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Fool's Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe |  | Author: Gillian Tett
Publisher: Free Press
List Price: $26.00
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Seller: cathmathmedia7
Rating:  46 reviews
Sales Rank: 2466
Media: Hardcover
Edition: 1
Pages: 304
Number Of Items: 1
Shipping Weight (lbs): 1
Dimensions (in): 9.1 x 6.1 x 1.2
ISBN: 141659857X
Dewey Decimal Number: 332.660973
EAN: 9781416598572
ASIN: 141659857X
Publication Date: May 12, 2009
Availability: Usually ships in 1-2 business days
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Product Description
From award-winning Financial Times journalist Gillian Tett, who enraged Wall Street leaders with her newsbreaking warnings of a crisis more than a year ahead of the curve, Fool's Gold tells the astonishing unknown story at the heart of the 2008 meltdown.Drawing on exclusive access to J.P. Morgan CEO Jamie Dimon and a tightly bonded team of bankers known on Wall Street as the "Morgan Mafia," as well as in-depth interviews with dozens of other key players, including Treasury Secretary Timothy Geithner, Tett brings to life in gripping detail how the Morgan team's bold ideas for a whole new kind of financial alchemy helped to ignite a revolution in banking, and how that revolution escalated wildly out of control. The deeply reported and lively narrative takes readers behind the scenes, to the inner sanctums of elite finance and to the secretive reaches of what came to be known as the "shadow banking" world. The story begins with the intense Morgan brainstorming session in 1994 beside a pool in Boca Raton, where the team cooked up a dazzling new idea for the exotic financial product known as credit derivatives. That idea would rip around the banking world, catapult Morgan to the top of the turbocharged derivatives trade, and fuel an extraordinary banking boom that seemed to have unleashed banks from ages-old constraints of risk. But when the Morgan team's derivatives dream collided with the housing boom, and was perverted -- through hubris, delusion, and sheer greed -- by titans of banking that included Citigroup, UBS, Deutsche Bank, and the thundering herd at Merrill Lynch -- even as J.P. Morgan itself stayed well away from the risky concoctions others were peddling -- catastrophe followed. Tett's access to Dimon and the J.P. Morgan leaders who so skillfully steered their bank away from the wild excesses of others sheds invaluable light not only on the untold story of how they engineered their bank's escape from carnage but also on how possible it was for the larger banking world, regulators, and rating agencies to have spotted, and heeded, the terrible risks of a meltdown. A tale of blistering brilliance and willfully blind ambition, Fool's Gold is both a rare journey deep inside the arcane and wildly competitive world of high finance and a vital contribution to understanding how the worst economic crisis since the Great Depression was perpetrated.
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Showing reviews 1-5 of 46
 Excessively narrativized, a PR coup for JP Morgan November 15, 2009
Angela Covalt (Irvine, CA USA)
1 out of 1 found this review helpful
Infantilized and excessively narrativized. Tett is waaaay too close to her subjects/sources, and pays for her "exclusive access" by making JP Morgan look faultless. She takes people who did and continue to do very bad things with no concept of real consequences or impact and she makes them into heroic figures.
Those wanting a better understanding might look at LiPuma and Lee's Financial Derivatives and the Globalization of Risk (Public Planet) It is much less mushy. Tett's book has all the intellectual rigor of a rotting banana.
Tales of Greenspan's flawed model November 13, 2009
K.S.Ziegler (Seattle)
0 out of 1 found this review helpful
Within the murky world of credit derivatives and the shadow banking system, the author finds an interesting storyline from which to explain the events that brought Wall Street and the global economy to the brink in 2008. She follows a team of JPMorgan wunderkind who were the first to apply derivatives to the credit world, and from that vantage point tells of Wall Street's credit debacle from the perspective of JPMorgan. Despite their early involvement, the management of JPMorgan was smart enough not to go overboard in creating CDOs and synthetic CDOs. Their relatively conservative decision-making contrasted with many of their brethren on Wall Street who, as it has become known, had little idea of the risks that their firms were taking.
Initially, the JPMorgan group developed synthetic CDOs (BISTRO was their acronym) but not from mortgage debt. The purpose was to offload risk so that the bank could free up capital reserves. They found that they could remove the risk from all the stuff in the lower tranches with the lowest ratings, but they were stuck with the so-called "super senior" debt - the stuff with the highest ratings. As it accumulated in large amounts, it appeared to be a potential problem. Indeed, when the credit markets started to grind to a halt and ratings agencies lowered ratings, the mark-to-market accounting that had reflected such huge windfalls on the upside now became the banks worst enemy. All that super-senior stuff became a lot less valuable, and had to be written down.
The super-senior debt, however, was not the only factor that held them back when they considered extending CDOs to mortgage debt. Compared to corporate borrowers, they found a big hole in the amount of information they could get on mortgage borrowers. This lack of data made even the best of models, such as the Gauss copula model, essentially worthless in assessing how one set of defaults can impact the entire system. Subsequently, we know that the rating agencies and others were faced with the same problem, but there were those on Wall Street who charged ahead anyway, regardless of the risks.
During the 90s we know that efforts were made by the CFTC to regulate credit derivatives, and that they were shot down by Congress and the Administration (Rubin and Summers). Wall Street was certain that they could regulate their derivative operations (the shadow banking system) all by themselves, and the fact that free markets could be self-regulatory was an ideology that Greenspan actively embraced and promoted. One of the wunderkinds in this book, Thomas Brickell, was also the head of the industry lobbying group ISDA that pushed against regulation with all the fervor of true believers. They were kicking and screaming against regulation, and the Fed was mostly asleep during the crisis, but fortunately Geithner did step in to clean up the backlogs that were clogging the back offices; otherwise, unwinding all that stuff after the Lehman collapse would have been all the more difficult.
More than anything, the point the book drives home is that Wall Street (particularly the investment banking concerns of Bear Stearns, Lehman, Merrill Lynch, and Citigroup) lost all contact with the risks that they were taking. The complicated schemes they dreamed up involving CDOs and exotic derivatives made them lots of money at first, but ultimately blew up in their faces.
 History, Economics, Fantasy, Autopsy Report - All of the Above November 11, 2009
Steve Dietrich (Santa Ynez Valley and Santa Monica CA, United States)
0 out of 1 found this review helpful
The author traces the beginnings of the maelstrom at JP Morgan through the ranks of the other "players" and onward to the near collapse of the financial systems in multiple countries. It's a classic story of taking a good idea and mixing with with some sophomoric,self serving assumptions and building a bridge to disaster. But sometimes the magnitude of an oncoming disaster is so great that we are challenged to accept the concept.
The author combines extensive knowledge of the events and subject matter with a flowing writing style and has created a highly readable account of the disaster. I wish we had her around when the 9-11 report was written.
In addition to its value as a history of the debacle, the book provides an understanding of the business necessary to un-spin the pronouncements coming from Wall Street and DC on the financial industry.
Dereliction of duty does not begin to describe the lack of senior management oversight of the business being run outside the normal banking business. As long as the "operators" were delivering huge profits to the institutions there was little incentive to ask what was going on behind the door. A don't ask, don't tell mentality that will burden our grandchildren's grandchildren, if the nation survives. Unfortunately the Treasury and FDIC have made it clear that they do not want to look too closely into the back rooms for fear that there are more cases of terminal cancer than they can handle.
I would like to have seen included some information on those who declined to drink the cool aid and instead, placed their bets against the houses of cards. One of these was a little known recent MBA from UCLA, Andrew Lahde. Andrew's 2006 business plan looked like a summary of the history of the next two years. Andrew went from obscurity to the pages of The Economist in less than 12 months and was ran a wildly successful hedge fund until his well publicized departure last year. He was not alone. The claims that nobody saw this coming are simply untrue excuses for allowing this disaster to occur.
The shelves are filled with books on the meltdown. This is one of the very best and most readable-highly recommended.
Good overview of Financial Crisis November 9, 2009
unreal (San Francisco, CA)
0 out of 1 found this review helpful
The author did a good job demystifying some complex financial issues in order to explain the financial crisis. She also managed to turn this into a good story instead of a brain-dump of various facts and figures. I have only two gripes with the book. One, she really seemed to lionize JP Morgan. I don't know whether this is fair or not, but I do think JP Morgan was not completely innocent of financial mis-steps. My bigger gripe is that she gave only very short mention of how the financial crisis was a result of actions from the most ignorant (though still greedy) home buyer to the brokers to the banks to the hedge funds and other investors who failed to do their due diligence. Overall, I would recommend this read to anyone who wants a deeper understanding of what happened, without having to wade through topics too technical for public consumption.
Puzzled by credit default swaps and derivatives? October 28, 2009
Adam Corson-Finnerty (Philadelphia, PA United States)
0 out of 1 found this review helpful
During the financial crisis, I found myself thinking: when this subsides I can hardly wait to read the book that will explain what the hell is happening. This book makes an excellent base for understanding the transmogrification of banking into a go-go financial house of cards. JP Morgan emerges as both villain (they invented some of the instruments that were abused) and role-model (they did not give in to the excesses of Lehman, Citibank, and Bear Sterns). The author writes for the Financial Times, and thus a sophisticated audience, so don't expect easy going--especially since the players themselves often didn't understand what they had wrought. A good companion to this is In Fed We Trust, which tells the Washington side of the story.In Fed We Trust: Ben Bernanke's War on the Great Panic
Showing reviews 1-5 of 46
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