Context. Don’t let the inflammatory title of Gillian Tett’s new book lead you to think that this is a lightweight, quickly written diatribe about the financial crisis. It must have been the publisher who thought more sales would come from the title, 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. Tett writes for the Financial Times, and Fool’s Gold is a thoughtful and engaging history of the creation and spread of credit derivatives. A group of talented J.P. Morgan bankers created credit derivatives, and managed them in the context of the credit culture of that company. One of Tett’s eureka insights is that the Morgan credit experts had never worked anywhere else, and couldn’t imagine that their competitors had such weak credit controls over their business. It was those weak credit controls that led to disaster. Among the recent books about the financial crisis, this focus on the history and spread of credit derivatives is one of the best.
Rating: Four-star (Highly Recommended)