All The Devils Are Here: Unmasking the Men Who Bankrupted the World (74 page)

Basel Committee on Banking Supervision, capital reserves rule,
59–60
,
81
,
240

Basis Yield Alpha Fund,
277

Bear Stearns

ABS index,
259–60

Bank of America lawsuit,
293

CDOs,
288
,
290–95

foreclosures, plan to prevent,
289–90

hedge funds, collapse of,
285–95
,
346–47

High-Grade Structured Credit Fund,
287–88

High-Grade Structured Credit Strategies Enhanced Leverage Limited Partnership,
288–89
,
293

J.P. Morgan acquisition of,
347–48

Beattie, Richard,
198

Behavioral economics,
261

Beneficial,
28

Bensinger, Steve,
331–32
,
340

Bernanke, Ben,
306

Berson, David,
253

Birnbaum, Josh,
270
,
272–73
,
275–76
,
295

BlackRock,
4
,
232

Black-Scholes formula,
55

Black swans,
56

Blankfein, Lloyd

during collapse,
348
,
353

compensation from Goldman,
157

Goldman Sachs under,
155–59

Blue sky laws, MBSs exemption from,
12–14

Blum, Michael,
238–40

Blumenthal Stephen,
42

BNC Mortgage,
238

BNP Paribas,
301

Bolten, Joshua,
245

Bomchill, Mark,
130

Bond, Kit,
178

Bond ratings

CDOs,
120–24

and credit enhancements,
31
,
34
,
115

failures, examples of,
114
,
119
,
121
,
124
,
297–98
,
310–11

public trust in,
8–9
,
113–14
,
310–11

ratings shopping,
118–19

system of,
9
,
110
,
118

for tranches,
31

Value at Risk (VaR) applied to,
53

See also
Moody’s
;
Standard & Poor’s

Bonuses, post-TARP,
360–62

Born, Brooksley,
100–108

biographical information,
100–101

derivatives, regulatory efforts,
101–8

style/personality of,
101
,
106–7

Bothwell, James,
45
,
66–68

Bowsher, Charles,
67–68

Bradbury, Darcy,
67–68

Brandt, Amy,
252

Breit, John,
236–38
,
283
,
311
,
314–17

Brennan, Mary Elizabeth,
297
,
299

Brickell, Mark,
63–66
,
175–76

Brightpoint fraud,
195–96

Broad Index Secured Trust Offering (BISTRO),
79–81

AIG FP credit protection,
80–81

features of,
78–79

Broderick, Craig,
270
,
302

Bronfman, Edward and Peter,
76

Bruce, Kenneth,
303

Buffett, Warren,
110

Burry, Michael,
260
,
266

Bush, George W.

homeownership initiatives,
168

Paulson appointment,
245–47

war with Fannie/Freddie,
168–69
,
174–81

Buxton, George,
294

Callan, Erin,
351

Calomiris, Chris,
35

Calyon,
331

Canfield, Anne,
50

Capital reserves

Basel I loophole,
240

Basel I rules,
59–60
,
81

and bond ratings,
112

credit default swap as substitute,
61

Fannie Mae,
41–42

Fed requirements,
58–59

risk-based capital requirements,
59–60

and subprimes, FDIC recommendations,
93–94

Cassano, Joe,
187–91

and AIG-FP collapse,
325
,
329–40

AIG-FP under,
187–91
,
196
,
201–3

biographical information,
80–81
,
187–88

and BISTRO,
80–81

compensation,
329
,
340

negative basis adjustment theory,
339

and PNC fine,
196

risk-aversion of,
188

style/personality of,
187–88

Catchings, Waddill,
98

Chanos, Jim,
83

Chatterjee, Debashish,
297

Cheyne Capital Management,
305

Christensen, Arne,
44

Cioffi, Ralph

and Bear hedge fund collapse,
285–95

indictment of,
362

Citigroup

Ameriquest portfolio, servicing,
208

Citicorp Mortgage,
21

SIV debt acquired by,
305

Cityscape,
34

Clarkson, Brian, and corruption of Moody’s,
115–20
,
124

Clinton, Bill

derivatives regulation, neglect of,
100–108

homeownership initiative,
32
,
36
,
50

Coffin, Charles,
38

Cohan, William,
294

Cohen & Company,
312

Cohn, Gary,
159
,
275
,
282

Collateral calls, to AIG,
322–26
,
330–35
,
339–41

Collateralized debt obligations (CDOs)

Bear Stearns,
288
,
290–95

BISTRO as precursor to,
79–81

collapse of market (2007),
285–308

danger and warning about,
254–56
,
264
,
288–97

downgrading (2002–2003),
121

downgrading (2007),
298–300
,
305

features of,
120–22

high ratings, reasons for,
120–24
,
297–98

hybrid CDOs,
270

Merrill Lynch,
163–66
,
236–39
,
308–21

multisector CDOs,
188–91
,
200–203

synthetic CDOs,
263–84

tranches,
122–23
,
188–94
,
200–203

See also specific instruments

Collateralized mortgage obligations (CMOs), features of,
13

Collateral triggers,
190–91

Commercial paper,
241

Committee to Save the World,
96–97

Commodities Futures Modernization Act (2000),
109

Commodities Futures Trading Commission (CFTC), derivatives, regulatory efforts,
63–68
,
102–9

Community Reinvestment Act,
48

Conforming mortgages

Fannie market for,
18
,
23
,
38

features of,
18
,
23

Consolidated Supervised Entities (CSE),
244

Constantine, Thomas,
29

Correlation trading,
263–64
,
283–84

Corrigan, Gerald,
65–66

Corzine, Jon,
151–54
,
245

Counterparty,
54

Countrywide Financial,
20–28
,
138–45

balance sheet risk,
229–30

as bank holding company,
140

Bank of America acquisition of,
304

collapse of,
300–305

conforming mortgage market,
23
,
39

consumer complaints/lawsuits,
227–28

dangerous products of,
143–44
,
219–20
,
226–29

establishment of,
22–23

exception pricing system,
144

Fannie buys loans from,
39
,
49
,
182

founder/CEO.
See
Mozilo, Angelo