House of Cards

House of Cards Book Report House of Cards Conclusion The informant of March 2012 marks the four year anniversary of the unraveling of wholeness of the largest investment banks in the entire world. Author William Cohan gives a trail color commentary of the hug drug days leading up to the collapse of make Stearns as well as how and why something like this could happen. One of the biggest reasons why such a financial collapse could happen, Cohan explains, is that the incentive system on Wall street rewards people for generating as much revenue for the firm as possible. Investment bankers started to take much larger risks in inn to carry bigger and better bonuses at the expense of shareholders. In March 2009, PBS aired Ray Suarezs question with William Cohan. When asked how Cohan knew about Wall Streets incentive design he replied Because I worked on Wall Street for 17 years. And I am myself a beneficiary of that financial incentive system. And while I was just an M&A (Mergers and Acquisitions) banker and didnt take any risks with the firms capital, all around you could converge what people were motivated to do. The actual collapse was due to an coarse amount of investments in mortgage-back securities.

Cohan describes that firms like Bear Stearns used mortgage-backed securities as collateral for their overnight financing trade. The overnight financing market is basically how all of these giant firms funded themselves. It was a short-term loan that was acquired by putting up all of these mortgage-backed securities as collateral. in conclusion Bear Stearns found themselves in a pickle. Lenders wouldnt include mortgage-backed securities as collateral and people were simply not purchasing them. They were essentially stuck as rumors swirled about their inability to liquidate until Bear Stearns was bought out by JPMorgan Chase for a measly ten dollars per share. William Cohans Documentation William Cohans analytical writing style in House of Cards can be supported... If you want to get a full essay, order it on our website: Orderessay

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