Mind Over Market

Note: Black Box Casino is to be published September 30 by Praeger. In writing this account of the financial crisis, the author found that ultimately some of what he had written had to be cut from the book. Below is an excerpt that was written too late to make it into Chapter 7: "Fast Money and High Stakes." By Robert Stowe England July 20, 2011 The Evanston, Illinois hedge fund Magnetar Capital LLC stated in April 2010 that it engaged in trading activities that its senior management claimed were neutral towards the housing market. That is, Magnetar claimed that they were making simultaneous shorts and longs on various pieces of collateralized debt obligations, which were backed by mostly subprime mortgage-backed securities. The point being made with the claim of neutrality was they were not betting against the housing market and bad subprime loans and securities. After a number of news stories surfaced in 2010 about the $50 billion or more in losses from CDOs deals in which...

JPMorgan Chase & Company chairman and ceo Jamie Dimon confronted Federal Reserve Chairman Ben Bernanke today, asking him if he had considered the impact of all the regulations being proposed and how they might together negatively impact the availability of credit and the economy. The Chairman revealed that, in essence, regulators had examined proposed rules individually but not in the aggregate. This is a rare public challenge from a banker to a top regulator. In the second video Jeffrey Sonnenfeld, professor in the practice of management for the Yale School of Management talks about Dimon's challenge to Bernanke.