Infectious Greed: How Deceit and Risk Corrupted the Financial Markets

by Frank Partnoy

Book Overview

From the bestselling author of F.I.A.S.C.O. , a riveting chronicle of the rise of dangerous financial instruments and the growing crisis in American business 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. Our financial system has suddenly reached a perilous...

• Format: Hardcover
• Language: English
• ISBN: 0805072675
• ISBN13: 9780805072679
• Release Date: April 2003
• Publisher: Times Books
• Length: 480 Pages
• Weight: 1.82 lbs.
• Dimensions: 1.5" x 6.4" x 9.6"

Customer Reviews

Con Men at the Highest Level

The book reveals some nasty deeds and even nastier people. What's interesting is he names names, uncommon in the high finance world which allows culprits to move on. For example, Cliff Kaplan (page 176), is still going strong, although on a smaller scale, swindling local businesses in and around Mill Valley and the Bay Area.

Partnoy is the man !!!

POSITIVE: In-dept overview of what happend in the last 15 years in "high finance". The authors knowledge on the topics can hardly be beaten. Author pretty harsh in critisicing Moodys, CDOs etc. Very interesting findings (e.g. trading profits at Enron, harsh treatment of Quattrone). The author provides some good solutions in the finance world at the end of the book.NEGATIVE: Value creation, especially of derivatives, is not mentioned in the book. Thus, book rather critical. Book not as readable as FIASCO due to more difficult topics (and NOT authors fault).

Get this book if you want to understand Wall Street antics

This book is an absolute must read if you want to understand Wall Street shenanigans. Partnoy has done a phenomenal job of demystifying the world of swaps, derivatives and other exotic financial instruments. Even better, he shows how investment banker antics have affected Main Street inhabitants including yourself. How did Orange County and so many other municipalities get so deeply in trouble? The author explains.I have a Ph.D in business and many finance courses under my belt, but I never quite understood the systemic dangers of the 'financial innovation' that is sweeping our markets. Now that I have, I will sleep much less well at night.Partnoy describes the evolution of exotic instruments and the characters involved in this evolution. How CS First Boston made securites of virtually any type of debt, Salomon pioneered the CMO and so on. He details the specific wrongdoings of companies like Enron, Global Crossing and WorldCom. He shows you the enabling role played by gatekeepers like accounting firms, law firms, analysts and credit rating agencies.Even more important, he shows you exactly how the collusion happened and why. He gives you both an aerial view of the markets and a down-in-the-trenches description. I often wondered why, in efficient markets, participants voluntarily involved themselves in such convoluted transactions that had high costs in terms of record-keeping and fees. The answer, as Partnoy shows, is that virtually all of these arrangements permit some set of parties to subvert law or regulation or both. This is true domestically and internationally.He graphically describes how lobbying keeps regulators at bay and the venality and ineffectuality of politicians. The chairperson of the Commodities Futures Trading Commission, for example, exempted important parts of Enron's business from regulation and, just weeks later, joined Enron' board. There are many such stories that show exactly how self-serving our legislators and regulatory guardians are.My quibbles are minor. While Partnoy is clear, his language is colorless. Perhaps his legal background has something to do with this. Given the strength of his material and the depth of his research, he could have made this book a popular bestseller if he had used more forceful colloquial expression.Also, he does not talk at all about the role of technology in this evolving mess. Greedy, incredibly smart bankers have always been with us. What has permitted them to have this huge impact now is the ability of computers to churn massive amounts of data, pick out the faintest of patterns and keep records of incredibly complex transactions involving dozens of parties over vast stretches of time.This said, this is the best book I have yet come across that explains how and why large scale financial malfeasance happens. And why it is hardly ever punished. You will understand why the perpetrators of Enron, Global Crossing, Adelphia, WorldCom, Sunbeam and so many others will walk and hold on to t

Be afraid, be very afraid...

Wow... what a scary book.You already knew that something very wrong has been happening in the relationship between investment banks and their customers but I'll bet you didn't how wrong.Partnoy's long book (there is an ENORMOUS amount of malfeasance available for the author to dissect) is well written. He has done an excellent job of creating separate threads from inter-connected stories without falling into too much repetition between chapters.An earlier reviewer remarked that Partnoy is a crusader and "Frankly, I think he goes to(o) far in his ranting".I couldn't disagree more. It is clear (to me, anyway) that, for too many people, the balance between the desire to make money on the one hand and the utterly vital community issues of honesty and integrity has been lost.It's also clear (to me) that the justice system does not seem to be properly configured to deal with this.If you've an interest in how your investment banker will roll you if he gets the chance - READ THIS BOOK.

A chilling summary with very thorough analytical background

In a much more serious project than his previous FIASCO, Partnoy gives an extremely persuasive explanation of how the interaction between financial product developments, legal change and administrative character have led to the series of financial scandals witnessed over the last twenty years. Few books on the subject have managed to explain the bizarre stories of Enron or LTCM in an understandable way but Frank puts together a convincing interpretation. The story depends not just on developments of financial products but also on accounting and legislative reforms, which he details. I'm not sure any other book on the subject approaches this one in detail and scope. Many have been written on individual cases but this is perhaps the first work to explain an overall pattern of corruption and it's evolution. The most familiar scandals are no longer bizarre events but can be seen as almost a logical consequence of a system going off the rails. Other reviews have suggested that Frank is anti-derivatives but this is not at all the case. He makes it clear that derivatives are in many case useful structures with a role to play but that they have been used at other times to less beneficial ends. There is an undertone of indignation in the writing but such anger is surely more than justified considering the huge injustices which have gone more or less unpunished.The suggestions for financial reform at the end of the book should be a blueprint for new legislation worldwide.