Roger Lowenstein’s book “The End of Wall Street” is a font of information regarding the recent financial crisis. Beautifully written in clear and simple language, it explores the environment that created the house price bubble and the impact on the mortgage market particularly with regard to subprime and Alt –A mortgages. Each chapter elaborates on the layers of riskiness added to financial systems, first by mortgage originators, then by investment banks, then by default insurers, and even by the inaction and then the seemingly ineffective action of the regulators; followed by the tipping of the scale and a reversal of fortunes for some of the biggest names on Wall Street.
It reveals the shamefulness of financial system excesses-poor underwriting, non-existent due diligence processes, excess risk taking in the form of risky asset purchases and inadequate reserving and pricing, inappropriate incentive/ compensation and bonus schemes; of the cocky and overconfident attitudes of those most at fault- severely undercapitalized and overleveraged entities that blindly followed inappropriate models that were not adequately stressed and with the arrogant belief that the market (or the government) would always be there to provide liquidity when needed.
The book makes for a thrilling read but is also a vault of knowledge into how the crisis progressed detailing how entities like Fannie Mae, Freddie Mac, Bear Stearns, Lehman, Merrill Lynch, AIG, Wachovia, Washington Mutual, JP Morgan, Morgan Stanley, Citigroup, etc each weathered and in some cases such as Lehman for example, succumbed to the storm; the steps taken (or lack thereof) by these entities to control and reign in their risk and by regulators to reverse and reduce the systemic trend.
The author highlights the importance of being adequately capitalized stating that “in a crisis only capital will ensure an institutions survival”. This is evidenced by the fact that despite the numerous and repeated efforts made by the regulators to increase liquidity in the financial markets during the crisis, customers and investors were not enticed to re-enter the market not until the regulators finally made capital injections into the banking system. By then the US economy had already entered into a deep recessionary period.
I recommend this book to anyone interested in knowing more about the recent financial crisis that have impacted lives worldwide. Like me before reading the book, we all have had some vague awareness of what transpired during those terrifying years but are unfamiliar with the actual chain of events. I would also suggest this book as a must-read for those involved in the highly responsible roles of evaluating risks in the financial sector. Valuable lessons were learned here, lessons we could all benefit from and errors which we would like to steer clear off.
Obtaining a job in the accounting field uullasy requires an associate or bachelor degree in accounting or related field. One may have a better chance of meeting job qualifications with a CPA certificate. In order to acquire a job in the financial industry depends on the type of position. For example, if you are trying to gain employment as a financial advisor, you most likely will need some type of business degree and the firm that is hiring provides in-house training. However, if you are trying to become a financial analyst, a finance related education will likely be a requirement. As you move through your career, you may want to consider earning a master’s of accounting or master’s of finance to earn promotions or move to a better position. Certifications are also a great way to heighten your potential. These include, but are not limited to: Certified Fraud Examiner, Certified Information Systems Auditor, Certified Internal Auditor, Certified Management Accountant, Certified Public Accountant, Enrolled Agent, Certified Government Financial Managers. Some entry to mid-level accounting jobs and salary include: Staff Accountant $36,297 (25th percentile)Staff Accountants prepare balance sheets, profit and loss statements, and other financial reports. Their responsibilities also include analyzing trends, costs, revenues, financial commitments, and obligations incurred to predict future revenues and expenses. They report on their organization’s finances to management, and offer suggestions about how to use resources, tax strategies, and help create budget forecasts.Tax Accountant $40,528 (25th percentile)Tax Accountants maintain tax records and prepare tax returns, related schedules, and related reports. They prepare paperwork for local, state, and federal level returns, and may deal with tax agencies on behalf of their clients.Mortgage Quality Assurance Auditor $42,627 (25th percentile)Mortgage QA Auditors ensure that mortgage loans procedures are being met according to their company’s guidelines and policies. They must be familiar with the standard concepts, practices, and procedures within the mortgage industry.Auditing Supervisor $46,405 (25th percentile)Auditing Supervisors oversee the auditing of accounting and financial data within the various departments in an organization. They Inspect and audit the operations and finances of the organization and report any evidence of fraud.Banking Commercial Loan Processing Manager $48,305 (25th percentile)Banking Commercial Loan Processing Managers manage all facets of commercial banking and business loan processing including loan origination, processing, and closing. They must be familiar with a variety of the standard concepts, practices, and procedures within the banking industry.Note: Salary data listed above includes the salaries in the 25th percentile, factored from throughout the United States, for a range of Accounting careers, according to figures available from salary.com.If you are able to earn a degree, you should not have too much of a problem finding a job as the demand for trained accountants is expected to keep growing over the coming years. Best of luck to you.