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Q & A with Bethany McLean, Author of ‘All the Devils Are Here’

STORM TRACKER: The coauthor of The Smartest Guys in the Room—the bestseller about the Enron debacle—discusses her newest tale of Wall Street villainy, about the global financial collapse

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Author Bethany McLean

Bethany McLean started her career as one of hundreds of recent college graduates working entry-level jobs on Wall Street—at Goldman Sachs, in her case. But it’s safe to say she didn’t truly make her mark in the investment world until a few years later, in 2001. By then a writer at Fortune, she penned an article titled “Is Enron Overpriced?”

The story didn’t lay bare the massive fraud under way at Enron, but in merely asking some smart questions—and pointing out some glaring inconsistencies—it helped start the process of scrutiny that brought down the energy company. McLean, 39, coauthored The Smartest Guys in the Room, the bestseller about Enron, which was made into a documentary. Since then, she has moved from New York to Chicago, married the lead prosecutor in the Enron criminal trial, Sean Berkowitz, who is now in private practice here, and had a daughter, 15-month-old Laine.

McLean also joined Vanity Fair and collaborated on a second book, with Joe Nocera, a New York Times columnist, as coauthor. This one, All the Devils Are Here (Portfolio, $32.95), examines the global financial collapse brought on by out-of-control mortgage lending in the United States. The book is a great primer on how the crisis developed. Confused by Fannie Mae’s role in the mess? McLean and Nocera persuasively show how the quasi-governmental behemoth and Wall Street firms egged each other on. The authors’ portraits of the leading characters are sharp and their explanations digestible for non–Wall Street types, but they’re never oversimplified.

'All the Devils are Here: The Hidden History of the Financial Crisis' by Bethany McLean and Joe Nocera

Before the new book hit stores, McLean sat down to talk about her work and her life in Chicago.

The financial crisis has spawned many books, quite a few published before yours. Some, like Michael Lewis’s The Big Short, build a tale around a single person or organization. But you and Joe Nocera chose a broad narrative, with history and action playing out at Fannie Mae, JP Morgan, AIG, Countrywide, the Treasury Department, Moody’s, Merrill Lynch, and others. What drove your approach?
I’d love to say it was well planned out. It wasn’t even a reaction to other books. Everyone wants to find the one villain. We wanted to tell the whole story—it’s so complex. We were still frantically editing till the very end.

As you point out in your acknowledgments, you used lots of unnamed sources, which is unfortunate but, it seems, unavoidable. Who surprised you by being willing to talk on the record?
Lord, was there anybody? The number of people willing to talk surprised me, even if they wouldn’t be quoted.

Of those you expected to talk, who clammed up?
I would have loved to have a real conversation with Angelo Mozilo [of Countrywide]. The person I’m most sorry I didn’t meet, because he’s dead, is Roland Arnall [chief of subprime juggernaut Ameriquest].

Saddest figure in the whole mess?
Maybe Mozilo. Even if you hate the guy and think he’s the most evil person in all this, he’s lost so much. He’s a more sympathetic character than he’s been made out to be. I think he’s in some ways a tragic figure. [Also sad] in some ways, I think, is Stan O’Neal [the former Merrill Lynch CEO].

Most maddening—worst devil?
I found myself being more and more angry at Fannie Mae. They were so good and squandered it. And stupidly chased subprime at the end. This wasn’t about home ownership [Fannie Mae’s supposed mission]. The subprime mess was about re-fi and cash-out. If the government had said nontraditional loans could only be used toward the purchase of a home, we wouldn’t have had a subprime crisis.

I found myself more mixed about Goldman Sachs. I worked there and admired the firm. They were smart enough to get out [and thus limit the firm’s losses]. They were smarter, but they’re not better. They contributed to it. It’s the sanctimonious attitude that makes me mad.


Photograph: Anna Knott


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