All the Devils Are Here

Key takeaways:

- Risk/compliance are among the most important roles in a financial institution. They should not be silenced or sidelined.
- If something is too complicated to understand, avoid it.
- Don't get suckered into the new, flashy, sexy products. If you decide to explore new areas, don't invest more than you can afford to lose.
- Even the ‘smartest' people missed a lot during this crisis. Don't pretend to be smart to fit in. If something doesn't work or doesn't make sense don't be embarrassed to ask questions.
- When moving into new areas or developing new products, look for what could go wrong. Put aside your optimism for this. Think 30 moves ahead.
- Capital requirements are not your enemy.
- Look for connections and interdependency. You can run a great organization, but you are still exposed to the errors of your counterparties.
- Don't ignore warning signs. Always consider them.
- Exercise your pessimism muscles.
- Something can ALWAYS go wrong

Found this book extremely interesting, especially in conjunction with “The Big Short,” by Michael Lewis and “Too Big to Fail.” There is very little overlap and they all work extremely well looking at different aspects of the build up to the credit bubble, trades long and short through the bubble and the goings on at the various financial firms during the meltdown.

I would highly recommend all three books to get a proper understanding of what happened.