The End of Ethics and A Way Back
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Foreword xvii
Acknowledgments xxix
Introduction xxxiii
Prologue xxxix
Part One: Economic Vice 1
Chapter 1 The Selfish Betrayal of the Global Investor: Libor and Its Consequences 3
The Calculation of Libor 5
The Rise and Fall of the World's
Financial Benchmark 8
Knowingly Asleep at the Wheel 13
A Troubling New Normal 16
Notes 17
Chapter 2 Jon Corzine's Fallen Empire of Risk: MF Global 19
History of MF Global 21
Jon Corzine's Midwestern Roots 22
The Rise of "Fuzzy" 23
The Establishment of MF Global 26
Rogue Trader Scandal 27
From Gubernatorial Disgrace to MF Global CEO 28
MF Global under Corzine 29
Risk Governance Failures 32
Notes 33
Chapter 3 The Continued Rating Agencies Game: Will Rating Agencies Be Reined in for the Sake of Global Market Stability? 37
History of Rating Agencies 43
Mortgages and the Ratings Boondoggle 47
Notes 51
Chapter 4 Belligerent Leadership and the Demise of Lehman Brothers 55
History of Lehman 57
Brewing Anger 60
Uncaging the "Animal" 62
Culture of Anger 64
Increasing Risk and Authority 66
Walsh's Rise 67
A Gorilla Bursting the Bubble 69
Extreme Leverage 71
The Deception of Repo 105 73
Fuld's Marginalization of Risk Management 75
Fuld's Last Chance to Save Lehman 77
Notes 79
Chapter 5 How Out-of-Control Pride Brought Down Bear Stearns 83
History of Bear 85
A Different PSD 89
Greenberg's Vision of Corporate Thrift at Bear Stearns 91
Bridge Bum Turned Bear Salesman and CEO 93
A Casino Culture 95
BSAM: Bear Stearns' Kryptonite 98
"Never a Losing Month" 100
The End of Bear Stearns: The Importance of Golf and Bridge during a Liquidity Crisis 105
JP Morgan and the Takeover of Bear 106
Notes 107
Chapter 6 Tyco: Exceptional Greed and the Destruction of a Billion-Dollar Company 113
Tyco History 115
The Makings of a "Bad" CEO 117
Seeds of Greed 118
Kozlowski's Culture of Fear at Grinnel 119
Looting the Company 120
Kozlowski's Accomplices 124
A Convicted "Piggy" 128
Notes 128
Chapter 7 Insatiable Lust and Two of the Most Destructive Ponzi Schemes in American History 131
The Ponzi Scheme and Society 133
Bernie Madoff and the Seeds of Lustful Temptations 134
Madoff 's Culture of Sexual, Criminal, and Moral Deviance 138
Tom Petters, the High School Dropout 139
Birth of the Ponzi Scheme, Petters Company Inc. 140
Succumbing to Uncontrollable Lust 141
Madoff 's Cast of Characters 142
Petters' Cast of Characters 151
Will We Witness Another Madoff ? 155
Notes 155
Chapter 8 HealthSouth and WorldCom: How a Gluttonous Appetite for Expansion Resulted in Accounting Fraud and Failed Corporations 161
HealthSouth 163
Bernie Ebbers and WorldCom 172
Blunting Future Accounting Fraud 178
Notes 179
Part Two: Recommendations 183
Chapter 9 Why Financial Regulation Has Failed, and What to Do about It 185
The Failed Promises of DoddFrank 185
The New Rules of the Game that Reinforce Vice 189
A Dummies' Guide to Save the SEC 194
The Regulatory Reforms Necessary to Reverse the End of Ethics 195
Reforms Needed for the Commodities Market 202
The Need for Heightened and Streamlined Fiduciary Rules 205
Notes 208
Chapter 10 The Case for Reintroducing Governance and Morality 213
The Important Demand for Corporate Governance 213
The Importance of Corporate Responsibility 215
The Importance of Reputation and Avoiding Long-Term Litigation Costs 218
Bonuses Redux: Corporate Welfare Reform and Cutting Golden Parachutes 220
The Need to Morally Redefine Ourselves on the Macro Level 223
Rebuilding Our Character 226
How to Remedy the Evils in Modern-Day Consumerism 227
Virtue and the Moral Life 228
The Consequences of Modern Selfishness 230
Modern Theories and Institutions 232
Democratic Morality and Our Current Crisis 233
Notes 234
Chapter 11 The Way Back 237
Appendix 241
About the Authors 249
Index 251
