Alex Berenson Bank Quotations

Normally, banks record profits on loans only as they are repaid, whether they securitize the loans or hold them on their books.

Business cycles lengthened greatly during the 20th century, as central banks learned to manage national economies by raising and lowering interest rates.

Enron Field in Houston, the Trans World Dome in St. Louis and PSINet Stadium in Baltimore are just three of the modern-day coliseums named for companies that have found new homes in bankruptcy court.

Enron had already collapsed and filed for bankruptcy protection by the beginning of 2002. But despite complaints from short sellers that corporations had used accounting gimmickry to inflate their profits, many investors thought the crisis at Enron was an isolated case.

Big banks have long had private equity divisions that put up capital for deals too complex or risky for individual shareholders to finance.

The biggest profit center for investment banks is the hefty fees they charge for underwriting stock offerings and giving financial advice, and analysts put those profits at risk if they publish negative conclusions about the companies that pay the fees.

Robert M. Morgenthau, the Manhattan district attorney, has seen a few financial schemes in his time. As the lead local prosecutor in the world's financial capital, he has battled frauds like the Bank of Credit and Commerce International, which stole billions of dollars from investors worldwide.

Whatever the potential pitfalls, banks are increasingly enthusiastic about venture capital, particularly in new companies with strong prospects in fields like health care and technology.

Most unfortunately, Enron's plunge into bankruptcy court also cost many of its rank-and-file employees their savings.

Like many other banks and finance companies, Green Tree used a process called securitization to resell its home loans to outside investors. Green Tree grouped thousands of these small loans into a pool worth hundreds of millions of dollars.