CDO banker writes salacious memoir

Icon Books this week publishes a book by Tetsuya Ishikawa entitled "How I caused the credit crunch", which is a semi-fictional account of his seven-year career in structured credit at ABN Amro, Morgan Stanley and Goldman Sachs.

The book is unlikely to be the last memoir of life in the structured credit business, as legions of unemployed bankers look to emulate the successful writing career of former bankers such as Michael Lewis (Liar's Poker) and Frank Partnoy (Fiasco). But it sets a high standard for others to follow.

"How I caused the credit crunch" is both extremely readable and brim-full of salacious descriptions of the seedy antics used to sell structured products. Those two factors are likely to ensure good sales of the book.

But Ishikawa also does a very good job of explaining how the market works to a non-specialist reader through a series of fairly implausible conversations and anecdotes. A senior banker at Vanderbor (ABN Amro), for example, recalls stumbling on the concept of securitisation and regulatory capital when he started a mini business lending money to school friends. However, one suspects that the average reader may have given up on the product details by the time Ishikawa gets to correlation trading and the ABX index.

As the author makes clear in the introduction, he was under pressure to put as much bad behaviour into the book as possible, and the accounts of endless trips to strip clubs come across as somewhat exaggerated. (Though with his biggest client a thinly disguised IKB - a bank which named its series of CLOs "Bacchus" - a certain amount of corporate entertaining is to be expected.) Ishikawa's description of arriving at his New York office at 4am every morning to make endless sales calls to different time zones seems a more realistic description of the drudge of selling CDOs.

Where the book is particularly accurate is its description of the dynamics of the structured credit business. The internal politics within investment banks and the relationship between dealers and investors are richly conveyed. And its frank but non-judgmental depiction of bankers obsessed with work, prestige and advancement make the book a worthwhile holiday read.