The Credit Crunch Diaries

November 10, 2009

For many financial services professionals the 2008 credit crisis was about as amusing as the Hundred Years’ War. So it was refreshing to read “The Credit Crunch Diaries” – a humorous account just released by David Lascelles and Nick Carn.

This fictional tale of the meltdown is told in the parallel diaries of the chief executive and compliance officer of a major bank, Amalgamated Finance for Europe. The diaries chart the bank’s journey from reckless lending to government bailout and finally back to business as usual.

The tension between the pheasant-shooting patrician chief executive and the pedantic and earnest compliance office makes an excellent vehicle for comedy – slightly reminiscent the 1980s comedy “Yes Minister.”

Behind the laughs, lies a serious discussion about the failings of risk management at banks, the arrogance of bank executives and the moral hazard created by government bailouts. Compliance office Parquet is comically small minded, boasting in his diary: “It’s more than a year since I put up “WALK – DON’T RUN” notices in all the hallways and I’m pleased to report that the number of collisions between people and trolleys has been halved.” Meanwhile, Gershon is completely devoid of humility. “It’s not often that the jolly old Treasury gives you 10 billion with no expectation of getting it back,” he says. “Just relax. And enjoy it.”

The book ends on a discouraging note, with Gershon quipping that AFFE’s new motto should become “Too Big to Fail.”

Though lighthearted, the book is a powerful critique of the banking industry and government during the financial crisis. If you can stand the occasional rise in blood pressure, it’s well worth a read.

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