Andrew Ross Sorkin on the financial crisis

An interview with the Samuel Johnson Prize-shortlisted author.

This year's shortlist for the Samuel Johnson non-fiction book prize has been announced. Among the nominations is Too Big to Fail, an account of the collapse of Lehman Brothers by the New York Times journalist Andrew Ross Sorkin. Republished below is Jonathan Derbyshire's 2009 interview with the author -- and you can read Paul Mason's review of the book here.

Too Big to Fail is based on remarkable access to the main players in the financial crisis.

It's very important that the reader is able to see what these people thought and said to each other during this calamitous period. And I think that when you get in the room with them and you get to hear what they were thinking, there are moments where you'll wince and cringe and, in some cases, get immensely frustrated with them. There are very few heroes in this book.

Those involved seemed to sleepwalk towards catastrophe. Why was that?

It's a story of greed, at some level. And it's a story of hubris. It's about a grab for power. I actually think that, in the end, the dollar figure is not necessarily the motivating force. The money is almost a scorecard for everything else. When you see these people in their moments of panic, I'm sure they're thinking about their wallets, but they're also thinking about the power that they have. We talk about institutions that are too big to fail -- I think the story is as much about people who think they are too big to fail.

You argue that Dick Fuld, chief executive of Lehman Brothers, was driven much less by greed than some of the other main players.

Dick Fuld has been villainised, but in the context of this book, he's more of a tragic figure. Remember, Fuld had a billion dollars of stock in the company -- he had more skin in the game than anyone else in the world. And yet he rides it down to $65,000. What does that say? I don't know. And I wouldn't say I'm sympathetic with him per se, but the reason I suggest he's a tragic figure is that there's a big likelihood that we'd have villainised every other CEO had the government not saved them.

Fuld blamed the collapse of Lehman on short-selling. Was he right to do so?

It's very hard to blame the short-sellers for this debacle. There's no question that they exacerbated the problem but, in many ways, there were good reasons to short stocks and I don't think that was what put pressure on these companies. Look at the hedge-fund manager David Einhorn: he saw the writing on the wall earlier and better than most other people. It's the people who have an incentive to find the problem who usually find the problem.

You appear to credit the former treasury secretary Hank Paulson, and his successor, Timothy Geithner, with having foreseen the disaster.

You have all these people who see the train barrelling down the track. And yet they still don't completely get out of the way. You can give them credit for having spotted the train -- that's great. But do I think they mitigated the disaster? Well, that's a larger question. It's hard to argue that they didn't bring us to the brink. But you could also argue that they took us back from the brink. So, for me, it's a much more mixed record. You can't simply credit these people with having foreseen the disaster. You can give Paulson credit for talking about the need for a resolution authority, which he did in June 2008. Tim Geithner is someone else who seemed to be talking about this a lot. But as for actually doing something -- that's another matter.

What about the wider historical context to the crash of 2008?

Many of the seeds of the debacle were sown ten years ago, with some of the issues around monetary policy, sub-prime mortgages, deregulation, the lowering of capital requirements at banks -- all of those things contributed to this. So by the time my book begins, many of the problems are already baked in. What you're watching here is people at the moment of emergency. I originally thought the book would just cover September 2008. But once I started doing the reporting, I realised that the treasury was trying to orchestrate a deal for Lehman with Barclays as early as the spring. It made me rethink the scope and narrative arc of the book.

And politics matters, doesn't it? The repeal of the Glass-Steagall Act in 1999, for example, was crucial.

The repeal of Glass-Steagall allowed the casino to be attached to the bank. Expanding home ownership exacerbated the problem. As did the decision to keep interest rates low for long periods of time. So you have the regulators clearly not minding the store and Wall Street taking advantage of rules that aren't properly enforced.

Andrew Ross Sorkin, the author of "Too Big to Fail", is the chief mergers and acquisitions reporter for the New York Times

Daniel Trilling is the Editor of New Humanist magazine. He was formerly an Assistant Editor at the New Statesman.

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Shami Chakrabarti’s fall from grace: how a liberal hero lost her reputation

Once, it was trendy to say you liked the former director of Liberty. No longer.

It might be hard to remember now, but there was a time when it was trendy to like Shami Chakrabarti. In the mid-2000s, amid the Iraq War backlash and the furore over identity cards, speaking well of the barrister and head of the human rights campaign group Liberty was a handy way of displaying liberal credentials. She was everywhere: Question Time, Desert Island Discs, Have I Got News For You. A young indie band from Worcester called the Dastards was so keen on her that it even wrote a song about her. It included the lyric: “I turn on my TV/The only one I want to see/Is Shami Chakrabarti.”

The daughter of Bengali immigrants, Chakrabarti was born and brought up in the outer-London borough of Harrow, where she attended a comprehensive school before studying law at the London School of Economics. Her background was a great strength of her campaigning, and during the most authoritarian years of New Labour government she burnished her reputation.

Fast-forward to 13 September 2016, when Chakrabarti made her House of Lords debut as a Labour peer. Baroness Chakrabarti of Kennington wore a sombre expression and a rope of pearls looped round her throat beneath her ermine robe. It was hard to recognise the civil liberties campaigner who was once called “an anarchist in a barrister’s wig” by Loaded magazine.

Yet Chakrabarti has also been cast in another role that is far less desirable than a seat in the Lords: that of a hypocrite. On 29 April this year, Jeremy Corbyn announced that Chakrabarti would chair an independent inquiry into anti-Semitism and other forms of racism in the Labour Party. The inquiry was prompted by the suspensions of Naz Shah, the MP for Bradford West, and Ken Livingstone, for making offensive remarks that were condemned as anti-Semitic. On 16 May Chakrabarti announced that she was joining Labour to gain members’ “trust and confidence”. She said that she would still run the inquiry “without fear or favour”.

The Chakrabarti inquiry delivered its findings on 30 June at a press conference in Westminster. The atmosphere was febrile – there were verbal clashes between the activists and journalists present, and the Jewish Labour MP Ruth Smeeth was reduced to tears. The report stated that Labour “is not overrun by anti-Semitism, Islamophobia or other forms of racism” but that there was an “occasionally toxic atmosphere”. It listed examples of “hateful language” and called on party members to “resist the use of Hitler, Nazi and Holocaust metaphors, distortions and comparisons”. Many Labour supporters were surprised that the report’s 20 recommendations did not include lifetime bans for members found to have shown anti-Semitic behaviour.

Then, on 4 August, it was revealed that Chakrabarti was the sole Labour appointment to the House of Lords in David Cameron’s resignation honours. Both Chakrabarti and Corbyn have denied that the peerage was discussed during the anti-Semitism inquiry. But critics suggested that her acceptance undermined the report and its independence.

In particular, it attracted criticism from members of the UK’s Jewish community. Marie van der Zyl, vice-president of the Board of Deputies of British Jews, said: “This ‘whitewash for peerages’ is a scandal that surely raises serious questions about the integrity of Ms Chakrabarti, her inquiry and the Labour leadership.” A home affairs select committee report into anti-Semitism in the UK has since found that there were grave failings in the report for Labour.

Two further incidents contributed to the decline in Chakrabarti’s reputation: her arrival on Corbyn’s front bench as shadow attorney general and the revelation that her son attends the selective Dulwich College, which costs almost £19,000 a year in fees for day pupils (£39,000 for full boarders). She said that she “absolutely” supports Labour’s opposition to grammar schools but defended her choice to pay for selective education.

Chakrabarti told ITV’s Peston on Sunday: “I live in a nice big house and eat nice food, and my neighbours are homeless and go to food banks. Does that make me a hypocrite, or does it make me someone who is trying to do best, not just for my own family, but for other people’s families, too?”

This was the end for many of those who had respected Chakrabarti – the whisper of hypocrisy became a roar. As the Times columnist Carol Midgley wrote: “You can’t with a straight face champion equality while choosing privilege for yourself.”

Hypocrisy is a charge that has dogged the left for decades (both Diane Abbott and Harriet Harman have fallen foul of the selective school problem). The trouble with having principles, it is said, is that you have to live up to them. Unlike the right, the left prizes purity in its politicians, as Jeremy Corbyn’s squeaky-clean political image shows. Shami Chakrabarti started the year with a campaigning reputation to rival that of the Labour leader, but her poor decisions have all but destroyed her. It’s difficult to recall a time when a liberal icon has fallen so far, so fast. 

Caroline Crampton is assistant editor of the New Statesman.

This article first appeared in the 20 October 2016 issue of the New Statesman, Brothers in blood