The Devil’s Derivatives


The Devil’s Derivatives: The Untold Story of the Slick Traders and Hapless Regulators Who Almost Blew Up Wall Street… and Are Ready to Do It Again

Buy this book on

Buy this book on

ISBN-10: 1-4221-7781-5
US$27.95 / £17.99
Harvard Business Review Press
July 2011

The Devil’s Derivatives reveals the untold inside story of modern financial innovation— how investment banks invented new financial products, how investors across the world were wooed into buying them, how regulators were seduced by the political rewards of easy credit, and how speculators made a killing from the near-meltdown of the financial system.

Nicholas Dunbar demystifies and popularizes this complex world by explaining the revolution that briefly gave finance the same intellectual respectability as theoretical physics. He explains how by juggling risks and rewards like atoms and molecules, bankers created a secret trillion-dollar machine that delivered cheap mortgages to the masses and riches beyond dreams to the financial innovators.

Fundamental to his story is how “the people who hated to lose” were persuaded to accept risk by “the people who loved to win.” Why did people come to accept that the use of arcane financial tools was safe and positive for society? Who were the bankers competing to assemble the basic components into increasingly intricate machines? How did this process achieve its own unstoppable momentum—ending in collapse, bailouts, and a public outcry against the rock stars of finance?

Provocative and intriguing, this new book sheds much-needed light on the forces that fueled the most brutal economic downturn since the Great Depression.


Japan DD Cover web

Nicholas Dunbar, author of “The Devil’s Derivatives,” is that rarest of animals: A genuine expert on the structured products at the heart of the crisis who is not afraid to tell the truth about just how harmful they were. Dunbar has spent his career in the structured-finance trade journals, which sets him apart from all the authors who had to try to work out what on earth was going on only after the world started falling apart. More importantly, Dunbar was one of the best-sourced journalists in the field long before the financial crisis hit…To know what people were thinking in the years when the sector was booming, when the seeds of disaster were being planted, you needed to be talking to them at the time. And that’s exactly what Dunbar was doing.

Felix Salmon , Reuters  magazine

The Devil’s Derivatives is focused on the actions of the lords of high finance. The account is naked and raw: the good old-fashioned bankers who hated losing money have been replaced by frenzied traders hell-bent on winning at the casino. And wham! For all those whose sense of fury has given way to doubt and despair, we highly recommend reading this most serious account. The book is light years ahead of the lurid bestsellers on the crisis.

Marc Roche, Le Monde

Devil's Derivatives_Italian_cover_

Nicholas Dunbar follows the first rule of good journalism: talk to everybody. He has interviewed not only the leading players in the derivatives industry, but has also followed many key actors whose stories have never appeared in print – until now. As this book makes clear, the dark side of financial innovation is just getting darker, and it is only a matter of time until we suffer another derivatives fiasco.

Frank Partnoy, Professor, University of San Diego School of Law

Nicholas Dunbar offers an insider’s perspective into the complex and risky world of derivatives. The Devil’s Derivatives is a compelling book, one that takes clear aim at the risk-takers on Wall Street who contributed to both our economy’s growth and decline. Dunbar is a fine writer who combines a deep knowledge of finance with a great knack for storytelling.

Edward Chancellor, author of Devil Take the Hindmost