F.I.A.S.C.O.: Blood in the Water on Wall Street

ISBN: 0393046222

Author: Partnoy, Frank

Condition: New

The Orange County bankruptcy. The fall of Barings Bank. Shocking losses at Procter & Gamble, Dell Computer, and Gibson Greetings. The Mexican peso crisis. What did all these disasters have in common? A class of financial instruments known as derivativesthe most dangerous (and profitable) products ever devised on Wall Street. In F.I.A.S.C.O.: Blood in the Water on Wall Street, a former derivatives salesman takes readers onto the trading floor of a leading investment bankand in a tell-all, no-holds-barred expos, reveals for the first time the ugly truth about these complex financial products and the people who peddle them. Writing with the same eye for telling details as Michael Lewis in Liars Poker, Frank Partnoy shows how the once genteel world of investment banking has now become a place where the rallying cry is "Theres blood in the water. Lets go kill someone."Partnoy was in his late twenties when he landed the job of his dreamsa position in Morgan Stanleys Derivatives Products Group, the single most profitable division of the venerable investment bank. With vivid character sketches and a wealth of funny-yet-disturbing anecdotes, Partnoy takes us inside the culture of Morgan Stanleys derivatives group. Encouraged by upper management and egged on by gun-toting senior salesmen, derivatives had become a business-as-war, take-no-prisoners operation where people pored over Soldier of Fortune and gloated when they sold a product that "ripped off" a clients face.As he leads us through the ups and downs of his fifteen months at Morgan Stanley, Partnoy explains in plain English what derivatives areand shows how he and the other "rocket scientists" at the bank custom-designed these arcane financial products to dodge government regulators, encourage foreign currency speculation by pension and mutual funds, disguise risky gambles with AAA Standard & Poors ratings, and avoid capital gains taxes for weathy individuals. He also details, for the first time, the deal that earned Morgan Stanley the fattest fee in Wall Street historya $74.5 million profit for devising a derivative that wiped hundreds of millions in losses off a Japanese companys balance sheet.But dreaming up ever more complicated derivatives productsDollarized Yield Curve Notes, Constant Maturity Treasury Floaters, Trigger Notes, and Total Return Swaps, to name a fewwas never enough. For the bank to earn its fee, they had to be soldusually, as Partnoy notes, either to "cheaters" (fund managers who wanted riskier investments than their regulators or charters normally allowed) or to "widows and orphans" (unsophisticated fund managers who couldnt understand the risks in fine print).Throughout the book, Partnoy gives us a trading-floor view of the disasters fueled by derivatives trading and provides the formula of greed, daring, and ingenuity that are the basic ingredients of all derivatives. Written with humor, insight, and a mounting sense of moral outrage, F.I.A.S.C.O. is both a brilliant insiders account of investment banking today and a blistering indictment of the largely unregulated market in derivativesa book that everyone who has a pension plan or invests in mutual funds needs to read.