A crisis observed

Victors get to write the history books, but the 2008 financial crisis did not leave many people able to claim the title. Besides the Great Depression, the events of 2008 were the most dramatic economic events in the last 100 years. As the markets began to stabilize in 2009, many authors began seeking to explain the causes of the crisis, or remedies to prevent another one. After reading and reviewing most of the credible books on this subject, I think five warrant special consideration:

Greg Farrell's masterful Crash of the Titans (Crown Business), which reads more like a thriller than a financial tale, is a wonderful place to start. Farrell's book focuses specifically on the downfall of Wall Street titan, Merrill Lynch, and is not meant to be a broad synopsis of the entire financial crisis-but understanding the pathologies of the main characters is key to understanding the entire story.

All the Devils Are Here (Portfolio Hardcover) by Bethany McLean, a former Fortune magazine writer, exposes the multiple causes of the crisis, rather than citing just one. She excellently intersects these various causes-government housing policy, an unchecked Fannie Mae/Freddie Mac, the low interest rate policy of the Federal Reserve, Wall Street securitization abuses, etc.-and demonstrates how they built on each other so the mess became inevitable.

Roger Lowenstein's The End of Wall Street (Penguin) is not particularly ideological, which is actually refreshing since the majority of the ideological books out there basically get it all wrong by asserting that the entire crisis came down to the greed of a few Wall Street companies and the willingness of the government not to regulate them. Lowenstein, as he does often in insightful books and articles, gives readers a compelling play-by-play, but without a political agenda that destroys his credibility.

Andrew Ross Sorkin's Too Big to Fail (Penguin) is one of the longest books about the crisis and understandably one of the most widely read. (HBO recently premiered a feature film of the same title based on Sorkin's book.) For anyone wanting "inside analysis" of key 2008 events including the bailout of AIG, the non-bailout of Lehman Brothers, the passage of TARP, and the massive changes that took place on Wall Street, Too Big to Fail is fascinating, compelling, and educational.

The Housing Boom and Bust (Basic Books) by Thomas Sowell is of a very different nature than the others in this list: He argues that there would have been no bust had there never been a boom, and that this boom was a direct result of terrible government policy. Sowell masterfully analyzes the foolish attempt by several administrations, Democratic and Republican, to implement a social agenda via a national housing policy. Readers may not get the same degree of drama or intrigue that some of the other books offer, but they will get a brilliant treatment of the subject at the very heart of the financial crisis: The government was an accomplice in putting people in homes they did not belong in.

-David Bahnsen is a senior vice president at a leading financial firm

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