Structured Finance and Collateralized Debt Obligations: New Developments in Cash and Synthetic Securitization

by Janet M. Tavakoli

Financial Classic on Securitization, Derivatives, and Global Systemic RiskThe definitive book on the built-to-fail mortgage-backed securities, collateralized debt obligations, corporate bonds, and other flawed structured credit products that led to the global financial crisis by derivatives expert Janet Tavakoli. Structured Finance and Collateralized Debt Obligations (eTextbook, Second Edition) exposed that corporations and financial institutions had massive hidden value-destroying exposure. Banks and corporations fluffed their accounting numbers to cover it up. Tavakoli explains not only what does not work but also what does work. She demonstrates how to profit from the madness of crowds to protect investment portfolios.Law firms, Congress, and scholarly publications reference her work. She provides real time evidence. John Wiley & Sons published the hardcover edition of this book in September 2008 just as the market imploded. This eTextbook edition is a print replica published by Lyons McNamara. Page numbers are identical to those used in public references.Among the wealth of practical information, in chapter eight under the subsection “A Good Year for Some,” Tavakoli explains the short ABX Index trade. The index was comprised of flawed mortgage-backed collateralized debt obligation tranches. She published eighteen months before Michael Lewis made the trade famous in his book, The Big Short.Tavakoli shines a bright light on fraud. She explains how to recognize it in advance. Fraud that affects leveraged corporate debt, asset-backed securities, and other fixed income assets creates a unique opportunity for short sellers. The bonds come to market at par. The short’s downside is limited, cost of carry is minimized, and upside is enormous.She addresses a wide range of structured financial product issues. Uses and abuses of special purpose corporations and entities, beyond investment banking and corporate finance, are explained in detail.. Other topics include equity-linked notes, credit linked notes, cross-border securitization, and exotic structures.“Janet Tavakoli has been able to dissect with a brisk style the intricacies of many structured products. Not only does she explain in a clear and insightful manner how certain things work, but more important, why others DO NOT WORK!!! Highly recommended and very much needed.”Arturo Cifuentes, Ph.D. (formerly Moody's) Professor/Business School en Universidad Adolfo Ibanez. Member, Investment Committee, Chilean Sovereign Fund“Tavakoli uses her broad professional experience to examine the CDO market in simple and clear language. —RiskJanet Tavakoli is exceptional in having worked extensively both in mortgage securitization and structured credit at major financial institutions. In this clearly written book, she shares her in-depth knowledge of structuring, valuation, and risk management of structured products. This book is a must read for regulators and risk managers to keep up with the latest developments in structured finance."—Joseph Masri, PhD, Barclays Global Investors, Regional Director, Professional Risk Managers' International Association (PRMIA)“Janet Tavakoli warned the world this disaster was coming well in advance. Now she explains it again for those who did not listen before as well as why it is not over yet. You need to read this book to understand the biggest credit bubble in world history.”—Jim Rogers, author of A Bull in China, Hot Commodities, Adventure Capitalist, and Investment Biker.

Genres: Finance, Business, Economics

Kindle Edition

First published August 28, 2003

About the author

Finance Expert & Author

Janet Tavakoli is the founder and president of Tavakoli Structured Finance, a Chicago-based consulting firm established in 2003. Internationally recognized as a finance expert, Business Week called her the "Cassandra of Credit Derivatives" for predicting the financial crisis. This profile features her acclaimed nonfiction finance books and business expertise.

Ms. Tavakoli posts topical finance updates at her business site: Tavakoli Structured Finance.

Fiction Writing: Author Janet Tavakoli has written the well-received financial murder mystery Archangels: Rise of the Jesuits. She also writes science fiction using the pseudonym Michael K. Clancy, creating the acclaimed Zombie Apocalypse series. She posts fiction updates at: Janet Tavakoli, Science Fiction and Mystery Author.

Media Recognition: She is frequently published and quoted in financial journals including The Wall Street Journal, The Financial Times, New York Times, The Economist, Business Week, Forbes and Fortune. Television appearances include CBS's 60 Minutes, CNN, C-Span, CNBC, Fox, CBS Evening News, Bloomberg TV, and BBC.

Education: Ms. Tavakoli earned a Bachelor's degree in Chemical Engineering from the Illinois Institute of Technology and an MBA in Finance from the University of Chicago's Booth School of Business, where she served as adjunct associate professor of finance.

Books by Janet Tavakoli

Finance & Business: Credit Derivatives (John Wiley & Sons, 1998, 2001, 2022)

Structured Finance & Collateralized Debt Obligations (John Wiley & Sons, 2003, 2008): an exposé of grave flaws in the structure, sales practices, and methodology for rating structured financial products.

Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street (John Wiley & Sons, 2009): the causes of the greatest credit bubble in the history of the world, how we could have avoided it and how we can prevent it from happening again.

The New Robber Barons (2012): Janet Tavakoli's ongoing chronicle of the global financial crisis captured in her articles from the September 2008 meltdown through February 2012.

Nonfiction: Decisions: Life and Death on Wall Street: Janet Tavakoli's nonfiction account of Wall Street skullduggery.

Unveiled Threat: A Personal Experience of Fundamentalist Islam and the Roots of Terrorism: Janet Tavakoli's autobiographical account.

Fiction: Archangels: Rise of the Jesuits: Janet Tavakoli's financial fiction thriller debut.

Reviews

[D · Rating 4 out of 5]

Much of this was over my head. However I did gain a lot by repetition and there were some pearls that I did understand. Gave some interesting insight into how the financial world uses obfuscation and structuring to handle risk.