Tavakoli Exposes Post-Enron Dangers in New Structured Finance Book

    CHICAGO, Sept. 9 /PRNewswire/ -- Caveat Emptor!  New developments in
structured finance make this warning more appropriate today than in the entire
history of finance.  Collateralized Debt Obligations and Structured Finance is
the essential navigation guide for finance professionals who want to steer
clear of the shoals inherent in the international waters of structured
financial products.
    (Photo:  NewsCom:  http://www.newscom.com/cgi-bin/prnh/20030429/CGTU090 )
    Did you know the Vatican Bank was involved in the abuse of offshore
vehicles long before Enron?  Tavakoli points out how easy it is to pull off
international financial chicanery, and how equally easy it is to prevent it.
    Janet Tavakoli examines a variety of finance topics never before seen in
print.  Collateralized debt obligations (CDOs), credit derivatives, and other
new structured finance techniques confound financial regulators.  Tavakoli
combines mathematics and skepticism to tackle burning issues in the post-Enron
financial world with clarity and authority.
    Warren Buffett labeled credit derivatives "weapons of mass destruction".
Tavakoli calls them "surgical strikes against portfolio credit risk
concentration," but reveals how market professionals can game the system.
Tavakoli explains the huge increase in structured finance arbitrage propelled
by credit derivatives, but highlights hidden costs to financial institutions
-- not to mention Mr. Buffett -- duped into sometimes taking on more risk than
they realize.
    Many investors who thought they owned AAA credits will discover to their
dismay that their investments are riskier than they realized.  In fact, their
investments do not merit a AAA rating.  Many investors in CDO equity will find
they were short-changed on the cash flows they thought they owned.  Many
capital markets managers will discover their employees are running hedge funds
and propping up their bonuses while stuffing the trading books with
undisclosed risks.  Tavakoli unveils this and more while offering solutions
and deterrents.
    Structured finance is a powerful tool, and Tavakoli is a proponent.   She
makes the case that structured finance is a necessary tool to the continued
development of financial management.  For every problem, Tavakoli suggests a
reasonable solution.

    Collateralized Debt Obligations and Structured Finance By Janet Tavakoli
(John Wiley & Sons, 338 pages, $79.95)   ISBN 0471462209