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JT
Note: There should also be widespread accounting fraud audits
of the relationship between mortgage lenders and legacy investment
banks that securitized the loans dating back from 2005 through
2007.
ICP
Once in AIG’s ‘Very Best’ Is New Front in SEC’s
CDO Probe
Business
Week - June
22, 2010
by Joshua
Gallu and Jody Shenn
Janet
Tavakoli, This was by no means isolated,"
said Janet Tavakoli, founder of Chicago-based
Tavakoli Structured Finance Inc., referring to
the broader collateral management industry. Some
investment advisers "were just raping their CDOs
for the benefit of hedge funds."
Most managers of mortgage-bond CDOs also oversaw
other types of investment funds, had affiliates
that did or started doing so once the housing
market soured. Those firms include the largest
money managers, such as BlackRock Inc. and TCW
Group Inc., as well as specialists such as Ellington
Management Group LLC and Tricadia Capital Management
LLC.
Most of the largest debt brokers also managed
some types of investment funds or CDOs. Bear
Stearns Cos., which was among the larges managers
of mortgage-bond CDOs and traders of home-loan
securities almost collapsed in 2008 before being
bought by JPMorgan Chase & Co., Credit Suisse
Group and Merrill Lynch & Co., which was later
bought by Bank of America Corp. [Lehman, Morgan
Stanley, Bank of America, Wachovia, and
Goldman, and others had other problematic issues.]
The question is whether regulators will accuse
additional firms of moving assets among entities
they influence or having one enter the opposite
side of another's bets, said Tavakoli.
"This is something I call CDO hawala," she said,
referring to informal, unregulated cash-transfer
networks used mainly in the Middle East, Africa
and Asia. "The abuse was widespread and massive."
END OF EXCERPT
Janet
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).
Janet
Tavakoli's book on the global financial meltdown is Dear
Mr. Buffett: What An Investor
Learns 1,269 Miles From
Wall Street (Wiley 2009)
Clients
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.
TSF
makes some information available to the general public. Please
click here for other articles.
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