Fool's Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe

by Tett, Gillian

  Tranche: A class of securities that are issued by a collateralized debt obligation or asset-backed security that carries a certain level of risk. Normally, CDOs issue several different tranches of securities including a senior tranche (least risky), junior or equity tranche (most risky), and mezzanine tranche (in between).

  ACKNOWLEDGMENTS

  This book could not have been written without the help of a vast number of people, on both sides of the Atlantic, who have generously given their time over many years to help me understand how the financial world works (and, more recently, how it ceased to function). These thoughts and conversations have entwined to create the tapestry of this book. Many of the bankers, regulators, and investors who have provided inspiration for this book have asked to remain anonymous. That is no surprise, given the current political climate. But while I have not cited their names, they know who they are, and I wish to stress that I am truly grateful for their time. Thanks should also be given to the numerous former and current staff of J.P. Morgan who have talked to me on many occasions since early 2005. The bank did not initiate this project, and it has not endorsed this book. On the contrary, some J.P. Morgan employees were extremely uneasy when they found out that I planned to write a book, and several actively tried to dissuade me. In the end, though, almost all graciously responded to my questions, and some devoted many hours trying to explain their story. If I have misunderstood their tale, the mistakes are entirely mine.

  My employer, the Financial Times, generously allowed me to take time off to pursue this project, even in the middle of a credit crisis. I am most grateful to Lionel Barber and Martin Dickson, respectively editor and deputy editor. I first started trying to wade through the alphabet soup of the credit world back in 2005, in tandem with my FT colleagues, and along the way I have benefited enormously from their insights and help. Particular thanks are due to Richard Beales, Chris Brown-Humes, Jamie Chisholm, Joanna Chung, Paul J. Davies, Aline Van Duyn, Francesco Guerrera, Jennifer Hughes, Sam Jones, Michael Mackenzie, David Oakley, Anousha Sakoui, Saskia Scholtes, Henny Sender, Gary Silverman, and Peter Thal-Larsen. Janet Tavakoli, Satyajit Das, and Arturo Cifuentes were some of the few mavericks who were willing to speak openly to FT about the looming credit dangers at an early stage. In various stages of writing, Adam Ridley, Charles Morris, Keith Hart, Henry Fajemirokun, and Satyajit Das read various drafts and offered extremely helpful comments. Henny Sender also offered very kind logistical support. Pascal Spreen, Shannon Gitlin, and Madhavi Pulapaka conducted research. Merryn Somerset Webb has been a wonderful source of support over the years. Sophia Arnold and Martha Mehta provided intellectual inspiration and welcome laughter. I am also very grateful to Keith Hart and other senior anthropologists for advice. The postgraduate work I did fifteen years ago in the social anthropology department of Cambridge University, under Ernest Gellner and Caroline Humphrey, instilled an analytical framework that deeply influences me, even today. More recently, I have also greatly benefited from debates at the London School of Economics and Westminster University.

  My agent, Amanda (Binky) Urban at ICM in New York, was endlessly supportive about the book project, even back in early 2007, when it was wildly unfashionable to talk about CDOs and CDS. Karolina Sutton, at Curtis Brown in London, was very helpful too. Emily Loose at Simon & Schuster worked extremely hard under brutally tight deadlines to turn my text into a book that would be readable by a wide audience. She did a truly remarkable job. I am thankful to them all.

  At critical junctures, Cynthia Fajemirokun, Esmond Naylor, and Peter and Romaine Tett all offered crucial domestic support. Priya Patel and Julie Philips provided help with child care. The biggest thanks, though, must go to Henry Fajemirokun, whose profound insights and determination to challenge the accepted wisdom have been a central source of intellectual inspiration for me over the years, in relation to this book and much else. His practical and emotional support has been deeply valued in recent months. Saying “thank you” sounds glib, but I mean it.

  ABOUT THE AUTHOR

  GILLIAN TETT oversees global coverage of the financial markets for the Financial Times, the world’s leading newspaper covering finance and business. In 2007, she was awarded the Wincott Prize, the premier British award for financial journalism, for her capital-markets coverage. In 2008, she was named British Business Journalist of the Year. She previously served as the newspaper’s deputy head of the Lex column (an agenda-setting column on business and financial topics), Tokyo bureau chief, economic correspondent, and foreign correspondent. She speaks regularly at conferences around the world on finance and global markets. She has a PhD in social anthropology from Cambridge University. In 2003, she published a book on Japan’s banking crisis, Saving the Sun: How Wall Street Mavericks Shook Up Japan’s Financial World and Made Billions.