segunda-feira, 19 de agosto de 2013
Quem criou os Default Credit Swaps ? ...How a team at JP Morgan devised the new financial instruments that produced "a revolution in banking" - and the market events of 2008. "Fool's Gold: How Unrestrained Greed Corrupted a Dream, Shattered Global Markets and Unleashed a Catastrophe." by Gillian Tett.
They had parties, we got the hangover
Complex derivatives were greeted as a new dawn for banking, says Ruth Sunderland. But few reckoned with the greed of bankers
The Observer, Sunday 7 June 2009 / http://www.theguardian.com/books/2009/jun/07/fools-gold-gillian-tett
Surprisingly for an account of the masculine world of finance, this book is full of women. Apart from Gillian Tett herself, who has been the most prescient British financial journalist on the credit crunch, the most fascinating is Blythe Masters, a blonde, porcelain-faced Tilda Swinton lookalike who has the dubious distinction of having devised the first credit default swap. She also took a tiny device into the maternity ward to pass the time tracking share prices - doesn't everyone? - and was later blamed for opening the Pandora's box that led to global financial meltdown.
But it is Terri Duhon, another female financier, who best sums up Tett's core thesis: that it is not complex derivatives that were to blame for the crisis but the recklessness and greed of the bankers who so eagerly adopted them and used them in ways which their inventors claim never to have envisaged. Duhon, a Harley-Davidson-riding maths whizz from rural Louisiana whose talent for numbers catapulted her into the rarefied world of finance, commented: "When car crashes happen, people don't blame cars or stop driving them, they blame the drivers! Derivatives are the same - it's not the tools at fault but the people who used those tools."
This is a fascinating and detailed look at the crisis, seen through the prism of the venerable investment bank JP Morgan, where many of the complex derivatives that helped bring the system down originated. Tett, a senior journalist at the Financial Times, has several advantages as an author on this subject: she spent time in Japan, which underwent its own banking crisis and recession before this one; in the period running up to the collapse, she was covering credit markets, an area even most banking specialists viewed as obscure; and she has a doctorate in social anthropology, giving her an acute insight into banking tribes.
As she says, in most societies elites try to maintain power not simply by garnering wealth but by ideological domination too - deciding what is talked about and what is not. The "social silence" around the explosion of derivatives, and around the wealth and influence of the banking cadre, helped to construct and reinforce a new power structure and encouraged financiers to regard their activities as detached from the rest of society, until they became "like the inhabitants of Plato's cave, who could see the shadows of outside reality flickering on the walls, but rarely encountered that reality themselves".
This lack of a holistic vision of finance had, Tett points out, terrible consequences, the most tragic of which have been the blows to families who had never heard of a CDO (collateralised debt obligation) or an SIV (structured investment vehicle), but are now suffering the loss of savings, homes and jobs.
As Tett tells it, the deadly progress of derivatives can be charted as a tale of three parties. The first was held in June
1994, in Boca Raton,
Florida, when a dozen young bankers from JP Morgan in London, Tokyo and New
York descended on a hotel where they got drunk, threw the bosses into the pool
and discussed how they would grow the derivatives business. They were fired by
the fervour of scientists who thought they were splitting the atom or
discovering DNA - with no notion that their innovation, in the hands of others,
would run disastrously out of control.
The second jamboree took place on 11 June
2007, in Barcelona, when
industry body the European Securitisation Forum held its annual meeting and
celebrated the most lucrative year in history for investment banks. The meeting
was dubbed "Global Asset Backed Securitisation: Towards a New Dawn!".
With what now looks like grim irony, the band, composed of bankers, was called
D'Leverage - and played slightly out of tune. When the new dawn actually broke,
the very next day, it was with the news that a crisis was erupting at a hedge
fund with close links to Bear Stearns - one of the early markers of the great
The third bash took place in January this year, at the World Economic Forum, where Jamie Dimon, the chief executive of JP Morgan Chase, was one of only a few chastened senior bankers to show his face. Dimon, who bought collapsed rival Bear Stearns for a knockdown price in
2008 in a deal described as
being like "the Boy Scouts taking over the Mob", hosted a cocktail
party for 200 key contacts in the Piano Bar at the Swiss resort of Davos. The invitations
were embossed with the ghostly image of the bank's founder, J Pierpont Morgan,
hailed as the saviour of Wall Street in the crisis of 1907, with the
not-so-subliminal message that Dimon had fulfilled a similar role in this
A down-to-earth, hard-nosed New Yorker, Dimon emerges well from these pages. I can testify to him being a different breed from most investment-banking CEOs: my mobile phone trilled one Monday afternoon last year, and to my astonishment it was "the King of Wall Street" himself, wanting to discuss one of my columns, a task many banking grandees would have delegated to a PR aide. Once I realised it was not a colleague playing a practical joke, we had a cordial exchange of views on short-selling.
Tett's book gives the lie to the comforting notion that the crisis could not have been foreseen. Veteran financier Felix Rohatyn warned in the early 1990s that derivatives were "financial hydrogen bombs built on personal computers by 26-year-olds with MBAs". In 2003, Bill White and Claudio Borio, the two most senior economists at the Bank for International Settlements, presented a paper challenging the orthodoxy that financial innovation was good, because it reduced and dispersed risk. Their audience, which included Alan Greenspan, was not impressed.
The JP Morgan team, whose evangelism for financial innovation went so horribly wrong, are portrayed as stunned and chastened; Blythe Masters is "livid at how bankers have perverted her derivatives dream". As one of the JP Morgan innovators emailed another: "What kind of a monster has been created here? It's like you raised a cute kid who then grew up and committed a horrible crime." Readers will have to make up their own mind whether Masters and her peers could, or should, have done more to curb the destructive potential of their brainchildren, who grew into such monstrous adolescents.
• Ruth Sunderland is business editor of the Observer
To Hear a Lecture with Gillian Tett in The London School of Economics: http://youtu.be/Z3YIcksBRhI