Rich Tucker

Near the end of his book, Sorkin writes, “Goldman Sachs and Morgan Stanley would become bank holding companies. It was a watershed event: The two biggest investment banks in the nation had essentially declared their business model dead to save themselves.”

But that’s no surprise. Business models fail all the time. IBM no longer makes PCs. Times change, business models change.

“It is, by any account, a tragedy that Lehman was not saved,” Sorkin writes in his epilogue. “Not because the firm deserved saving but because of the damage its failure ultimately wreaked on the market and the world economy.” Well, the real shame is that so much effort and tax money was spent trying to keep a failing business model alive.

After all that expense, the banking system survives; it’s just an investment banking model, which generated hundreds of millions of dollars for a select handful of people in the ’90s and ’00s, that’s gone away.

Politicians, as is their wont, have drawn the wrong lesson. They claim the economy was “under-regulated.” But if more regulation means giving more power to economic geniuses in Washington, we’d be better off taking our chances with a completely unregulated economy.

The government doesn’t learn from its mistakes, because it’s playing with our money -- or money it’s borrowing in our name. So the Obama administration is making the same mistakes as the Bush administration did -- it’s just propping up a different industry.

Instead of “saving” Wall Street investment banks, Obama aims to “save” GM and Chrysler. In this case, it was shareholders who lost out when Washington engineered an unprecedented bankruptcy procedure. Meanwhile the big unions, longtime supporters of Obama’s party, were given a stake in the new companies and didn’t even have to take pay or benefit cuts. A good deal, as long as the federal bailout money lasts.

But just as there’s no longer an investment bank called Lehman Brothers, there will, eventually, no longer be an automaker named General Motors. At least, not one that looks like the behemoth built up after World War II. That model is dead.

Sorkin’s book is big, but like a staggering Wall Street firm, its sheer size doesn’t keep it from failing. Use it as a doorstop, but don’t look for much insight here.


Rich Tucker

Rich Tucker is a communications professional and a columnist for Townhall.com.