Authors: Frank Partnoy
Infectious Greed (75 page)
14
Radford, p. 6.
Radford, p. 6.
16
Liebowitz, p. 6.
Liebowitz, p. 6.
17
“Credit Suisse Financial Products Establishes Representative Office in New York,”
PR Newswire,
September 26, 1990, p. 1.
“Credit Suisse Financial Products Establishes Representative Office in New York,”
PR Newswire,
September 26, 1990, p. 1.
18
These agencies were designated “Nationally Recognized Statistical Ratings Organizations.” By the late 1990s, only Moody's, S&P, and Fitch had NRSRO status, and the Securities and Exchange Commission consistently had denied applications from competing agencies from the 1970s until 2002. Frank Partnoy, “The Siskel and Ebert of Financial Markets: Two Thumbs Down for the Credit Rating Agencies,”
Washington University Law Quarterly, Volume 77,
Fall 1999, p. 619.
These agencies were designated “Nationally Recognized Statistical Ratings Organizations.” By the late 1990s, only Moody's, S&P, and Fitch had NRSRO status, and the Securities and Exchange Commission consistently had denied applications from competing agencies from the 1970s until 2002. Frank Partnoy, “The Siskel and Ebert of Financial Markets: Two Thumbs Down for the Credit Rating Agencies,”
Washington University Law Quarterly, Volume 77,
Fall 1999, p. 619.
19
The News Hour with Jim Lehrer:
Interview with Thomas L. Friedman (PBS television broadcast), February 13, 1996.
The News Hour with Jim Lehrer:
Interview with Thomas L. Friedman (PBS television broadcast), February 13, 1996.
20
Partnoy, “The Siskel and Ebert of Financial Markets: Two Thumbs Down for the Credit Rating Agencies,” pp. 619-711.
Partnoy, “The Siskel and Ebert of Financial Markets: Two Thumbs Down for the Credit Rating Agencies,” pp. 619-711.
21
John Eatable and Lance Taylor,
Global Finance at Risk: The Case for International Regulation
(New Press 2000), p. 101.
John Eatable and Lance Taylor,
Global Finance at Risk: The Case for International Regulation
(New Press 2000), p. 101.
23
“Structured Products: Background and Investment Opportunities,” Morgan Stanley, March 1994, p. 12.
“Structured Products: Background and Investment Opportunities,” Morgan Stanley, March 1994, p. 12.
24
Michael Liebowitz, “Can the Triple-A Subs Live Up to their Billing?”
Investment Dealers' Digest,
November 2, 1992, p. 16.
Michael Liebowitz, “Can the Triple-A Subs Live Up to their Billing?”
Investment Dealers' Digest,
November 2, 1992, p. 16.
26
Liebowitz, “Credit Suisse Derivative Unit Opens with a Bang in New York,” p. 6.
Liebowitz, “Credit Suisse Derivative Unit Opens with a Bang in New York,” p. 6.
27
Scism, p. C1.
Scism, p. C1.
28
“An Issuers' View of the Structured Note Market,” p. 6.
“An Issuers' View of the Structured Note Market,” p. 6.
31
James M. Mahoney, “Correlation Products and Risk Management Issues,”
Federal Reserve Bank of New York Economic Policy Review,
October 1995, p. 7.
James M. Mahoney, “Correlation Products and Risk Management Issues,”
Federal Reserve Bank of New York Economic Policy Review,
October 1995, p. 7.
32
Miriam Bensman, “How Do I Get Out of This? New Exit Strategies for the Structured Note Market,”
Futures,
October 1993, p. 32.
Miriam Bensman, “How Do I Get Out of This? New Exit Strategies for the Structured Note Market,”
Futures,
October 1993, p. 32.
33
Mahoney, p. 7.
Mahoney, p. 7.
34
“Traders Sell Strategies for Falling European Rates.”
“Traders Sell Strategies for Falling European Rates.”
35
Ronald H. Coase, “The Problem of Social Cost,”
Journal of Law and Economics, Volume 3,
October 1960, pp. 1-44.
Ronald H. Coase, “The Problem of Social Cost,”
Journal of Law and Economics, Volume 3,
October 1960, pp. 1-44.
37
Steven Bavaria, “Fuzzy Line between Private and Bank Debt,”
Investment Dealers' Digest,
September 16, 1991, p. 13.
Steven Bavaria, “Fuzzy Line between Private and Bank Debt,”
Investment Dealers' Digest,
September 16, 1991, p. 13.
38
Everette D. Hull and Leslie Annard, “Time to Jump on the Securitization Band-wagon?”
ABA Banking Journal,
October 1987, p. 137.
Everette D. Hull and Leslie Annard, “Time to Jump on the Securitization Band-wagon?”
ABA Banking Journal,
October 1987, p. 137.
39
David Gillen, “More Junk Bonds May Be Repackaged as High-Grade Securities, Analysts Say,”
The Bond Buyer,
February 22, 1990, p. 3.
David Gillen, “More Junk Bonds May Be Repackaged as High-Grade Securities, Analysts Say,”
The Bond Buyer,
February 22, 1990, p. 3.
41
David Gillen, “Columbia to Sell Entire Junk Holdings, Put at $3.5 Billion, through First Boston,”
The Bond Buyer,
March 15, 1990, p. 3.
David Gillen, “Columbia to Sell Entire Junk Holdings, Put at $3.5 Billion, through First Boston,”
The Bond Buyer,
March 15, 1990, p. 3.
42
Anne Schwimmer, “Chancellor's CBO Pulled as Investor Backs Out,”
Mergers & Acquisitions Report,
November 19, 1990, p. 9.
Anne Schwimmer, “Chancellor's CBO Pulled as Investor Backs Out,”
Mergers & Acquisitions Report,
November 19, 1990, p. 9.
44
Kevin Muehring, p. 73; “In World of High-Tech Financial Instruments, Compliance Officer to Become King of Bank,”
Thomson's Financial Compliance Watch,
March 23, 1992, p. 3.
Kevin Muehring, p. 73; “In World of High-Tech Financial Instruments, Compliance Officer to Become King of Bank,”
Thomson's Financial Compliance Watch,
March 23, 1992, p. 3.
45
Philip Maher and Ron Cooper, “CS First Boston's Wheat Begins to Exert Control,”
Investment Dealers' Digest,
October 11, 1993, p. 5.
Philip Maher and Ron Cooper, “CS First Boston's Wheat Begins to Exert Control,”
Investment Dealers' Digest,
October 11, 1993, p. 5.
46
Dunne, p. 32.
Dunne, p. 32.
47
Ron Cooper, “In Switch, First Boston Comes to Rescue of CSFB,”
Investment Dealers' Digest,
December 7, 1992, p. 5.
Ron Cooper, “In Switch, First Boston Comes to Rescue of CSFB,”
Investment Dealers' Digest,
December 7, 1992, p. 5.
50
Dunne, p. 32.
Dunne, p. 32.
53
Dunne, p. 32.
Dunne, p. 32.
54
Dunne, p. 32.
Dunne, p. 32.
55
Michael Siconolfi, “CS First Boston Asks Departing Workers to Sign Sweeping Nondisclosure Pact,”
Wall Street Journal,
February 27, 1995.
Michael Siconolfi, “CS First Boston Asks Departing Workers to Sign Sweeping Nondisclosure Pact,”
Wall Street Journal,
February 27, 1995.
57
Dunne, p. 32.
Dunne, p. 32.
58
Fairlamb, p. 64.
Chapter 4: Unreconciled BalancesFairlamb, p. 64.
1
Roger Lowenstein,
When Genius Failed: The Rise and Fall of Long-Term Capital Management
(Random House 2000), p. 5.
Roger Lowenstein,
When Genius Failed: The Rise and Fall of Long-Term Capital Management
(Random House 2000), p. 5.
2
Peter Grant and Marcia Parker, “Hurtling toward Scandal,”
Crain's New York Business,
June 1-7, 1992, p. 3.
Peter Grant and Marcia Parker, “Hurtling toward Scandal,”
Crain's New York Business,
June 1-7, 1992, p. 3.
3
Lowenstein, p. 33.
Lowenstein, p. 33.
4
Grant and Parker, p. 3.
Grant and Parker, p. 3.
5
Lowenstein, p. 19; Nicholas Dunbar,
Inventing Money: The Story of Long-Term Capital Management and the Legends behind It
(John Wiley & Sons 2001), p. 110.
Lowenstein, p. 19; Nicholas Dunbar,
Inventing Money: The Story of Long-Term Capital Management and the Legends behind It
(John Wiley & Sons 2001), p. 110.
6
Grant and Parker, p. 13.
Grant and Parker, p. 13.
7
Lowenstein, p. 4.
Lowenstein, p. 4.
8
Lowenstein, p. 15.
Lowenstein, p. 15.
9
Dunbar, p. 123.
Dunbar, p. 123.
10
Dunbar, p. 123.
Dunbar, p. 123.
11
Dunbar, p. 79.
Dunbar, p. 79.
12
Dunbar, p. 58.
Dunbar, p. 58.
14
Dunbar, p. 118.
Dunbar, p. 118.
15
Lowenstein, p. 11.
Lowenstein, p. 11.
16
Grant and Parker, p. 9.
Grant and Parker, p. 9.
17
Dunbar, p. 82.
Dunbar, p. 82.
18
Dunbar, p. 107.
Dunbar, p. 107.
19
Robert Lenzner and William Heuslein, “The Age of Digital Capitalism,”
Forbes,
March 29, 1993, p. 62.
Robert Lenzner and William Heuslein, “The Age of Digital Capitalism,”
Forbes,
March 29, 1993, p. 62.
20
Lenzner and Heuslein, p. 66.
Lenzner and Heuslein, p. 66.
21
Lenzner and Heuslein, p. 62.
Lenzner and Heuslein, p. 62.
24
Grant and Parker, p. 4.
Grant and Parker, p. 4.
25
Dunbar, p. 105.
Dunbar, p. 105.
26
Dunbar, p. 97.
Dunbar, p. 97.
27
Dunbar, p. 95.
Dunbar, p. 95.
28
Dunbar, p. 98.
Dunbar, p. 98.
29
Dunbar, p. 110.
Dunbar, p. 110.
30
Grant and Parker, pp. 3, 13.
Grant and Parker, pp. 3, 13.
31
Grant and Parker, p. 12.
Grant and Parker, p. 12.
32
In the Matter of John H. Gutfreund, Thomas W. Strauss, and John W. Meriwether,
Securities Exchange Act of 1934, Release No. 34-31554, December 3, 1992, p. 11.
In the Matter of John H. Gutfreund, Thomas W. Strauss, and John W. Meriwether,
Securities Exchange Act of 1934, Release No. 34-31554, December 3, 1992, p. 11.
34
Robert J. McCartney, “Salomon's Mines; What Makes These Traders Tick?”
The Record,
September 29, 1991, p. B1.
Robert J. McCartney, “Salomon's Mines; What Makes These Traders Tick?”
The Record,
September 29, 1991, p. B1.
35
Mayer, p. 200.
Mayer, p. 200.
36
Grant and Parker, p. 13.
Grant and Parker, p. 13.
39
Kenneth H. Gilpin, “Credit Markets; Treasury's Rule Upsets Note Sale,”
New York Times,
July 12, 1990, p. D1.
Kenneth H. Gilpin, “Credit Markets; Treasury's Rule Upsets Note Sale,”
New York Times,
July 12, 1990, p. D1.
40
Grant and Parker, p. 13.
Grant and Parker, p. 13.
43
Grant and Parker, p. 14.
Grant and Parker, p. 14.
45
In the Matter of Paul W. Mozer,
Securities Exchange Act of 1934, Release No. 34-34373, July 14, 1994, p. 3.
In the Matter of Paul W. Mozer,
Securities Exchange Act of 1934, Release No. 34-34373, July 14, 1994, p. 3.
46
Mayer, pp. 206-208.
Mayer, pp. 206-208.
48
Mayer, p. 210.
Mayer, p. 210.
50
Lewis, p. 111.
Lewis, p. 111.
51
Lewis, p. 101.
Lewis, p. 101.
52
Mayer, p. 155.
Mayer, p. 155.
53
Lowenstein, p. 21.
Lowenstein, p. 21.
54
Dunbar, p. 101.
Dunbar, p. 101.
55
Lewis, p. 124.
Lewis, p. 124.
56
Lewis, p. 126.
Lewis, p. 126.
57
Salomon ultimately decided to abandon this cap; for example, the firm paid Michael Lewis, author of
Liar's Poker,
more. Lewis, p. 245.
Salomon ultimately decided to abandon this cap; for example, the firm paid Michael Lewis, author of
Liar's Poker,
more. Lewis, p. 245.
58
Lewis, p. 126.
Lewis, p. 126.
59
James Sterngold, “Merrill Lynch Puts Bond Loss at $250 Million,”
New York Times,
April 30, 1987, p. A1.
James Sterngold, “Merrill Lynch Puts Bond Loss at $250 Million,”
New York Times,
April 30, 1987, p. A1.
60
Sterngold, p. A1.
Sterngold, p. A1.
62
Mayer, p. 214.
Mayer, p. 214.
64
“Basham Leaving Treasury Department,”
United Press International,
August 5, 1991; Michael Vachon, “Basham to Smith Barney,”
Investment Dealers' Digest,
August 19, 1991, p. 15.
“Basham Leaving Treasury Department,”
United Press International,
August 5, 1991; Michael Vachon, “Basham to Smith Barney,”
Investment Dealers' Digest,
August 19, 1991, p. 15.
67
Keith Bradsher, “Former Salomon Trader to Pay $1.1 Million Fine,”
New York Times,
July 15, 1994, p. D1; Antilla, p. D2.
Keith Bradsher, “Former Salomon Trader to Pay $1.1 Million Fine,”
New York Times,
July 15, 1994, p. D1; Antilla, p. D2.
68
Katherine Burton and Liz Goldenberg, “Ten Years Ago, Salomon Treasury Scandal Changed Traders' World,”
Bloomberg News,
August 9, 2001.
Katherine Burton and Liz Goldenberg, “Ten Years Ago, Salomon Treasury Scandal Changed Traders' World,”
Bloomberg News,
August 9, 2001.
69
Burton and Goldenberg.
Burton and Goldenberg.
70
Peter Woodifield, “Gutfreund Joins Unterberg, Towbin as Senior Managing Director,”
Bloomberg News,
November 14, 2001.
Peter Woodifield, “Gutfreund Joins Unterberg, Towbin as Senior Managing Director,”
Bloomberg News,
November 14, 2001.
72
Burton and Goldenberg.
Burton and Goldenberg.
73
Dunbar, p. 130.
Dunbar, p. 130.
74
Lowenstein, pp. 37-38.
Chapter 5: A New Breed of SpeculatorLowenstein, pp. 37-38.
1
Robert Hurtado, “Fed's Move Jolts Stock and Bond Markets,”
New York Times,
February 5, 1994, Sec. 1, p. 37.
Robert Hurtado, “Fed's Move Jolts Stock and Bond Markets,”
New York Times,
February 5, 1994, Sec. 1, p. 37.
2
Jonathan R. Macey, “Derivative Instruments: Lessons for the Regulatory State,”
Journal of Corporation Law,
Fall 1995, p. 93.
Jonathan R. Macey, “Derivative Instruments: Lessons for the Regulatory State,”
Journal of Corporation Law,
Fall 1995, p. 93.
3
In re County of Orange,
U.S. Bankruptcy Court, Central District of California, Case No. SA 94-22272 JR,
County of Orange v. Morgan Stanley & Co.,
Complaint, June 11, 1996, p. 27.
In re County of Orange,
U.S. Bankruptcy Court, Central District of California, Case No. SA 94-22272 JR,
County of Orange v. Morgan Stanley & Co.,
Complaint, June 11, 1996, p. 27.
4
Laura Jereski, “Merrill Lynch Saw Big Profit on Orange Fund,”
Wall Street Journal,
January 26, 1995, p. A4.
Laura Jereski, “Merrill Lynch Saw Big Profit on Orange Fund,”
Wall Street Journal,
January 26, 1995, p. A4.
11
Katherine Burton, John Pickering, and Dave Liedtka, “Credit Agencies Dropped Ball, Investors Say,”
Bloomberg News,
December 5, 1994, p. 1.
Katherine Burton, John Pickering, and Dave Liedtka, “Credit Agencies Dropped Ball, Investors Say,”
Bloomberg News,
December 5, 1994, p. 1.
12
“Orange County Crisis: The FalloutâWall Street Races to Sell $10 Billion in Collateral,”
Dow Jones News,
December 8, 1994, p. 2.
“Orange County Crisis: The FalloutâWall Street Races to Sell $10 Billion in Collateral,”
Dow Jones News,
December 8, 1994, p. 2.
13
Laura Jereski, “Salomon's $8.1 Billion Derivative Offer Seen by Other Firms as Latecomer's Bid,”
Wall Street Journal,
March 27, 1995, p. A4.
Laura Jereski, “Salomon's $8.1 Billion Derivative Offer Seen by Other Firms as Latecomer's Bid,”
Wall Street Journal,
March 27, 1995, p. A4.
14
Jereski, p. A4.
Jereski, p. A4.
15
“Orange County CrisisâLocal Heroes: Public Finance Chiefs Are Often Very Boring; That's the Good News,”
Dow Jones News,
December 8, 1994, p. 3.
“Orange County CrisisâLocal Heroes: Public Finance Chiefs Are Often Very Boring; That's the Good News,”
Dow Jones News,
December 8, 1994, p. 3.
16
“Orange County CrisisâLocal Heroes,” p. 1.
“Orange County CrisisâLocal Heroes,” p. 1.
17
“Orange County CrisisâLocal Heroes,” p. 2.
“Orange County CrisisâLocal Heroes,” p. 2.
18
Jill J. Barshay, “Star Struck: How Piper Tied Its Fortunes to a Maverick,”
Minneapolis Star Tribune,
February 8, 1999, p. 1D.
Jill J. Barshay, “Star Struck: How Piper Tied Its Fortunes to a Maverick,”
Minneapolis Star Tribune,
February 8, 1999, p. 1D.
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