose pay depends on transactions should be treated with caution, and it provides background to later financial crises.
Related entries
- AAA ratings on subprime mortgage securities
- Stratton Oakmont stock recommendations
- The Big Short (Lewis)