Hilarious Bankers Joked About Naming Their CDO “Shitbag” or “Nuclear Holocaust.”
Oh, so that’s where the term ‘bullshit’ comes from.
Looking for an uplifting article to restore your faith in humanity? Then you’ve landed on the wrong web page. Try this one instead. Seriously, it’s adorable. But if you’re looking for an article that will crush your soul, then you’ve come to the right place.
Basically, it’s the same story you’ve heard before, just way more disgusting this time. In March of 2007, a bunch of Morgan Stanley bankers created one of those toxic asset bombs that helped annihilate the world economy. They had to come up with a name for their $500 million subprime mortgage CDO before they could start selling it, so they emailed around a few hilarious ideas. And by “hilarious,” we mean “completely nauseating and not even funny in the first place.”
Among their suggestions: ”Subprime Meltdown,” “Hitman,” “Nuclear Holocaust,” “Mike Tyson’s Punchout,” and our favorite, “Shitbag.” They settled on the more marketable “Stack 2006-1.”
More grossness here.
Ultimately, China Development Industrial Bank bought some of the shitbag, and Morgan Stanley shorted against it. Surprisingly, things did not go well for the Chinese bank from there on out. Now they’re suing.
Jesse Eisinger provides a nice analysis of Morgan Stanley’s defenses. The most prominent one, which has previously been successful for other banks selling ”sacks of shit,” is that the banks also happened to be partially invested in these same CDOs and therefore lost a lot of money.
Which is insane. Morgan Stanley accidentally got stuck with some of their own shitbags when the music stopped, and now they think they shouldn’t be liable to all the innocent schmucks who bought them.
But that’s just the civil stuff. What about criminal charges for any these guys? Of course not! See, in order to get a conviction for fraud, prosecutors would need to prove the defendants had criminal intent. How on Earth could prosecutors ever dig up documentary proof that these Morgan Stanley guys actually knew they were selling “shitbags” that were sure to cause a “nuclear holocaust” once the “subprime meltdown” occurred? Oh wait.
But apparently prosecutors don’t think emails like these are enough to bring criminal charges. None of these guys are being prosecuted, and Frontline reports that none of the whistle-blowers in similar cases are being contacted by authorities, which implies that the government isn’t even investigating.
So where are these Morgan Stanley guys now? Both Philip Blumberg (the Morgan Stanley lawyer who composed most of the names) and Jonathan Horowitz (the manager of the group who said of the names “I like it”) are still working for major banks. According to LinkedIn, Horowitz is a Managing Director at J.P. Morgan now…meaning is salary is somewhere around $300,000 and his bonus is probably in the vicinity of $1 million.)
Here, click on this before you kill yourself.
Photo: BK and EP via Flickr
Appellate attorney, admirer of funny people, Dolt.
Latest posts by Linda (The Daily Dolt) (see all)
Godfree
January 25, 2013 at 8:54 am
http://en.wikipedia.org/wiki/Scaphism
It's too good for them, really…
Linda the Dolt
January 25, 2013 at 10:12 am
Gah!!! That's very … creative. Who sat around and came up with this idea?
Godfree
January 25, 2013 at 10:55 am
Fridays can be a little slow around here…
Linda the Dolt
January 25, 2013 at 11:43 am
Was this a job back in the day? To come up with torture methods? I feel like it should have been. It takes talent to be that creative.
Barjack
January 26, 2013 at 12:31 pm
It takes lizard blood. Just how many things does "Let the buyer beware" cover?
503me
January 25, 2013 at 12:13 pm
Loved the kitten pic and of course enjoyed your article
Linda the Dolt
January 25, 2013 at 1:25 pm
:) It seemed necessary to have a chaser after all that awfulness.
Tracey
January 25, 2013 at 1:42 pm
See, I thought you put that picture up there to illustrate Wall Street's big balls.
The story reminds me of an oral argument from Delaware, in which an attorney (I kid you not) used a demonstrative graphic of a pig, and analogized the situation between two companies to the pig, explaining that one company was like the pig, and the other company had to "feed" the pig, and either manure would come out, or a gold bar would come out. Delaware's infamous Chancellor Strine commented, "I guess it's a big moral dilemma or hygienic development. If something comes out of the back of a pig that's actually a gold bar, what would you do? . . . I might pay someone to pick it up for me, figuring that once I had them clean off the bar, I could pay them, I could afford to pay them and take the excess."
Linda the Dolt
January 25, 2013 at 4:03 pm
Ha! That's a very involved metaphor they used.
Sarah
January 26, 2013 at 7:01 pm
Phil blumberg still works at Morgan Stanley. U need to get your facts in order before writing articles.
Linda the Dolt
January 27, 2013 at 7:21 am
That's what was reported by ProPublica, New York magazine, and Gothamist.
http://nymag.com/daily/intelligencer/2013/01/morg… http://gothamist.com/2013/01/23/morgan_stanley_ca… http://www.propublica.org/thetrade/item/explosive…
I wasn't able to find any further info on him.
dectra
February 1, 2013 at 10:54 am
Sarah,
Perhaps it is YOU who needs to work on things…such as Grammar and Punctuation.
This may come as a surprise, sweetie, but the world does NOT revolve around 'twitter speak' or the idiots who use it…
Anonymous
January 27, 2013 at 3:10 pm
分析的很透彻，很欣赏你的看法，学习了。