Structured Finance and Collateralized Debt Obligations: New Developments in Cash and Synthetic Securitization

Financial Classic on Securitization, Derivatives, and Global Systemic Risk

The definitive book on the built-to-fail mortgage-backed securities, collateralized debt obligations, corporate bonds, and other flawed structured credit products that led to the global financial crisis by derivatives expert Janet Tavakoli. Structured Finance and Collateralized Debt Obligations (Paperback Textbook, Second Edition) exposed that corporations and financial institutions had massive hidden value-destroying exposure. Banks and corporations fluffed their accounting numbers to cover it up. Tavakoli explains not only what does not work but also what does work. She demonstrates how to profit from the madness of crowds to protect investment portfolios.

Law firms, Congress, and scholarly publications reference her work. She provides real time evidence. John Wiley & Sons published the hardcover edition of this book in September 2008 just as the market imploded. This eTextbook edition is a print replica published by Lyons McNamara. Page numbers are identical to those used in public references.

Among the wealth of practical information, in chapter eight under the subsection “A Good Year for Some,” Tavakoli explains the short ABX Index trade. The index was comprised of flawed mortgage-backed collateralized debt obligation tranches. She published eighteen months before Michael Lewis made the trade famous in his book, The Big Short.

Tavakoli shines a bright light on fraud. She explains how to recognize it in advance. Fraud that affects leveraged corporate debt, asset-backed securities, and other fixed income assets creates a unique opportunity for short sellers. The bonds come to market at par. The short’s downside is limited, cost of carry is minimized, and upside is enormous.

She addresses a wide range of structured financial product issues. Uses and abuses of special purpose corporations and entities, beyond investment banking and corporate finance, are explained in detail.. Other topics include equity-linked notes, credit linked notes, cross-border securitization, and exotic structures.

“Janet Tavakoli has been able to dissect with a brisk style the intricacies of many structured products. Not only does she explain in a clear and insightful manner how certain things work, but more important, why others DO NOT WORK!!! Highly recommended and very much needed.”
Arturo Cifuentes, Ph.D. (formerly Moody's) Professor/Business School en Universidad Adolfo Ibanez. Member, Investment Committee, Chilean Sovereign Fund

“Tavakoli uses her broad professional experience to examine the CDO market in simple and clear language. —Risk

Janet Tavakoli is exceptional in having worked extensively both in mortgage securitization and structured credit at major financial institutions. In this clearly written book, she shares her in-depth knowledge of structuring, valuation, and risk management of structured products. This book is a must read for regulators and risk managers to keep up with the latest developments in structured finance."—Joseph Masri, PhD, Barclays Global Investors, Regional Director, Professional Risk Managers' International Association (PRMIA)

“Janet Tavakoli warned the world this disaster was coming well in advance. Now she explains it again for those who did not listen before as well as why it is not over yet. You need to read this book to understand the biggest credit bubble in world history.”—Jim Rogers, author of A Bull in China, Hot Commodities, Adventure Capitalist, and Investment Biker.

“Stan O'Neal, Marcus Ospel, and more than a few other bold-face names in finance might still have jobs if they'd taken the trouble to read this book.”—Greg Newton, Founding Publisher, MAR/Hedge