The Financial Crisis in Perspective (Collection)

Epilogue: Nemesis

Nemesis—in classical Greek mythology, the goddess of retribution and downfall.

Marginal

“What the f**k do you think you are doing!” Uncertain whether the question was rhetorical, I replied: “Good to hear from you, Mailer.” “Are you acting for JR against us?” As it happens, I am acting for the administrator appointed by the fund’s investors. Earlier, I accompanied the administrators, the insolvency firm of Check & Charge Partners, to a meeting at Mailer’s employer. JR’s Leveraged Structured Credit Fund (LSCF) owns several billion AAA and AA-rated MBSs, CDOs, and CDO²s, funded 95 percent by money borrowed from Mailer’s bank.

The market value of the securities had fallen 50 percent, well below the level of debt. The bank wanted ...