The End of Ethics and A Way Back - How To Fix A Fundamentally Broken Global Financial System

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