Chapter 8. Ordinary Business at the Banks


At the bank we designed financial instruments for Enron that were intended to inflate earnings, keep debt off the balance sheet, and pop the stock. The bank hedged on the other side of our business to limit our exposure to Enron by shifting the risk to other firms. The top people knew exactly what they were doing. It was ordinary business.

 --An investment banker who preferred not to be identified

Investment banks play a central role in the American securities industry. They supply capital to firms and investment opportunities to the public. They are middlemen and market-makers. During the great bull market they were very active and very profitable. Their executives and partners made large sums of money ...

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