From the Inside Flap
The simplicity of Wall Street's business model is often masked by the supposed complexity of its innovations. While the "financially engineered" products that Wall Street peddles to investors may seem different, in reality, they are nothing more than financial origamiwhere the attributes of stocks, bonds, and derivatives are folded and refolded to form something that seems new. This is the perfect metaphor for how Wall Street works, and ultimately proved to be the underlying cause of the recent financial crisis.
Now, in Financial Origami, Brendan Moynihaneditor-at-large for Bloomberg News and a twenty-year market veterandescribes how the Wall Street business model has evolved from a method to transfer risk into a method for manufacturing risk. Page by page, he skillfully dissects financial engineering and addresses how financial origami, along with its inherent conflicts of interest, have allowed individuals as well as institutions to skirt regulations or taxes, sometimes meet investor needs, and always boost their profits.
But folding existing products into "new" ones is not the only financial origami performed in the world of finance. Other instances touched upon throughout the book include:
Industry refolding in the form of firms, once specializing in specific tasks within the risk-transfer business, now seeking to offer one-stop shopping for all financial services
Firms refolding their business charters from private partnerships to publicly traded, shareholder owned corporations
Altering the mortgage lending process by unfolding the mortgage market: unbundling the origination, funding, and servicing components so they could be carried out by separate companies
And much more
Along the way, this reliable resource explains the events that have shaped financial markets, firms, and products over the past forty years, and have hurt Wall Street over the past three. It also explores the evolution of Wall Street, shows the logical sequence of events that brought us to this point, and offers insights on how to fix some of the problems we face.
The Wall Street business model effectively broke. But there are many lessons to be learned from what has transpired, and this book will show you what they arehelping you avoid getting caught up in financial origami and the extreme of taking good ideas and running them into the ground.