***** Separating Fools From Their Money: A History of American Financial Scandals. By Scott B. MacDonald and Jane E. Hughes; published by Transaction Publishers, www.transactionpub.com (Web); 273 pages; $32.95.
When a financial scandal occurs in the United States, a wave of public fury and media coverage inevitably ensues. Accompanying the cries for tighter regulations and stricter punishment for corporate criminals is an overwhelming sense of déjà vu. It seems as if every scandal charts a course that has been traveled many times before.
In Separating Fools From Their Money, authors MacDonald and Hughes show how the similarities between financial scandals are no coincidence. A pattern emerges in each financial scandal the United States has experienced, and learning how this pattern plays out is essential to preventing future business crimes and financial meltdowns.
The authors set the stage by examining the catalytic forces at work in every major U.S. financial scandal. These forces include the social ties between businesspeople and government officials, loose regulations or poor oversight, extremely aggressive business practices, and dangerous risk-taking.
The book details how these factors apply to scandals from the Panic of 1792 to the stock market crash of 1929 and the accounting scandals that plagued the early 21st Century. We see the striking similarities between their causes, effects, and aftereffects. For example, a comparison between the railroad stock bubble of the late 1800s and the tech stock bubble of the 1990s reveals an almost identical picture of lax regulation, vicious competition, and shortsighted market players.
MacDonald and Hughes are neither apologists nor finger-pointers, as they examine every pro and con of each scandal. The negative impacts of seemingly necessary regulations are revealed, and many “crooks” are revealed to be scapegoats or simply opportunists who never actually broke the law. As the authors say, “greed—while extremely unattractive—is not a crime.”
Separating Fools From Their Money is not only extremely useful but also highly entertaining. Many complex scandals are reduced to their most basic elements, which makes this book accessible to general readers as well as businesspeople and financial specialists. This combination of readability and usability makes this book the definitive primer on American financial scandals.
Reviewer: Dan Bergevin is the principal of Catfield International, an intelligence and security firm based in the Salt Lake City, Utah, area.