High-Finance Fiction

<i> Frank Partnoy is the author of "F.I.A.S.C.O.: Blood in the Water on Wall Street" (W.W. Norton) and an assistant professor of law at the University of San Diego School of Law</i>

Since the crash of ‘87, the stock market has bullied its way into American culture, luring trillions of dollars into risky investments, minting millionaires by the thousands and exciting interest not only in the market’s maniacal ascent toward the 10,000 mark but also in the wild ride of its participants. The market’s ups and downs are now a staple of life and fit neatly amid the daily pour of statistics from weather and traffic reports, sports scores, lottery results and crime tallies. It is no surprise, then, that the market has invaded literature, too, even creating its own hybrid genre: high-finance fiction.

Novels about Wall Street are blooming like tulip bulbs, and the leading indicators are that many fools--myself included--are hungrily buying them all. These books lure the reader by combining prurient interest (in greed, crime or lust) with the promise of insider knowledge (of markets, companies or management). I can no more avoid reading the next financial thriller, good or bad, than I could have avoided loading up on shares of the Korea Fund six months ago.

“Numbered Account” and “The Velocity of Money” are two recent additions to the genre. “Numbered Account” is a tale of a Wall Street star who leaves New York and his fiancee to work for a Swiss bank where his father was murdered 17 years ago; in the background, an international crime syndicate plots a massive acquisition to rip off the bank. “The Velocity of Money” is a tale of a Wall Street star who joins a new firm, not knowing his predecessor had been murdered a month before; in the background, an international crime syndicate plots a massive securities trade to rip off the entire American stock market. Each book is thick with dollar signs and drama and complex banking deals. I loved every word.


Yet, I must admit that these two books and their genre are a bit of a puzzle. Financial markets are not an obvious source of material for novelists for numerous reasons: Investment bankers are notoriously tight-lipped; they make too much money to bother talking to novelists or researchers or to waste time writing. They’re trained in business and economics, not literature; they neither write nor read well or often. And the sad truth is, finance can be dull and colorless. Early 20th century bankers were mostly boring codgers whose idea of a jolly time was an early bond redemption.

Even after the freewheeling modern banker unseated his drab predecessor, the 1970s and 1980s produced little fiction to reflect the increasing interest in Wall Street. William Gaddis’ “J.R.,” which won the National Book Award in 1975 for its portrayal of a precocious 11-year-old finance guru, and Tom Wolfe’s 1987 novel, “Bonfire of the Vanities,” which dubbed the 1980s investment banker a “Master of the Universe,” were islands in their respective decades.

Through 1993, the best pulp about Wall Street turned out to be true, hence the slew of best-selling nonfiction exposes about trading floors (“Liar’s Poker”), junk bonds (“Predator’s Ball” and “Den of Thieves”) and mergers and acquisitions (“Barbarians at the Gate”). But there was a notable dearth of novels. Even Wolfe’s masterpiece, remarkably well researched, was more fact than fiction.

Then, finally, in the early 1990s, the undercurrents of supply and demand began to shift in favor of high-finance fiction. The supply of wannabe Wall Street novelists exploded in the early 1990s. Bankers yearned to escape the shackles of corporate hierarchy and the pressure of daily performance. The industry was consolidating, and job satisfaction and security were low. As a derivatives salesman during this period, I watched dozens of my colleagues become discontent, despite their millions in bonuses. The hard-driving climate overwhelmed even the hardiest personalities; most burned out by the time they turned 30. A few daring malcontents finally responded to the chorus we all heard almost daily: “Somebody’s gotta write a book about this.” Hence, supply.

The demand for Wall Street novels exploded simultaneously. Beginning in 1994, the financial markets were a source of great drama: Markets gyrated from minute to minute as they headed for the moon; prosecutors tried unsuccessfully to keep pace with securities miscreants, including the mob; reputable institutions, such as Orange County, lost billions and collapsed. There was even a global manhunt for Nick Leeson, the 28-year-old Singapore trader whose arbitrage strategy devolved into casino gambling and buried the venerable Barings Bank.

The audience for stories about this exotic world expanded as average investors, feeding 6,000-plus mutual funds with hearty helpings of cash each month, began to learn the trading lexicon and did pretty well, too. Churches, school events and dinner parties across the country were filled with talk of 30% annual returns. Wall Street created not only millionaires but billionaires. When George Soros began spending hundreds of millions on philanthropy, we all wanted to be like him. His books were instant best-sellers. Retirees, especially wealthy corporate executives (many of whom hadn’t read a novel in decades), thirsted for stories about the world generating these spectacular returns. And they weren’t about to tackle William Gaddis’ stream-of-consciousness. They demanded pulp, and they got it.


In the early 1990s, four young authors with investment banking experience wrote successful first novels set in the financial services industry: Po Bronson, Linda Davies, Stephen Frey and Michael Ridpath. Their stories pit young, righteous, virile financier heroes (and a few heroines) against middle-aged financier demons. The battle scenes are littered with fraudulent banking deals, international terrorism, drug dealing and money laundering. To boot, the books are chock-full of sex, including racy trysts that cross enemy lines. Critics mildly praised all four novels, and they sold reasonably well.

During the same period, several established novelists began integrating financial market subplots into stories that involved international espionage. Tom Clancy in “Debt of Honor” and Joseph Finder in “The Zero Hour” enriched their typical mix of global mystery and suspense with the threatened sabotage of a supercomputer in Manhattan that clears securities trades. Even John Grisham, notorious for writing novels with loose ends, appended a large speculative foreign currency loss in Singapore to his most recent blockbuster, “The Rainmaker,” thereby breaking with his own tradition and neatly tying up several intractable plot lines. If this trend continues, it won’t be long before Stephen King is writing horror stories about options and futures.

More recently, publishers have been plying the ranks of ex-bankers in search of the genre’s first major bestseller. Delacorte Press seems to think it has found its financial Jehovah in Christopher Reich, author of “Numbered Account.” Not every first-time novelist writes a book that’s bankrolled by a $300,000 premium marketing campaign, including national television advertising. The blurbs are sound bites cut for a movie trailer: “He can’t live with the lies. But he may not survive the truth.” The “he” character is Nick Neumann, the aforementioned superhero of Reich’s novel, who leaves a job at Morgan Stanley to solve his father’s murder.

Neumann is the prototypic Wall Street male, strong and studly, brilliant with numbers, part Navy Seal, part securities salesman. His only physical flaw is the shrapnel left in his knee from a covert military operation; his only mental flaw is an occasional lapse with an attractive, yet traitorous, blond.

For readers who are aroused more by markets than by muscle, Reich’s fleshy prose is especially lurid: “Nick was thinking that right now she could talk about the mathematical derivation of modern portfolio theory and it wouldn’t bore him.” What better place than a bed to talk of triple-digit returns! Every one of the more than 100,000 men in the financial services industry could be this guy--if they would just go to the gym and study bond math more often.

Neumann descends into the bowels of Swiss banking, where “everything is legal until you get caught.” The web includes the illegal drug and arms trade, nuclear weapons, an Arab-Israeli war and even a quaint little heroin park. Reich’s picture of human nature isn’t any prettier: “Man was a putrid creature rarely able to govern his lesser desires, concerned only with acquiring money, power and position. Interested in fulfilling his greed, sating his lust and dominating all that surrounded him.” Even emotions are market-driven: One stern male character had “probably cried once in his life, and that had been when his bonus failed to meet his expectations.”


Reich’s overarching message? Forget about caveat emptor; everyone should beware the markets.

The message of “The Velocity of Money” is equally ominous but more about the nature of markets than of the people driving them. Rhodes teases us with a murder victim in the first couple of pages, but after that, he quickly settles into an intricate tale of derivatives, financial instruments whose value is linked to, or derived from, some other financial instrument or index. An option to buy stock is a simple example.

The size of the derivatives market is daunting, estimated at more than $25 trillion worldwide with annual turnover of $300 trillion, and the book is replete with such astonishing statistics. There are at least 250 derivatives dealers and 2,200 types of derivatives. A subscription to a weekly derivatives industry rag costs $1,795 a year. The average reader--in Rhodes’ parlance, a “Belgian dentist,” slang for an unsophisticated rube--may have trouble digesting occasional references to swap exemptions, Section 4(2) private placements and the use of Reg. T by offshore affiliates. But Rhodes also supplies lucid blood-and-guts details about the deals, including a few sketches of the box-and-arrow diagrams bankers actually use to design complex structures. These facts will leave you informed yet angry, perhaps agreeing with one 72-year-old retiree in the book who curses, “Goddamned derivatives.”

Unfortunately, in contrast to macho Nick Neumann, Rhodes’ main character, Rick Hansen, is a bit of a wimp. Marriage and a kid hinder any steamy or unexpected sex scenes. The best poor Rick can manage for foreplay is a tantalizing discussion of sophisticated financial concepts, which he foists on his wife. Incredibly, this rap works. When Rick explains the Orange County and Barings fiascoes and suggests that derivatives are almost totally unregulated, his wife becomes goo-goo eyed. She murmurs: “All this talk about derivatives has made me horny.” It is an odd and fascinating book in which the risk of global economic meltdown is more titillating and credible than the single sex scene.

Which makes me wonder. Perhaps the proliferation of high-finance fiction says more about the likely direction of markets than of popular literature. Markets are prone to manias, panics and crashes. If finance novels are a function of the market’s manic phase, they might not survive a downturn. The four pioneers--Bronson, Davies, Frey and Ridpath--may have reason for concern. Their first novels succeeded enough to get them more book deals, but critics and readers didn’t like the sequels as much. As even Rhodes admonishes us: “On Wall Street, a reputation was a peculiar asset; it took years to establish, but only an instant to destroy.”

Rhodes may know more than he’s letting on. In one memorable moment in his book, he gives us the image of his fool, the poorest sap in the novel’s global poker game, a mediagenic mogul named Donald Trump who, after much hemming and hawing during months of spectacular market gains, finally visits a bank’s trading floor to consider a sizable investment. One bank employee remarks, “Looking for a biblical sign that the bull market has come to an end? You just got it.”


As much as I love the genre, the surge of interest scares me; if I spot Trump, or his ilk, browsing high-finance fiction any time soon, I think I’ll start selling stock.