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Eagle on the Street.

Eagle on the Street. Steve Coll, David Vise. Scribner's, $24.95. I filed a Freedom of Information Act request not long ago with the Securities and Exchange Commission (SEC). The information I wanted was not explosive in nature nor embarrassing to the agency in any way. My interest instead was historical; the documents I wanted were all at least 20 years old. After much delay, the SEC finally made its decision: It concluded that the only document it could release to me was a press release. Everything else was protected.

So it goes at the SEC, which may well be the most secretive federal agency this side of the CIA. The SEC meets in closed sessions, conducts secret investigations, encrusts its documents with layers of "Eyes Only" classifications. Even the targets of SEC investigations are never told if and when their cases are dropped; to do so would require the agency to tip its hand, which is something it has always been loath to do. Even though this practice seems manifestly unfair to the subjects of lapsed investigations, such notions simply don't rank very high on the SEC's list of bureaucratic imperatives.

For this reason, we must tip our cap to Coll and Vise, two Washington Post reporters who have done a remarkable job of piercing the SEC's veil to put together this account of the agency during the tenure of chief John Shad-in effect a study of the agency during the Reagan era. (Shad arrived with Reagan and left five months before George Bush was elected.) Those were tumultuous times for the SEC, for they gave rise to among other things) corporate raiders, junk bonds, insider trading scandals, leveraged buyouts, the wild bull market and subsequent crash of 1987, hostile takeovers, and so on. The SEC was filled with dissension over the propriety of many of these developments. Shad, a veteran of Wall Street whose view of the SEC before he arrived was that it tended to leap before it looked, became a lightning rod within the agency. He was viewed by the hard-liners as too easy on Wall Street and by the free-market theorists as too intrusive in the natural workings of the market. What amounts to the first draft of this book-a multi-part series that ran in The Washington Post- won the Pulitzer Prize.

I don't live in Washington, so I never read that series, but people tell me it was a pointed piece of work. I don't doubt it, because Coll and Vise are both very good reporters. Their basic point was that Shad's natural empathy for Wall Street caused him to rein in the agency at a time when it should have been given even more leeway to ferret out wrongdoing. The result was that crimes like insider trading went undetected far longer than they should have. The lengthier book version attempts to make the same essential point, but something got lost in the translation. In the book, the argument tends to vanish in a muddle of extraneous information: page after page describing long-forgotten investigations into small-time scams; extended forays into policy disputes that now seem stale and arcane; narrative detours that lead nowhere. You get the sense that Coll and Vise are trying so hard to prove they cracked the SEC that they can't bear to leave any of their hard-won discoveries on the cutting-room floor. As for Shad, he winds up looking more foolish for neglecting a sexual harassment suit brought against the agency than for failing to crack down on hostile takeovers.

Further, even when Coll and Vise stick to their main point, they are not completely persuasive. Shad may well have been too quick to believe that everyone on Wall Street was honest, but Coll and Vise err in the opposite direction. They seem to think that anyone who makes a lot of money is, by definition, worthy of suspicion. They note with distaste, for instance, that economist Milton Friedman was one of the first to come up with the idea of currency speculation when he asked his bank back in the late sixties to loan him $300,000 so he could sell short the price of the British pound. (The bank refused.) They add: [Friedman] didn't digress into why he personally had wanted to wager $300,000, several times the annual salary of a college professor ... or what exactly he planned to do with all that money if his bet paid off." I suspect he planned to spend it.

Coll and Vise are doubly cursed because their book will undoubtedly be compared with another insider-trading book that's just been published: James Stewart's Den of Thieves. The comparison will not reflect well on Coll and Vise. Stewart's book is a compelling narrative that tackles the main event-the crimes of Boesky, Milken, et al., and how they were ultimately brought to justice. It confirms one's sense that Coll and Vise wound up with a subject that was more the sideshow than the real thing. I suppose that's what Eagle on the Street is really trying to say, but you have to wonder whether it takes an entire book to say it.
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Author:Nocera, Joseph
Publication:Washington Monthly
Article Type:Book Review
Date:Nov 1, 1991
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