Day: December 8, 2007

Article: Here Comes Da Judge


Here Comes Da Judge
The innovations of the boom years are having their day in court
by Bill Bonner

“Structured investment vehicles are being put on trial. Some will get the gallows. Many more probably deserve it”

Mr CA Boyko recently fired a shot that was heard around the world. At least around the world of structured finance. Or, at least, around the world of Deutsche Bank, which got a bullet in the head. Poor Deutsche Bank is the victim of its own avarice, its own stupidity – and the cycles of nature. Nothing to be ashamed of. In war, even the best soldiers get their brains blown out. In finance, they blow them out themselves. Before pulling the trigger, the judge was curious. A curiosity shared by millions, no doubt. He wanted to crack open a sophisticated derivative product – a mortgage-backed security – and find out what was in it. In the event, he found that something was missing; structured finance was not structured quite as well as it pretended to be.

At issue in his courtroom was…