Confidence Game: How Hedge Fund Manager Bill Ackman Called Wall Street's Bluff
The collapse of America's credit markets in 2008 is quite possibly the biggest financial disaster in U.S. history. Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff is the story of Bill Ackman's six-year campaign to warn that the $2.5 trillion bond insurance business was a catastrophe waiting to happen. Branded a fraud by the Wall Street Journal and New York Times, and investigated by Eliot Spitzer and the Securities and Exchange Commission, Ackman later made his investors more than $1 billion when bond insurers kicked off the collapse of the credit markets.
- Unravels the story of the credit crisis through an engaging and human drama
- Draws on unprecedented access to one of Wall Street's best-known investors
- Shows how excessive leverage, dangerous financial models, and a blind reliance on triple-A credit ratings sent Wall Street careening toward disaster
Confidence Game is a real world "Emperor's New Clothes," a tale of widespread delusion, and one dissenting voice in the era leading up to the worst financial disaster since the Great Depression.
1 The Meeting.
2 The Short Seller.
3 The Question.
5 The Worst That Could Happen.
6 The Trouble With Triple-A.
7 Unanswered Questions.
8 Crimes And Cockroaches.
9 Turning The Tables.
11 The Black Hole.
12 The Court Of Public Opinion.
13 The Insurance Charade.
14 When Crack Houses Become Collateral.
15 Storm Warnings.
16 An Uncertain Spring.
17 Apocalypse Now.
18 Parting The Curtain.
19 Ratings Revisited.
20 The Panic Begins.
21 Catastrophe And Revenge.
22 Time Runs Out.
24 Judgment Day.
25 The Nuclear Threat.
— Todd Sullivan, valueplays.net, April 2010
" ... Ackman’s pursuit of MBIA spanned the two major crises of capitalism of the last decade, from the earlier era of corporate fraud prosecutions epitomized by Enron and its off-balance-sheet special purpose vehicles (SPVs), to the late credit debacle stemming from the collapse of the CDO house of cards."
—The Hedge Fund Law Report, May 2010
In Confidence Game: How A Hedge Fund Manager Called Wall Street’s Bluff (Wiley; April 2010; $27.95; 978-0-470-64827-8; Hardcover), Bloomberg News reporter Christine Richard tells the story of how Bill Ackman tried to warn the powers that be that MBIA and the $2.5 trillion bond insurance business was a catastrophe waiting to happen.
Written with the full support of and access to Bill Ackman, the book opens when the hedge fund manager issued a research report titled Is MBIA Triple-A? in late 2002. This is an opening shot in what became a long and bitter Wall Street feud between him and MBIA. Soon after, Ackman was branded a fraud in the media and was investigated by Eliot Spitzer and the SEC. However, the investigations ultimately led nowhere and Bill Ackman turned the tables years later when MBIA crumbled and his short position made his investors more than $1 billion.
MBIA, one of the five biggest financial institutions in the country in terms of outstanding credit exposure, Moody’s Investors Service, Standard & Poor’s and Fitch Ratings all assigned MBIA’s bond-insurance unit AAA or Aaa ratings. The rating companies had determined that the firm could weather another Great Depression and still meet all of its claims. Bill Ackman wasn’t convinced. MBIA held just $1 of capital for every $140 of debt it guaranteed. The high leverage meant MBIA had virtually no margin of safety.
Given unprecedented access to one of Wall Street’s most famous investors, Richard narrates a compelling, behind-the-scenes human drama that explores many crucial issues, including the market’s unquestioning acceptance of credit ratings, their dangerous reliance on financial models, and the use of securitization to create value from thin air and assumptions.
Confidence Game is a real-world "Emperor's New Clothes," a tale of widespread delusion and one dissenting voice in the era leading up to the worst financial disaster since the Great Depression.