Exile from Wall Street a Disappointment

Mayo I am trying to diligently finish up my multi-year project of reading and reviewing every noteworthy book pertaining to the great financial crisis of 2008. I have been quite behind in a lot of the reading I have assigned myself in this project (though am getting caught up), and remain quite behind in many of the reviews that need to be written. In the interest of moving this project forward, I recently completed several books in a week, choosing to focus on a few that I thought would be particularly engaging (thus motivating me to read the book and then review it). The brand new Exile on Wall Street by well-known financial analyst, Michael Mayo, is one that I would have guessed met this criteria. Sadly, I finished the book devastated that I had read it instead of several others I wish I had, and also extremely non-motivated to review it. Let me explain …

More than nearly any other book thus far, the hype behind this book was that it would really show in-depth the ways in which the post-2008 banking system is just as vulnerable as before the crisis. The author promises to show exactly how the nation’s financial institutions have not learned anything from the crisis, and specifically why history is bound to repeat itself. This seems like an ambitious but exciting project. Sadly, the book essentially amounts to a rather bizarre tale of self-congratulation by the author and a gigantic exercise in self-righteous vindication. I should say that I have not met the author personally, though I have read his research for years. He is a well-respected and gifted analyst. I really want to be very hard on him in this review as his book is just not very good, but I like Mr. Mayo’s work and don’t want to seem like I am piling on. The bottom line is that I do not recommend the book for two reasons: (1) It is just as clear as can be to anyone objectively reading it that it was not written to provide readers any new insights or analysis, but rather to try and settle scores. I will leave it for others to determine if he has a right to want this or not, but I think it is unfair to subject readers to his quest for personal vindication. (2) The book is supposed to be an analysis of what financial and banking issues got us into the crisis, and more particularly where these things seem likely to repeat themselves now. How can anyone be taken seriously who addresses this topic and does not, even one time, discuss the role of monetary policy and the Fed? In fact, I am almost certain that Ben Bernanke’s name does not even appear in the book. I can appreciate Mr. Mayo’s desire to protect his old employer (he was a junior analyst at the Fed before becoming a Wall Street banking analyst), and I can further respect that his objective was to hit the financial institutions he felt deserve hitting, but my feeling is that the book lacks a degree of credibility because of this glaring oversight.

Look, I suspect Mr. Mayo really does believe the narrative as he has laid it out (that he was a beacon of virtue and integrity trying to call balls and strikes in a system that was punishing him for not rigging the game). I can’t possibly bring myself to buy into his version of the whole narrative, but I am sure he believes it. My point is that I don’t think it is interesting or pertinent. (It bears noting that one of the major “selling points” of the book is that Mayo was one of the only analysts out there who accurately predicted the crisis, a notion not worthy of responding to when one considers that he had a BUY recommendation on Lehman Brothers all the way up until just a couple days prior to their bankruptcy announcement; “other than that, how was the play Mrs. Lincoln?”). We had major structural flaws in the financial system that played a role in this crisis, but I do not see Mayo providing the kind of analysis of those flaws that I believe he is amply capable of providing in this book. We have a post-Dodd/Frank environment now that could be dissected by a gifted analyst like Mayo, but instead got a sort of biographical plea for approval and back-patting. If I sound harsh, it is not intentional. I was just disappointed in the book, and would not recommend it for readers looking to gain insights on the great financial crisis of 2008. Will I still read the research of Michael Mayo? You bet! I just may not rush his next book to the top of my pile …