Infectious Greed: How Deceit and Risk Corrupted the Financial Markets - Softcover

Partnoy, Frank

Softcover

ISBN 10: 1586487841 ISBN 13: 9781586487843

Publisher: Public Affairs, 2009

Synopsis

As the global financial crisis unfolds people everywhere are seeking to understand how markets devolved to this perilous, volatile state. In this dazzling and meticulously researched work of financial history, first published in 2003, and now thoroughly revised and updated, law professor and financial expert Frank Partnoy tells the story of how classical Wall Street securities like stocks and bonds were quietly eclipsed by ever more quantum products like derivatives. He documents how, starting in the mid-1980s, each new level of financial risk and complexity obscured the sickness of corporate America, and how Wall Streets evlving paradigm moved farther and farther beyond the understandingand regulationof ordinary investors and government overseers, leading inevitably to disaster.

About this title

Review

" Ambitious . . . a useful book, bringing together details of half-forgotten scandals from the past fifteen years." -- "The New York Times Book Review" " Frank Partnoy knows the landscape from the inside . . . a good, snappy read." -- "The Washington Post"

From the Publisher

Enron, Worldcom, Global Crossing... while financial scandals like these were headline news a few months ago, today they seem commonplace. We see now that they are not just isolated incidents. They are the inevitable fallout from more than a decade’s skulduggery, deceit and sheer criminal activity. And the crisis is far from over...

The world financial system is now out of control, says former Wall Street banker Frank Partnoy. We now have a situation that no-one can even understand, let alone regulate. In his new book, Infectious Greed, he asks: how did it happen?

How was it that companies such as industry stalwarts P&G and General Electric could risk billions of dollars of their shareholders’ money on dodgy investments? That NatWest could lose more than $80 million in options trades? That Japanese insurance companies could gamble their funds on American interest rates without understanding how risky – and illegal – their actions were? That Orange County, one of the richest municipalities in the US could lose more than a billion dollars thanks to absurd investments based on unpredictable mortgage rates? That accountancy firms could collude with the CEOs of top companies in keeping key financial data off the balance sheet and disclosing it only among footnotes in companies’ annual reports? That analysts could give AAA ratings to a company offering investments based on the performance of a basketball team? That regulators could be unwilling or unable to act? Why does today’s global financial system look like something from Alice in Wonderland?

The shockwaves at the heart of the current financial crisis have one major cause, says Partnoy: greed.

In the 1987 film Wall Street, Gordon Gecko pronounced: ‘greed is good’. Financiers took him at his word. The 1990s were a decade of financial innovation: traders pitted their wits against regulators to develop ever more complex investments. They concealed the risks from their customers and, for a time, made unimaginable profits with products like options, derivatives, swaps, inverse IOs and ‘Z Bonds’. This couldn’t last forever, and in the mid-1990s the cracks began to show. There were a number of high-profile scandals (like Bankers Trust and First Boston): but the individuals involved went unpunished. The message was clear: behave as badly as you like. Even if you’re caught you’ll be let off lightly. The result was white-collar crime on a massive scale. And so infectious greed corrupted individuals, institutions, and corporations, spreading like a contagion through corporate America and the world financial system. And like many infections, it had a long gestation period: the effects may last for years to come. Many of the individuals responsible for the worst scandals of recent years have gone unpunished - and now they’re back in business.

In his previous book, FIASCO, Frank Partnoy described blood and guts on Wall Street Infectious Greed is blood and guts everywhere. It is the one book to explain exactly what was behind the financial crises of today. And tomorrow.

About this edition

• Publisher: Public Affairs
• Publication date: 2009
• ISBN 10: 1586487841
• ISBN 13: 9781586487843
• Binding: Paperback
• Number of pages: 473