Inside Job
Page 39
Internal guideline compliance
Internal Revenue Service (IRS)
International Monetary Fund (IMF)
Internet bubble
Internet revolution
Internet services
Interstate banking
Investment banking, (see also Banking industry; Financial bubble of 2000–2007)
auction-rate securities (ARS) and
bonuses
compensation
domination by five firms
extreme leverage and
leveraged buyouts (LBOs) and
mortgages and (see Mortgages)
prior to 1980s
rating agencies and
rise of predatory
Schwab lawsuit
separation between commercial banking and
short-term financing
S&Ls and
structural consolidation and
Investment Company Act of 1940
Iran, money laundering and
Iraq war
Ireland, debt crisis and
Italy
J
Jackson, Shirley
Japan
Jefferson County, Alabama
Jobs, Steve
Johnson, Simon
Joint ventures
Jones, Day, Reavis, and Pogue
JPMorgan Chase
Julius Baer
Junk bonds
“Just-in-time” production model
Justice, US Department of
K
Kabaker, Matthew
Kaye Scholer
Keating, Charles
Keating Five
Kelley, Martin
Kennedy, John F.
Khuzami, Robert
Killinger, Kerry
Kim, Dow
Kim, Richard
KKR Financial Corporation
Knapp, Charles
KPMG
Kravis, Henry
Kroft, Steve
Krugman, Paul
L
Labour productivity
Lagarde, Christine
Latvia
Lauder, Ronald S.
Law and Economics Consulting Group (LECG)
Lay, Kenneth
Lee, Matthew
Lee, Thomas H.
Legal profession
Lehman Brothers
Leland, Hayne
Leverage, extreme
Leveraged buyouts (LBOs)
Levin, Carl
Levitt, Larry
Lew, Jacob
Lewis, Michael
Libertas
Libya
Liechtenstein, tax evasion and
Liechtenstein Fürsten-Bank
Liens
Linklaters
Lippmann, Greg
Lipton, David
Liquidity puts
Lloyds Bank
Loan sharks
Loan-to-value ratios (LTVs)
Lobbying
Local government spending
Loeb, David
London Interbank Offered Rate (LIBOR)
Long Beach Mortgage Corporation
Long-Term Capital Management (LTCM)
M
Macavoy, Paul
Mack, John
Madoff, Bernard L.
Mafia
Magnetar
Mahonia
Mail fraud statute
Malkiel, Burton
Manufacturing sector
Marijuana possession
Mark-to-market accounting
Markit
Markopolos, Harry
Massachusetts Institute of Technology (MIT)
MasterCard
MBIA
McCain, John
McCormick, David
McDonald’s
MCI
McMahon, Ed
Media industry
Median household income
Medical profession
Medical research
Meeker, Mary
Mergers
Meriwether, John
Merrill Lynch
MERS
Merton, Robert
Mexico
MF Global
Microsoft
Milken, Michael
Mishkin, Frederic
Money laundering
Money market funds
Money Store
Mongelluzzo, John
Monitor Group
Montag, Tom
Moody’s
Moore, Gordon
Morgan Stanley
Morris, Charles
Mortgage Bankers Association
Mortgage banks (see Mortgages)
Mortgage brokers (see Mortgages)
Mortgages
Alt-A loans
collateralized mortgage obligation (CMO)
80/20 piggyback loans
fixed-rate
housing bubble
mortgage-backed securities (MBSs)
mortgage fraud
Option-ARMs
second-lien loans
stated income loans
subprime
teaser rates
Mozilo, Angelo
Municipal bonds
Mutual funds
N
Nasdaq stock exchange
National debt
National Economic Council
National Security Letter
National security policy
NationsBank
New Century Financial Corporation
New Deal laws
New York magazine
New York Stock Exchange
New York Times
Nides, Thomas
Nierenberg, Michael
Nigerian power barges
Nixon, Richard
“No doc” loans
Nocera, Joe
Nomura
North Korea
North Street
Norway
Noyce, Robert
NRSRO (Nationally Recognized Statistical Ratings Organizations) ratings
Nuclear weapons
Nye, Joseph S.
O
Obama, Barack
Obama administration
Occupancy status
Occupy Wall Street movement
Office of Federal Housing Enterprise Oversight (OFHEO)
Office of Management and Budget
Office of the Comptroller of the Currency
Offshore tax havens
Oil futures trading
Oil shocks
Oligarchy
O’Meara, Christopher
On the Brink (Paulson)
O’Neal, Stan
OPEC (Organization of Petroleum Exporting Countries)
Option-ARMs
Option One
Oracle
Orange County, California
Organized crime
Orszag, Peter
Outsourcing and offshoring
Over-the-counter (OTC) derivatives
Ownit
P
Palin, Sarah
Pandit, Vikram
Parsons, Richard
Paterson, Mark
Patronage
Paul, Ron
Paul, Weiss, Rifkind
Paulson, Henry
Paulson, John
Pelosi, Nancy
Pension Benefit Guaranty Corporation (PBGC)
Pension funds
Perelman, Ronald
Perjury
Perry, Rick
Personal conduct offences
Personal spending, billing as business expense
Pharmaceutical industry
Pickens, T. Boone
Pinochet, Augusto
PMI, Inc.
Political advertising
Political corruption
Political duopoly
Political extremism
Political parties, (see also specific parties)
Ponzi schemes
Porter, Michael
Portes, Richard
Portfoli
o insurance
Portfolio management industry
Portugal, debt crisis and
Poverty rate, rise in
Pratt, Richard
Pre-trial asset seizure
Primerica
Prince, Chuck
Princeton University
Private equity industry
Procter & Gamble
Property appraisers
Property bubble
Proprietary trading accounts
ProPublica
Protectionism
Proxmire, William
Putnam, Robert
Q
Qaddafi, Muammar al-
Qaddafi, Saif
Quayle, Dan
“Quiet Coup, The” (Johnson)
R
Racketeer Influenced and Corrupt Organizations Act (RICO)
Raines, Franklin
Rajan, Raghuram (Raghu)
Rajaratnam, Raj
Rating agencies
Rattner, Steven
Reagan, Ronald
Reagan administration
Reilly, Gerald
Religious extremism
Repo 105 fraud
Republican Party
Residential mortgage-backed securities (RBMS)
Resolution Trust Corporation
Retirement funds, (see also Pension funds)
Revolving-door hiring
Rhinebridge Capital
RICO offences
Riegle, Donald
Riggs Bank
Roach, Stephen
Rogoff, Ken
Romney, Mitt
Rotella, Steve
Roubini, Nouriel
Royal Bank of Scotland
Rubin, Robert
Rubinfeld, Daniel
Rubinstein, David
Rubinstein, Mark
S
Sachs, Jeffrey
Sachs, Lewis
Sacramento, California, homelessness in
Safarha, Reza
Safe Ground
St. Denis, Joseph
Salinas, Raúl
Salinas de Gortari, Carlos
Salmon, Felix
Salomon Brothers
Salomon Smith Barney
Sandoz Pharmaceuticals
Sanford Bernstein
Sankey, Brian
Sanofi
Sarbanes-Oxley Act
Saudi Arabia
Savings & loan institutions (S&Ls)
collapse of
junk bonds and
mortgages and
Schmalensee, Richard
Schneiderman, Eric
Scholes, Myron
School dropout rates
School graduation rates
Schultz, Howard
Schwab (see Charles Schwab, Inc.)
Schwarzman, Steve
Scott, Hal
Seattle, Washington, homelessness in
Second-lien loans
Securities and Exchange Commission (SEC)
Securities Exchange Act of 1934
Securities Investor Protection Corporation (SIPC)
Securities rating (see Rating agencies)
Securitization food chain
Senate Banking Committee
Senate Permanent Subcommittee on Investigations
September 11, 2001 terrorist attacks
Severance payments
Shadow banking
Shapiro, Carl
Shapiro, Mary
Shearson Lehman
Shiller, Robert
Short-term financing
Sidak, Geoffrey
Silverado
Silverstein, Baron
Simmons, Ruth
Simmons Bedding Company
Simon, William
Simons, Jim
Singapore
SIVs (see Structured investment vehicles (SIVs))
60 Minutes
Skilling, Jeffrey
Sloan, Allan
Smith, Yves
Smith Barney
Snow, John
Software industry
Soros, George
South Korea
Soviet Union
S&P 500 stock index
Spain, debt crisis and
Spar, Debora
Sparks, Dan
Speakers’ bureaus
Special dividends
Special purpose entities (SPEs)
Spector, Allen
Speculative arbitrage
Sperling, Gene
Spitzer, Eliot
Squam Lake Group
Squared
Standard & Poor’s
Stanford, Allen
Stanford University
Medical School
State, US Department of
State government spending
Stated income loans
Stated liens
Statute of limitations
Steel industry
Stewart, Martha
Stiglitz, Joseph
Stock-index futures
Stock market
dot-com stocks
junk bonds and
1987 crash
oil shocks and
recovery in 1980s
technology stocks
Stock options
Stoneville
Strauss-Kahn, Dominique
Structural concentration
Structured investment vehicles (SIVs)
Student loans
Subpoena power
Subprime mortgages
Success of Open Source, The (Weber)
Sudan
Sullivan, Martin
Sumitomo Bank
Summers, Larry
Supreme Court of the United States
Sweden
Swiss banks, tax evasion and
Sworn testimony
Synthetic CDOs
T
T-Mobile
Taconic Capital Advisors
Taibbi, Matt
Taiwan
Tax avoidance
Tax cuts
for wealthy
Tax evasion
Tax reform
Tea Party movement
Teaser rates
Teece, David
Telecommunications industry
Temin, Peter
10b-5 offence
Terrorism
Tett, Gillian
Texas Pacific Group
Thailand
Thain, John
Third parties
THL
Thornton, John
Thurow, Lester
Tightly coupled system
Timberwolf
Time Warner
Title search
Tourre, Fabrice
Trade deficit
Travelers Insurance
Treasury, US Department of the
Treasury instruments
Tricadia
Trillion Dollar Meltdown, The (Morris)
Turkey
Turner, Lord Adair
Tyson, Laura D’Andrea
U
UBS
Undisclosed liens
Unemployment
Unions
U.S. Trust
University graduation rates
University of California, Berkeley
V
Venture capital investment
Verizon
Vernon Savings Bank, Texas
Verschleiser, Jeffrey
Vestar
Vietnam war
Viniar, David
Virgin Islands pension fund
Visa
Volatility
Volcker rule
W
Wachovia
Wade, Robert
Wall Street Journal
Walmart
Washington Mutual (WaMu)
Watergate affair
Waters, Maxine
Wealthy
children of
education and
income inequality and
policy dictated by
source
s of wealth
tax cuts for
Weber, Steven
Weil, Raoul
Wells Fargo
Wharton School
WMC Mortgage
Workforce skills
World Bank
World Economic Forum (2011)
WorldCom
Wozniak, Steve
Y
Yahoo
Yale University
Yield spread premiums
Yom Kippur war
Z
Zames, Matthew E.
Zero-Sum Society, The (Thurow)
Zingales, Luigi
Zuckerman, Greg
ABOUT THE AUTHOR
* * *
Charles Ferguson won an Oscar in 2011 for Inside Job, his documentary on the financial crisis, and was an Oscar nominee for his first documentary, No End In Sight, on the war in Iraq. He is a graduate of the University of California at Berkeley, holds a PhD in Political Science from MIT, and has been a technology policy consultant to the White House and the Office of the US Trade Representative, as well as to leading technology companies including Apple, IBM, and Texas Instruments. He was the co-founder of Vermeer Technologies, which invented the web tool Front Page, later sold to Microsoft. A former visiting scholar at MIT and Berkeley, he has also been a senior fellow at the Brookings Institution in Washington, DC. He has written four books, and is a life member of the Council of Foreign Relations and a director of the French-American Foundation.
ENDNOTES
* * *
1FICO is the stock ticker symbol for the Fair Isaac Corporation, the company that pioneered the three-digit credit score.
2That calculation was across all the securities. In the pool example used here, the 73.8 percent LTV implied equity of 26.2 percent. If LTV was really 90.5 percent, the equity falls to 9.5 percent, which is 64 percent lower.
3The puzzle here is why Morgan Stanley could have been on the long side in Hudson, since they were also selling seemingly toxic instruments to their own investors. But it merely illustrates how few firms had the internal discipline of Goldman. Both Morgan and Goldman had large asset-management businesses that invested on behalf of their clients; to a naïf at Morgan asset management, a Goldman-sponsored investment-grade security would look pretty reasonable. One can bet that no one at Goldman’s asset management group bid for it.
4: Yves Smith gives a cautious estimate of $128 billion of Magnetar-induced lending. The production of cash subprime CDOs over this period was about $450 billion. Other estimates of the Magnetar impact are as high as $250 billion.
5: Canadian Imperial bank of Commerce
6: Swap agreements almost always include breakup fees calculated as the present value of the net stream of income due to the aggrieved party over the remaining life of the deal.
7: Merrill, for example, offered investors the opportunity to recover four times the return on referenced Madoff funds. An investor would put up, say, $1 million, and receive a Merrill note in exchange, plus a top-up loan of $3 million. In return, Merrill received an investment fee, plus a hefty lending fee. To cover its liability, Merrill then would typically invest the $4 million into the referenced Madoff fund—although it was not required to do so. Each month, it paid the amount of dividends the customer would have received if he or she had a $4 million Madoff account, less a 20 percent incentive fee. Note that Merrill itself did not have to take any investment risk, and that customer funds were never directly invested in a Madoff account.
8. The original account was opened in 1986 with Chemical Bank, which later merged with Chase. The Chase/JPMorgan merger was in 2001, when Madoff was on the verge of spectacular growth.