Thumbs Up for Perino’s “Hellhound of Wall Street”
posted by Lawrence Cunningham
The country continues to suffer from bank excesses like high-risk compensation, shoddy customer treatment, and falsely-secured loans. Those excesses occurred amid a giddy market plagued by inept regulation organized by leaders walking through the revolving doors linking high finance and government. Damage includes bank failures, lost savings, and an ongoing, severe economic recession. Fallout has included controversial government bailouts; finger-pointing running back in time to the previous laissez-faire President and forward to his progressive successor; and official hearings to get to the bottom of the abject mess.
I’m writing, of course, about the period from late 1929 to 1933, retold with spellbinding elegance by Michael Perino in his gripping account of the events that culminated in the stunning hearings about the causes of the 1929 stock market crash and the financial failures of that period. Perino’s engaging account focuses on the piotval hearings spearheaded by the unlikely hero, Ferdinand Pecora, lawyer of humble roots and modest standing, whose questioning of legendary Wall Street titans of the day uncovered dirty secrets of the devious financiers whose deception, duplicity and greed stoked the devastation.
The book, The Hellhound of Wall Street: How Ferdinand Pecora’s Investigation of the Great Crash Forever Changed American Finance, is an impressive substantive and literary achievement. In its first half (127 pages) Perino narrates a riveting tale, providing a stimulating back-story, rich characterization, and delicious plot-building; in its second half (150 pages), Perino weaves an amazingly suspenseful account of the ten days of hearings that Pecora conducted probing the exploits of the country’s most powerful bank of the period.
The delightful narrative, which also includes a satisfying 25-page Epilogue (plus good references and index and finely-reprinted photographs), reveals many other eerie parallels between that time and our own. These include the scurrilous anti-immigrant sentiment (then against Italians like Pecora, the book’s protagonist); controversy about short-selling on Wall Street; debates about whether corporations should rivet solely on short-term shareholder profit maximization or adopt broader appreciation of their many constituencies, especially labor; angst about how billionaires and millionaires continue to live the high life while severe economic ruin leaves vast numbers of people homeless, hungry, and destitute; and related disagreements about tax policy.
Among the wonderful features of Perino’s book is how readers get to see and draw these connections themselves. Perino tells the tale, sometimes making explicit links, but mostly letting the normative parts of the story speak for themselves. Perino’s Epilogue notes how Pecora’s investigation led to vital changes of enduring value, particularly the mandatory securities disclosure system and banking regulation. Hence the book’s sub-title.
But as the parallels attest, those legal changes haven’t exactly changed the business, economic or social reality in any meaningful way. Maybe you can’t regulate out greed or duplicity on the one hand or stupidity or gullibility on the other. Or maybe there is a case from history that the considerable deregulation of the 1990s and early 2000s that weakened many of those reforms was a colossal mistake. The book doesn’t lecture on these questions but will inform discussion about them.
Despite parallels, there may be one nagging difference between the period-tale Perino tells and our own groping with eerily similar disaster. Our predecessors were fortunate to have someone like Ferdinand Pecora to uncover top-secret financial shenanigans. No such person appears in our midst, despite what appear to be efforts of some members of the Financial Crisis Inquiry Commission to uncover the truth. Its report is due out in December. Meanwhile, members would do well to read Perino’s Hellhound of Wall Street. It’s a must-read that all adult Americans today will enjoy, and highly-likely to become a best-seller within short order.