Read Alongside The Examiner's Report

Elsewhere, I've reviewed the book, "A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers," by L.G.McDonald and P.Robinson. Here's the review, which still rings true in light of the new data:

"This is a very compelling, informative, and irreverent account of the housing bubble and Lehman's demise. McDonald's distressed debt group was making money shorting the bad actors in these markets. Independently, Lehman's CEO was drinking poison by directing the irratonal purchase of large commercial properties around the world based on no analytics and with no oversight.

Lehman CEO Dick Fuld comes off as aloof and totally isolated from the people who were taking huge risks and making money for his firm. When the fateful meeting with Treasury Secretary Henry Paulson took place and Lehman was at death's door, Fuld's arrogance, a lack of mutual respect , and a misplaced sense of competition with Goldman Sachs probably made Paulson uninterested in bailing out Lehman. In the end, whether it's at Yalta or on Wall Street, so much turns on personalities and on their interactions.

As the bubble grew in earnest from 2003 through 2006, there were ample warning signs, but few took the time, and had the industry and horsepower to challenge the Kool Aid being handed out in the housing market. Distressed debt analyst Christine Daley does old fashioned, analytical grunt work under enormous pressure, and her conclusions that Delta, Calpine, and New Century Financial were going under provided the foundation for traders like McDonald to place enornous bets against these firms that resulted in a $5 million trading profit DAY for the Lehman distressed desk. I know that I would like her if we met--she did the work, took a contrarian stand, felt the heat and made lots of money for herself and the firm. If you haven't worked in or around a trading desk, you'll get a great flavor from reading this book.

If you're interested in genuine financial market reform and what we've learned, you'll have a Scotch and turn out the lights. (From where we are now, this seems prophetic)

The stories and sequence of events in this book dovetail very well with the dryer, more analytic and legal document provided by the Bankruptcy Examiner. It's a sad tale, and one that will likely be repeated sometime in the next up leg of the cycle.