How we cite our quotes: (Chapter.Paragraph)
Quote #4
Why were sophisticated traders at AIG FP doing this stuff? If credit default swaps were insurance, why weren't they regulated as insurance? (3.41)
That's a good question, Michael Lewis, and we were actually hoping that you had an answer. No? Putting that aside, however, the uncomfortable truth is that there isn't a real answer—the rules got exploited simply because it was more profitable to exploit them. Gross, huh?
Quote #5
Moody's and S&P claimed they were impossible to game. But everyone on Wall Street knew that the people who ran the models were ripe for exploitation. (4.43)
Corruption can take many different forms. It can take the form of failing to rate stocks accurately. In can take the form of placing too much trust in banks. It can even take the form of former ratings analysts spilling their secrets to Wall Street for some sweet consultant cash. No matter how you look at it, these "regulations" don't count for much.
Quote #6
"In the course of trying to figure it out, we realized that there's a reason why it doesn't quite make sense to us. It's because it doesn't make sense." (5.48)
Charlie Ledley hits the nail on the head with this one. Our short-selling heroes keep trying to find order underpinning the subprime market, but there isn't any order—just chaos as far as the eye can see. In fact, the system was expressly created to achieve this chaos.