Economic Quarterly

Roddy Boyd's Fatal Risk: A Cautionary Tale of AIG's Corporate Suicide and Greg Farrell's Crash of the Titans: Greed, Hubris and the Fall of Merrill Lynch and the Near Collapse of Bank of America are reviewed to analyze why AIG and Merrill Lynch nearly failed during the financial crisis of 2007--09. Both books argue that each firm collapsed because of failures of senior management. Using the accounts provided by the books, as well as other sources, the review goes further and argues that both firms were vulnerable to managerial failures because they were inefficiently large, complex, and leveraged, that is, "too big to manage." The review also argues that these firms were able to get to that point because 40 years of governmental interventions in financial markets created the expectation that large financial firms are too big to fail.