Infectious Greed: How Deceit and Risk Corrupted the Financial Markets [Paperback]

"A sweeping account... Exemplary" --William Leith, Evening Standard

'Partnoy's account of what happened within these companies will send a shiver down the spine of anyone with a humble investment in a unit or investment trust' Bill Jamieson, The Scotsman --This text refers to an out of print or unavailable edition of this title.

'Sparkling ... a breathtaking chronicle of greed and stupidity on an operatic scale ... a compelling portrait of corruption on the scale of the last days of Rome..' Robert Peston

First published in 2003, Infectious Greed examined how our greed-driven culture led to the generation of massive profits, but also to unprecedented levels of risk, widespread deception, and high profile disasters like Enron and Worldcom. In the wake of the 2008-9 financial crisis, Partnoy's analysis of how major companies obscured the reality from shareholders by disguising risk and side-stepping regulations, is more pertinent than ever. Beginning in the mid-1980s with the introduction of the first proto-derivatives, Partnoy gives an intelligent and thorough account of the dangerous manipulations that have and continue to come to light.

Enron, Worldcom, Global Crossing… while financial scandals like these were headline news a few months ago, today they seem commonplace. We see now that they are not just isolated incidents. They are the inevitable fallout from more than a decade’s skulduggery, deceit and sheer criminal activity. And the crisis is far from over…

The world financial system is now out of control, says former Wall Street banker Frank Partnoy. We now have a situation that no-one can even understand, let alone regulate. In his new book, Infectious Greed, he asks: how did it happen?

How was it that companies such as industry stalwarts P&G and General Electric could risk billions of dollars of their shareholders’ money on dodgy investments? That NatWest could lose more than $80 million in options trades? That Japanese insurance companies could gamble their funds on American interest rates without understanding how risky – and illegal – their actions were? That Orange County, one of the richest municipalities in the US could lose more than a billion dollars thanks to absurd investments based on unpredictable mortgage rates? That accountancy firms could collude with the CEOs of top companies in keeping key financial data off the balance sheet and disclosing it only among footnotes in companies’ annual reports? That analysts could give AAA ratings to a company offering investments based on the performance of a basketball team? That regulators could be unwilling or unable to act? Why does today’s global financial system look like something from Alice in Wonderland?

The shockwaves at the heart of the current financial crisis have one major cause, says Partnoy: greed.

In the 1987 film Wall Street, Gordon Gecko pronounced: ‘greed is good’. Financiers took him at his word. The 1990s were a decade of financial innovation: traders pitted their wits against regulators to develop ever more complex investments. They concealed the risks from their customers and, for a time, made unimaginable profits with products like options, derivatives, swaps, inverse IOs and ‘Z Bonds’. This couldn’t last forever, and in the mid-1990s the cracks began to show. There were a number of high-profile scandals (like Bankers Trust and First Boston): but the individuals involved went unpunished. The message was clear: behave as badly as you like. Even if you’re caught you’ll be let off lightly. The result was white-collar crime on a massive scale. And so infectious greed corrupted individuals, institutions, and corporations, spreading like a contagion through corporate America and the world financial system. And like many infections, it had a long gestation period: the effects may last for years to come. Many of the individuals responsible for the worst scandals of recent years have gone unpunished - and now they’re back in business.

In his previous book, FIASCO, Frank Partnoy described blood and guts on Wall Street Infectious Greed is blood and guts everywhere. It is the one book to explain exactly what was behind the financial crises of today. And tomorrow. --This text refers to an out of print or unavailable edition of this title.

Frank Partnoy is a Professor of Law at the University of San Diego, where he
teaches courses in white collar crime and corporate finance. He writes and
lectures frequently on financial market regulation. His testimony about Enron before the U.S. Senate was widely cited as the most illuminating commentary on that scandal. --This text refers to an out of print or unavailable edition of this title.

'Readers are unlikely to find a more readable explanation of how the financial system has changed since the 1980s and who came unstuck' Financial Times The beginning of the twenty-first century saw major corporations such as Enron, Global Crossing and WorldCom implode, falling prey to a greed-driven culture and dubious or illegal corporate finance and accounting. In September 2008, the global banking system nearly collapsed during one of the most devastating financial crises of all time. Infectious Greed draws on Frank Partnoy's experience as a securities attorney, financial analyst and law professor to trace the seamless progression of deception and manipulation in these corporations. Beginning in the mid-1980s with the introduction of the first proto-derivatives, Partnoy documents how each new level of financial risk and complexity obscured and aggravated the sickness of the company in question. First published in 2003, Infectious Greed shows that blind faith in the financial system was no longer sufficient. Partnoy's foresight went unheeded, but this important financial history, now updated with new material, remains a classic cautionary tale for businesses today, and of the future. 'Illuminating ... Partnoy tells a complicated story with verve and clarity' Sunday Telegraph

Frank Partnoy is the George E. Barrett Professor of Law and Finance at the University of San Diego School of Law. His books include F.I.A.S.C.O., Infectious Greed, and The Match King. His next book, Wait, will examine snap decision making. Professor Partnoy writes regularly for The New York Times and the Financial Times, and has appeared on numerous media programs, including 60 Minutes, The NewsHour, and The Daily Show with Jon Stewart. He has degrees in mathematics and economics from The University of Kansas, and a J.D. from Yale Law School.