The genre of narrative business books that I love so much - the ones that have a you-are-there quality - was invented, or so it is said, in 1982 by David McClintick, who wrote 'Indecent Exposure,' a rollicking good read about a Hollywood scandal and the ultimate boardroom power struggle at Columbia Pictures.
Several companies have explicit policies against cronyism, with good reason. Hiring a family member simply for a relationship can be troubling and may not necessarily serve a company's interests. But by and large, financial firms in particular commonly hire people who have certain connections, whether through family or a business relationship.
Under the Foreign Corrupt Practices Act, a company is not allowed to provide a personal benefit to a decision maker in return for business. But hiring the sons and daughters of powerful executives and politicians is hardly just the province of banks doing business in China: it has been a time-tested practice here in the United States.
In truth, in the fairy-tale version of bailing out Lehman, the next domino, A.I.G., would have fallen even harder. If the politics of bailing out Lehman were bad, the politics of bailing out A.I.G. would have been worse. And the systemic risk that a failure of A.I.G. posed was orders of magnitude greater than Lehman's collapse.
Here's the perversity of Wall Street's psychology: The more Wall Street is convinced that Washington will act rationally and raise the debt ceiling, most likely at the 11th hour, the less pressure there will be on lawmakers to reach an agreement. That will make it more likely a deal isn't reached.
What if the slowdown in merger activity isn't cyclical, but secular? What if corporations have learned the lessons of so many companies before them that the odds of a successful merger are no better than 50-50 and probably less? Is it possible that the biggest deals have already been done?