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Über dieses Buch

The story of the recent global economic crisis is told in the words of the main players in the drama. Including quotes from bankers, rating agencies, housing agencies, regulators, politicians and media figures. Erik Banks' latest book shows why we are doomed to experience further financial crises in the future.

Inhaltsverzeichnis

Frontmatter

Prologue: Crisis Redux

Abstract
I call it the “risk manager’s moment”: a point when you feel nervous tension, light-headedness, a sense of disbelief (and yet, somehow, not really), perhaps a tinge of nausea. And helplessness: complete inability to do anything to stop the train wreck. The risk manager’s moment arrives, of course, when things are going pear-shaped: the deal is collapsing, the client has announced plans to file for bankruptcy, or the markets are in freefall. Nothing to do but watch the whole thing go absolutely wrong.
Erik Banks

1. A Quick Recap

Abstract
Lots of red ink was spilled during the 2007 Crisis, and lots of black ink has been spilled writing about the events and the culprits ever since that time. And little wonder – with the quantity of money that was lost during a very short three- year period – between $2 and $3 trillion directly according to estimates from the International Monetary Fund (IMF), plus lots more indirectly – there are lots of questions out there: what, why, who? And, perhaps more importantly, will it happen again?
Erik Banks

2. The US Banks Got It Wrong …

Abstract
It is easy to be a pundit sifting through the wreckage of the banking system with all the evidence at hand. All the warnings seem so obvious, all the mistakes seem so astounding, and all the motivations seem so wrong. Reality, experienced in the heat of the moment, was rather different. To be sure, warning signals surrounding the housing and financial markets were there, but they weren’t necessarily easy to interpret or act on. In the interest of full disclosure, I count myself amongst the group of bankers that got some of it right, but missed a whole lot of things – I certainly didn’t expect the crisis to play out with such fury, and I didn’t think that the safest, most mundane, nonmortgage assets would suffer. I think Goldman’s Blankfein is correct in stating that “[a]fter the fact, it is easy to be convinced that the signs were visible and compelling.” 1
Erik Banks

3. … and So Did the European Banks

Abstract
Pre-crisis blindness was not confined to the US: there were plenty of heads-in- the-sand in the UK and on the Continent. In fact, some of the biggest European banks got it quite wrong, including household names like RBS, HSBC, HBOS, and Barclays of the UK, once-bulletproof Swiss behemoth UBS, Benelux giant Fortis, and even the leading light of German banking, Deutsche Bank. And a bunch of smaller, more specialized, banks like Northern Rock, Bradford & Bingley, Sachsen Landesbank, and IKB got it wrong, too.
Erik Banks

4. The Fannie and Freddie Sinkhole

Abstract
Let me now shift my focus from the seemingly incompetent bankers to those operating outside the world’s financial capitals. I’ll start in this chapter with Fannie and Freddie, the powerful government-sponsored (and now government-owned) entities at the heart of the housing crisis, and move on to the rating agencies in the next and the regulators, politicians, and lobbyists in the following one.
Erik Banks

5. Fuel to the Fire I: The Rating Agencies

Abstract
Let me switch gears slightly, away from the bankers and housing enterprises, toward the credit rating agencies. More specifically, in this chapter I want to explore the role of “big three” agencies in the crisis. Standard and Poor’s (S&P), Moody’s, and Fitch are responsible for analyzing all manner of liabilities (like commercial paper, notes, and bonds), providing “opinions” on the likelihood issuers will continue to perform. While the agencies have been late to the party a few times with downgrades of failing companies, their overall record has generally been pretty good – at least for corporate obligations.
Erik Banks

6. Fuel to the Fire II: Regulators, Politicians, and Lobbyists

Abstract
Since some outside the financial capitals aided-and-abetted in the grand buildup and collapse, it would be remiss of me not to make some mention of their role. In particular, it pays to understand the behaviors of various “power players,” which I take to include all manner of regulators (who, by my count, have missed every single major crisis of the past two decades and have, in fact, helped fuel a few of them), politicians and legislators (who in some cases emerge as rather clueless and hypocritical), and lobbyists (who talk up their particular special interests, regardless of whether the markets are good or bad). Let me illustrate how each one of these groups contributed to the crisis.
Erik Banks

7. A Handful of Sages

Abstract
Lest you think that everyone involved in banking, politics, regulation, and lobbying is either a buffoon or involved in something nefarious, I am happy to present in this (unfortunately rather short) chapter, the exceptions that prove the rule: the small cadre of experts who saw the freight train barreling down the tracks, sometimes with unbelievable accuracy. They deserve kudos and many of us probably wish, in retrospect, that we would’ve heeded their advice, warnings, or counsel – they were dismissed as just so many Cassandras. Perhaps they can serve as “leading indicators” in the future?
Erik Banks

8. The Blame Game: Fingerpointing and Apologies

Abstract
It is interesting in the aftermath of the crisis to correlate red ink and failed performance with apologies and admissions of culpability from those in a position of power, influence, and responsibility. In other words, it’s interesting to see who does and doesn’t feel accountable for the annihilation of so much wealth. In the past chapters I’ve mentioned all the different groups that contributed to the screwup – the question is, how many have actually owned up to it? Based on my admittedly unscientific review, there seems to be an entire spectrum that ranges from “genuine mea culpa” to “mistakes were made” to “not my fault.” But before I get into the specifics, let me set the stage by first looking at how of some of the global political leaders reacted to the crisis.
Erik Banks

9. Closing the Barn Door

Abstract
Every crisis brings with it the promise of change, including new rules and new discipline so that the lapses and losses won’t be replayed in the future. In other words, a bit of “barn-door closing.” And so it has been with this crisis – though, it must be said, with a bit more zeal, because this one has had some extra zeros in the red ink column. Not surprisingly, there is a populist element to the exercise: politicians and regulators need to be seen to be doing the “right thing” for their constituents so that they can get reelected or otherwise keep their jobs – though by now I’m sure that they don’t know exactly what the right thing is.
Erik Banks

10. Get Ready for the Next One …

Abstract
In this book I’ve summarized what happened during the fateful crisis period that came to the forefront in August 2007 – but which had been percolating for at least several years before that. I’ve mentioned some of the people that got it wrong (along with a very few that got it right), and examined who fell on the sword and who ran for the hills. In the last chapter I’ve also described some of the “fixes” that have either been put in place or proposed as a way of making sure this never happens again.
Erik Banks

Backmatter

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