In the case of the corporation, a manager does not want to miss out on a perceived good thing if everyone else is doing it....executives are attracted to a new repackaging of mortgaged-backed securities, even though they could manufacture essentially the same thing themselves at a lower cost. Like ants attracted to the honey pot, this is a bonanza for financial promoters. Each time a defeasance plan, leveraged buyout, or new type of mortgage-backed security is sold, substantial promoter fees are realized. But do they make money the old fashioned way by earning it? I think not in many cases.
James C. Van Horne, President of the American Finance Association (1984)
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