Submitted by Knute Knutson:

As I imagine many of your are, I'm an avid reader of Gillian Tett?s Financial Times columns, I therefore purchased her recent book, Fool's Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe, shortly after its release. Ms. Tett is head of financial market coverage at the FT. She was named British journalist of the year in 2008 for her coverage of the financial crisis. With a PhD in social anthropology, she has an unusual background for a financial journalist.

The book traces the development of the credit derivatives market from its inception circa 1994 to its eventual blowup. It does so by profiling a group of J.P. Morgan bankers that were instrumental in the invention and proliferation of credit derivatives. In a nutshell, the storyline is that these bankers started a well-intentioned revolution that eventually spun out of control when other greedier or less competent players got involved. From a publisher?s standpoint, Fool?s Gold is arguably the ideal mass-market book about the financial crisis: it is timely, has engaging characters and an engrossing story, and is written on a level that is easily understandable to laypersons with little or no previous knowledge of derivatives or finance. It also does a good job of coherently explaining how the financial meltdown happened. Even though I had closely followed the financial crisis as it unfolded in real time, I still learned quite a bit from the book, particularly in terms of the big picture. Overall, I found Fool?s Gold to be an engrossing enjoyable read. But ultimately, its pleasures were superficial, a sugar high rather than a good meal.

My main criticism of the book is that it often reads like a puff piece. All of the story?s ?heroes? (e.g., the JPM bankers, Jamie Dimon, Tim Geithner) are portrayed flatteringly. The author, an active journalist, presumably had to cast her sources in a favorable (or at least not harsh) light lest she jeopardize her future access to them. Or she could have gotten too involved in their view of the story and lost objectivity. The dustjacket blurb boasts of the author's "exclusive access to JPMorgan Chase CEO Jamie Dimon and...the 'Morgan Mafia,' as well as in-depth interviews with dozens of other key players, including Treasury Secretary Timothy Geithner."

Fool's Gold portrays JPM as more prudent and risk-averse than other banks and, by virtue of these qualities, largely unscathed by the financial crisis. To wit, another quote from the dustjacket: "Tett's access to Dimon and the J.P. Morgan leaders who so skillfully steered their bank away from the wild excesses of others sheds invaluable light not only on the untold story of how they engineered their bank's escape from carnage but..." In contrast to such a hagiographic portrayal, Institutional Risk Analytics recently had this to say about JPM:

Many of our clients believe that JPM is the last redoubt for both cash and collateral. We remind them, however, that all of the bailouts to date engineered by Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke, including the merger of Bear Stearns, the acquisition of WaMu and the rescue of American International Group (NYSE:AIG) were designed to prevent the trigger of CDS and the resultant evaporation of JPM. The bank is an afterthought compared to the OTC derivatives exchange that JPM has become.

Suffice it to say that JPM may not be as pristine a hero as Fool?s Gold would have us believe. But the book certainly is a PR coup for JPM.

I had a couple of other quibbles. For one, I felt the book paid short shrift to events post Bear Stearn?s collapse. I got the impression that it may have been rushed into print. Second, I was disappointed in the author?s closing comments, which came across to me as obligatory and largely platitudinous. Nonetheless, I found Fool?s Gold to be a worthwhile read despite its shortcomings (and my review may be guilty of accentuating the negative), but I suspect that many Naked Capitalism readers would consider it to be lightweight fare.

I had a couple of other quibbles. For one, I felt the book paid short shrift to events post the Bear Stearns collapse. I got the impression that it may have been rushed into print. Second, I was disappointed in the author?s closing comments, which came across to me as obligatory and largely platitudinous. Nonetheless, I found Fool?s Gold to be a worthwhile read despite its shortcomings (and my review may be guilty of accentuating the negative), but I suspect that many Naked Capitalism readers would consider it to be lightweight fare.