#56. A Summary of ‘Flash Boys: A Wall Street Revolt’ by Michael Lewis

Due to a complaint from W.W. Norton, this summary is no longer available. I apologize for the inconvenience. If you have a question or comment, please leave it in the comment box below.

Aaron Thibeault

4 thoughts on “#56. A Summary of ‘Flash Boys: A Wall Street Revolt’ by Michael Lewis

  1. Enjoyed the first part of the summary. Having watched the interview with Charlie Rose and the 60 Minutes episode, it will be interesting to track the fallout.

    I wanted to comment on your reference to “the sleepy Canadian bank.” I don’t think that is a fair or accurate characterization. Actually, RBC (Royal Bank of Canada) is Canada’s largest bank and the world’s 11th largest bank (based on market capitalization; 10th largest global investment bank by revenue), with operations in 46 countries. It has about 80,000 staff and more than 15 million clients worldwide. So I am not sure “sleepy” quite captures RBC – even back in 2007. It might seem like a small point (and I appreciate that RBC doesn’t have the profile/stature of say, Goldman Sachs), but as a Canadian I thought it was worthwhile to set the record straight. And interesting enough, both RBC and TD (Toronto Dominion) have a large and growing presence in the US.

    Thanks again for the great summaries.

    • To be fair, that wasn’t exactly Aaron’s description of RBC, that was more of how Michael Lewis described the bank —

      and by ‘sleepy’, Lewis meant that RBC was not one of the big Wall Street firms — and while RBC has grown their investment banking practice in the United States (especially after the crisis when they hired many top-tier bankers who were displaced by the bulge-bracket firms) they still don’t have a U.S. presence that is on the same level as the more established U.S. firms (like a Goldman Sachs, JPMorgan, Morgan Stanley, etc) — and I’m not knocking RBC, they are one of the largest banks but the context of ‘sleepy’ was in the sense that RBC, to its credit, does not have the history of risk-taking and gambling that got many other (U.S.-centric) banks in trouble during the crisis….

      Furthermore, that more risk-averse approach is reflected across all the
      ‘Big 5’ – Scotia, CIBC, TD, BMO (and RBC)….

      • Point well taken. And having watched a couple of Lewis’ interviews I can see how he infers the ‘sleepy’ description – but your explanation does the actual context more justice. I hope that is what folks take from Lewis’ discussion of RBC in the book and interviews – not that that which is non-US or Wall Street is lesser in some way.

  2. The Big 5 Canadian banks are “sleepy” (ie, more conservative with regards to risk) because their home regulatory environment is structured to reward that behaviour.

    The country has a smaller internal capital market than the US, with securities and exchange rules set by the provinces, not the federal government. (Bank regulation is a federal responsibility) Combine that with a more heavily resource-based economy than you have ‘stateside, engaged in inherently risky sectors (oil, mining, forestry) and you have an environment which rewards cautious evaluation and containment of risk.

    This has results at home; if you are a small company looking to raise capital for future growth, or an individual looking to borrow funds for a home purchase, it’s harder to do than it is within the US.

    OTOH, there have been fewer bank collapses.

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