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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 Hardcover – May 12, 2009
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Top Customer Reviews
Having fought the battles in the trenches over the past two years during the ongoing financial crisis, I have a deep appreciation for what Gillian Tett has accomplished in this book. It provides a comprehensive view of one corner of the financial markets - the one that caused so much of the wreckage over the past two years. While it will be a daunting task for any single writer to document the crisis we are still going through (given the multiple contributing factors/actors to this crisis), the author has done a great job producing a contemporary record on the credit derivatives market and its role in fueling the housing bubble leading up to the crisis.
Obviously, the author deliberately chose to exclude some critical episodes of the credit crisis (such as the SocGen trading scandal, the resulting ill-timed massive cut in Fed funds rate leading to the oil shock of 2008 that partially contributed to the inflation scare and added shock to the economy).Read more ›
Pages 61 to 64 provide one of many examples. She concludes at the top of page 64, "Banks had typically been forced to hold $800 million in reserves for every $10 billion in corporate loans on their books. Now that could be just $160 million. The CDS concept had pulled off a dance around the Basel rules." Regulators and rating agencies aren't that naive! Three pages earlier she notes that the issuer of credit default insurance had to post $700mm of collateral, held as Treasuries, and that the Fed demanded that the issuer either had to have a triple AAA rating, i.e. the capacity to absorb losses greater than the $700mm it posted as collateral, or else the bank had to post an addition $160mm of reserves with the Fed, over and above the $700mm. The logic of this requirement is obvious, either way, someone, the bank or the insurer, had to post at least $800 of reserves. There is a popular belief that AIG posted no collateral but the truth is that while, it in part did not post liquid collateral, it in fact posted the value of its other businesses as collateral. The Fed, of course, took those businesses as collateral in exchange for posting liquid collateral.Read more ›
Gillian Tett's book Fools Gold covers the current financial crisis from its purported beginning in 1994 to the point at which most of us became aware of the systemic flaws in the global financial systems, with an inside look at the crisis from J.P. Morgan's version of the story.
The book begins by engagingly and sympathetically introducing us to the players on the banking and investment side of the equation; the team of collegiate, young, impassioned and idealistic folks at J.P. Morgan responsible for creating and marketing credit derivatives back in the early 1990's. It loosely follows the team, and more interestingly, follows the firm's evolution through the 1990's (with an admiring nod to Jerry Corrigan's concern regarding risk) and subsequent leaders (with a resounding `hurrah!' to Jamie Dimon and his `hands on' management style) and the industry excesses outside of JPM that, combined with a crisis in confidence in the financial markets, have created the worst financial crisis known since The Great Depression.Read more ›
Most Recent Customer Reviews
Gillian Tett was very shrewd in focusing her account of the financial meltdown of 2007-09 on J. P. Morgan. Read morePublished 10 days ago by Stanley Crowe
I enjoy the historical aspect of this book. That said, I would highly recommend that one read the epilogue. the second paragraph of page 252 sums it all up.Published 2 months ago by Marlon Varsace
I read a book a long time ago that taught me always ask the next question. Not many people know about the commodities and futures modernization act, smart people like those at J.P. Read morePublished 5 months ago by Billy Ray
I have been reading Gillian Tett's articles in the Financial Times for about 18 years and she really does a good job here of explaining exactly how the 2008... Read more
In 2008 Gillian Gett received the British Business Journalist of the Year Award for her coverage of the 08 Collapse. Read morePublished 8 months ago by Cline Russell
An insightful book on how the 2008 financial crisis was enabled mostly by the work of the derivatives team at J.P. Morgan beginning in the 1990's. Read morePublished 8 months ago by D. Olson
A must read for those eager to get a deeper understanding of the 2008 financial crisis, and how exactly did we get there. Read morePublished 8 months ago by Roland Pettersson