Quotes below are from an edited transcript of an interview conducted by producer Martin Smith on Feb. 6, 2012.
“So it takes rocket science to — I mean, — (laughs) — these are very complex deals, correct?”
[Martin Smith to Terri Duhon, Feb 6 2012, during interview for Frontline’s “Money, Power & Wall Street” series.]
I’m not the brightest bulb in the box. I’ve never been able to balance my checkbook and yet after watching this series I had a general understanding of CDO’s. One of the few good things I can say.
While it may take rocket science to understand the complexity of the deals, it doesn’t take a rocket scientist to figure out that Frontline’s much touted series had an agenda. Nor does it take a rocket scientist to figure out that the disingenuous comments by Terri Duchon (joined JPMorgan as a derivatives trader in 1994) and the interviews with others about JP Morgan’s 20-something wiz kids who came up with the idea of complex derivatives were contrived to manipulate our perceptions of those behind the melt-down.
“They are complicated. But for someone who is well versed in fixed income products or who has been looking at portfolios of fixed income products for a long time, it’s not that much of a leap from what they’re currently looking at. So if you’re looking at individual bonds and loans, already thinking about them on a portfolio basis, and then thinking about the tranches of risk isn’t that much of a leap.”
“OK. But by that argument, why did other banks go forward when your bank and your team decided to stop? So if it’s not so complicated, why did so many others keep going, marching toward the cliff?”
“Look, very simply, there are certainly some investors, some banks, some borrowers who are a bit greedier than they should be. And we decided to stop because the products just got more and more risky. The risk became something that we weren’t comfortable with.”
Apparently JP Morgan did not stop as the $2 billion loss this past week was not due to a hedge gone wrong but to another failure of complex derivatives trading. Trading a product that doesn’t exist, gambling high stakes on a poker hand without the advantage of being an autistic card counter.
Watching the show as it aired, I was shocked by the way the JP Morgan 20-somethings were allowed to portray themselves as ‘kids’ without a clue as to what would happen with their new idea. These were adults trained to think ahead, whose jobs inherently required long term financial forecasting. To say they were ‘unaware’ just shows how creatively manipulative they are. Ms. Duchon and others from that group were a bunch of 20-something psychopaths whose job it was to come up with plan to hide risk in a way that wouldn’t show up on the charts. I can imagine them all high 5’ing each other and yelling “OMG!!! WE RULE!!!!!” when they came up with the idea.
And then again after Frontline aired.
The list of experts not chosen for interviews says as much about Frontline’s agenda as the list of experts interviewed. With Frontline’s typical lack of balanced and informed viewpoints, it watered down to nothing more than anti-Obama propaganda, the kick off for another election season. Not that it matters much. Anyone who thinks one politician is different from another… well, I can’t help you. Please seek professional help.
Have we all seen enough of smirking bankers and Wall St. execs wending their way through crowds of angry citizens to collect their bonuses yet? MOVE YOUR MONEY out of these predatory financial monstrosities and into community banks and Credit Unions.
Recommended additional reading:
Practically anything on ethics and, even with his occasionally flawed constructs, Ernest Becker’s “The Denial of Death.”