Nothing Personal: A Novel Of Wall Street - Plot & Excerpts
Jed was only twenty-eight, but had gone three-quarters bald already. With his heavy Queens accent, three-piece suits and watch chains, he gave the general impression of being a porn actor dressed like a banker. He always seemed to be smiling. He traded the CMO position for Weldon, which included some of the most volatile and exotic securities in existence. These were mortgage securities that had been restructured to reallocate risk or hide it, in part to meet investors’ needs, and also to get around the rules and make some pieces eligible for sale to people and investment funds that should probably not buy them. Most of the risk in mortgages was in prepayments. If interest rates went down, people would prepay their mortgages to refinance their loans. The owners of the securities created from those loans would get their money back at the worst possible time—since interest rates were lower, they would have to invest the money at a lower yield. CMOs took big pools of mortgage loans, made a series of bonds out of them, and focused most of the prepayment risk of those big pools into a small number of bonds, or “front”
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