How I caused credit crunch - Goldman CDO man

The writer of a book entitled "How I caused the credit crunch" worked for the unit of Goldman Sachs that sold the financial product at the heart of U.S. fraud allegations against the bank.

Tetsuya Ishikawa's name appears on the preliminary term sheet for the Abacus 2007-AC1 deal, a collateralized debt obligation (CDO) the U.S. Securities and Exchange Commission accuses the bank of using to commit fraud.

"Tets" Ishikawa, who is Japanese by birth but grew up in London, was educated at the elite British school of Eton and at Oxford University, according to a short biography in his 2009 novel. He left Goldman in 2007 and then worked for Morgan Stanley, structuring, syndicating and selling credit derivatives to investors.

His name and London phone number are on the Abacus term sheet as one of six people in the "Global Syndicate" group, part of a wider contact list that also includes Fabrice Tourre, the 31-year old Frenchman who has been charged with fraud by the SEC.

Goldman is vigorously defending itself against the U.S. accusations, contesting the idea that it was selling the CDO in the knowledge it would collapse so as to allow hedge fund manager John Paulson to bet against it.

Ishikawa's novel, about a fictitious Oxford graduate, "tells how a novice to the mysteries of hedge funds, subprime mortgages and CDOs can fix complex deals worth billions in the exclusive bars, brothels and trading floors of London, New York, Frankfurt and Tokyo," a blurb on the back of the book says.

The idea for the novel was born when Ishikawa was telling his friends "about the cliched high life I had been living while creating and selling billions upon billions of these securitization and credit derivative products, now better known as 'toxic assets'," the preface of his book says.

Ishikawa was made redundant by Morgan Stanley in May 2008. He now works for fixed income house Amias Berman & Co in London. He could not be reached for comment through his current employer. A spokeswoman for his publisher, Icon Book Ltd., said he did not talk to the press.

The book -- which contains a financial glossary -- uses no real names and says "any resemblance to actual firms of persons in this book is entirely and genuinely coincidental."


Based on an article that appeared in http://thewallstreetchallenger.com the use of Synthetic CDOs after 2005 would have been very risky. Since home prices grew at a high rate till almost the end of 2007 and peaking in 2005, CDOs backed by MSS were an ideal high return investment till approximately November 2005.

Using home prices forecast it is hard to believe that the financial institutions and credit rating agencies involved in the CDO business had sophisticated risk analysis simulations, but did not forecast price movements of the underlying collateral.

CDOs played a notable role in the financial markets. Did the CDO cause the financial crisis or was it blindness, greed and the need for riskier assets? The constructors of the CDOs may not bear direct responsibility. Rather their reckless use, misunderstanding and ignorance of key warning signs likely contributed to the magnitude of the financial crisis. You can observe the financial landscape today and recognize from the survivors, walking wounded and the absentees those who knew and those who had not understood the use of these tools.