Carol Loomis Described Four Derivatives’ Sins: Lies, Leverage, Ignorance, and Arrogance

A. Rashad Abdel-khalik

Chapter 2 in Brazen:Big Banks, Swap Mania and the Fallout, 2019, pp 59-71 from World Scientific Publishing Co. Pte. Ltd.

Abstract: More than 20 years ago, Carol Loomis, the renowned reporter of Fortune magazine, proffered a brutal assessment of the emergence of the Swap Mania. In this respect, she noted four Derivatives’ Sins as characterizing Wall Street and big banks. This was only two years before Frank Partnoy published his book F.I.A.S.C.O.: Blood in the Wall Street. Twenty years later nothing seems to have changed; Bob Ivry published a book titled The Seven Sins of Wall Street.

Keywords: Swaps; Interest Rate Swap; Unconscionable Contracting; Termination Penalties; Embedded Costs; Paying for Nothing; Gambling; ISDA; Master Agreement; Deceit; Inadequate Disclosure; Hidden Costs; Zero Sum Game; Wealth Transfer; Paper Chasing Paper; Floating Rate; Synthetic Rate; Credit Risk; Demonstrations; Water Shut Off; Union Class Action Suit; The LIBOR Scandal; Non-Profit (search for similar items in EconPapers)
JEL-codes: E43 E44 (search for similar items in EconPapers)
Date: 2019
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