Note: There is nothing wrong with hedging or taking
the opposite view to one's customers. There is nothing wrong
with using credit derivatives to accomplish this goal. The
underlying RMBSs and CDOs, however, were value-destroying and
misrated. I and others said so at the time deals like this were
Trust 2006-3 is just one example.
Tranches sold as "AAA," "super-senior," and "investment grade"
did not deserve those labels at
the outset, and any underwriter or securitization professional
worth their salt knew it.
to Goldman Sachs
TSF (also on Huffington
Post) – December
By Janet Tavakoli
Tavakoli is the president of Tavakoli
Structured Finance, a Chicago-based firm
that provides consulting to financial institutions
and institutional investors. Ms. Tavakoli
has more than 20 years
of experience in senior investment banking
positions, trading, structuring and marketing
structured financial products. She
is a former adjunct professor of derivatives
at the University of Chicago's Graduate
School of Business. She is the author of: Credit
Derivatives & Synthetic Structures (John
Wiley & Sons,
1998, 2001), Structured
Finance & Collateralized Debt Obligations (John
Wiley & Sons, 2008).
Tavakoli's book on the global financial meltdown is Dear
Mr. Buffett: What An Investor
Learns 1,269 Miles From
Wall Street (Wiley 2009)
of Tavakoli Structured Finance
have the benefit of proprietary consultation, which is
not available in any other paid or public forum. Clients
also commission proprietary research and analysis.
makes some information available to the general public. Please
click here for other articles.