From an old friend who read an advance copy:
In Finance Monsters, Howard Hill provides us with an insightful, fast paced overview of the mortgage securitization industry and of some crucial factors that brought down the financial system in 2008. For over 20 years, Mr. Hill had a ringside seat in the U.S. fixed income market, and mortgages in particular. His experience includes sell and buy side, both sides of Wall Street, and as the financial designer of ground breaking mortgage products.
Finance Monsters will appeal to anyone interested in how mortgage markets grew and crashed, along with economy. Though devoid of equations, many chapters could fit well in a graduate class on mortgage credit and securitization and would sharpen skills of professionals.
Several sections highlight factors that increased the severity of the financial crisis. Mr. Hill argues that the volume of subprime mortgages and “liar loans” was insufficient to generate a systematic meltdown. Indeed, his analysis indicates that related bond losses were not extraordinary, but that they lit the fuse of synthetic mortgage derivatives and related default swaps. Those contracts’ magnitude and opaqueness infected almost all financial institutions. In conjunction with historic declines in home prices, the U.S. economy and banking system was knocked to its knees.
Sprinkled with interesting personal stories and histories of the mortgage bond industry, Finance Monsters is a fun and illuminating read.
Steven Raymar has a PhD in finance from Columbia University and is currently the Associate Chair for Fordham University’s Schools of Business. He has published many articles in respected finance journals. Dr. Raymar also developed and teaches the Credit Risk (and derivatives) class in Fordham’s Masters in Quantitative Finance program.