Infectious Greed : How Deceit and Risk Corrupted the Financial Markets
by Frank PartnoyEdition: 2nd
Format: Trade Paper
Pub. Date: 2004-01-01
Publisher(s): Holt Paperbacks
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Summary
The still-unfolding financial story is terrifying. One by one, major corporations such as Enron, Global Crossing, and WorldCom are imploding all around us, prey to a greed-driven culture and dubious or illegal corporate finance and accounting. We have reached a perilous crossroads. In a compelling and disturbing narrative, Frank Partnoy brings to bear all of his skills and experience as a securities attorney, financial analyst, and law professor to tell the story of the rise of the trading instruments and corporate financial structures that now imperil the economic health of the country. Starting in the mid-1980s, he documents how each new level of financial risk and complexity obscured the sickness of corporate America. Finally, Partnoy offers clear policies that can save our financial system.
Author Biography
Frank Partnoy is a professor at the University of San Diego Law School. He has worked as an investment banker, derivatives broker, and corporate securities attorney. He also consults on regulation of the markets and white-collar crime. His expert testimony before the Senate committee investigating the Enron collapse has been widely cited in the media. Partnoy is the author of F.I.A.S.C.O.: Blood in the Water on Wall Street. He lives in San Diego, California.
Table of Contents
| Introduction | p. 1 |
| Patient Zero | p. 9 |
| Monkeys on Their Backs | p. 36 |
| Wheat First Securities | p. 62 |
| Unreconciled Balances | p. 84 |
| A New Breed of Speculator | p. 112 |
| Morals of the Marketplace | p. 141 |
| Messages Received | p. 187 |
| The Domino Effect | p. 227 |
| The Last One to the Party | p. 267 |
| The World's Greatest Company | p. 296 |
| Hot Potato | p. 350 |
| Epilogue | p. 393 |
| Notes | p. 413 |
| Acknowledgments | p. 447 |
| Index | p. 449 |
| Table of Contents provided by Blackwell. All Rights Reserved. |
Excerpts
From Infectious Greed:
By 2002, the closing bell of the New York Stock Exchange was barely relevant, as securities traded 24 hours a day, around the world. The largest markets were private, and didn't involve regulated exchanges at all. Financial derivatives were as prevalent as stocks and bonds, and nearly as many assets and liabilities were off balance sheets as on. Companies' reported earnings were a fiction, and financial reports were chock full of disclosures that would shock the average investor if she ever even glanced at them, not that anyone—including financial journalists and analysts—ever did. Trading volatilities were sky high, with historically unrelated markets moving in lock step, increasing the risk of systemic collapse.
In just a few years, regulators had lost what limited control they had over market intermediaries, market intermediaries had lost what limited control they had over corporate managers, and corporate managers had lost what limited control they had over employees. This loss-of-control daisy chain had led to exponential risk-taking at many companies, largely hidden from public view. Simply put, the appearance of control in financial markets was a fiction.
By 2002, the closing bell of the New York Stock Exchange was barely relevant, as securities traded 24 hours a day, around the world. The largest markets were private, and didn't involve regulated exchanges at all. Financial derivatives were as prevalent as stocks and bonds, and nearly as many assets and liabilities were off balance sheets as on. Companies' reported earnings were a fiction, and financial reports were chock full of disclosures that would shock the average investor if she ever even glanced at them, not that anyone—including financial journalists and analysts—ever did. Trading volatilities were sky high, with historically unrelated markets moving in lock step, increasing the risk of systemic collapse.
In just a few years, regulators had lost what limited control they had over market intermediaries, market intermediaries had lost what limited control they had over corporate managers, and corporate managers had lost what limited control they had over employees. This loss-of-control daisy chain had led to exponential risk-taking at many companies, largely hidden from public view. Simply put, the appearance of control in financial markets was a fiction.
Excerpted from Infectious Greed: How Deceit and Risk Corrupted the Financial Markets by Frank Partnoy
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