Summary of 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

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Fool's Gold book summary
A journey into the arcane heart of financial darkness: how J.P. Morgan insiders took a wrong turn and caused a wreck.

Rating

9 Overall

7 Applicability

8 Innovation

9 Style

Recommendation

This ranks as one of the most thorough, accessible explanations of how the global financial system nearly disintegrated during the great financial crisis that broke in 2008. Gillian Tett traces the development of credit derivatives from their inception at an alcohol-fueled Boca Raton corporate retreat in the early 1990s. She shows how the pioneers struggled with risk management, turning down business that other financial institutions with less regard to risk sought eagerly. She elucidates the building and breaking of the wave of institutional crises – Bear Stearns, Lehman, AIG – during 2007 and 2008, and takes readers inside tense meetings between bankers and regulators at the New York Federal Reserve and the U.S. Treasury. This is capital financial journalism, which getAbstract highly recommends to any reader who hopes to get a better understanding of the forces at work in the financial crisis.

In this summary, you will learn

  • How and why J.P. Morgan bankers pioneered credit derivatives
  • Why the combination of credit derivatives and mortgage securitization created enormous, hidden systemic risks
  • What happened to tip the world into global financial crisis
 

Summary

Hatching the Idea
Pinpointing where and when credit derivatives were born is difficult, but a 1994 party for J.P. Morgan bankers at Florida’s Boca Raton Hotel could claim that distinction. Between pranks and drinking games, the young, aggressive financiers considered new ways to profit...
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About the Author

Gillian Tett, Ph.D., runs global coverage for the Financial Times. She was named British Business Journalist of the Year in 2008 for her coverage of the financial crisis.


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