Washington Post – In Washington, the Wall Street moneymen are at it again, waging behind-the-scenes battles against a host of new rules to prevent another financial crisis. Some of the fiercest fights are over limits on derivatives trading, including complex derivatives linked to commodities. Regulators, legislators and judges inclined to sympathize with the industry ought to rush out and buy a copy of Barbara Dreyfuss’s “Hedge Hogs,” a wonderfully instructive tale about Amaranth Advisors, a nearly $10-billion hedge fund brought down by the recklessness and arrogance of a single commodities trader.
The rise and fall of Amaranth turns out to be just the latest chapter in a story that, in the modern era, begins with Drexel Burnham Lambert in the 1980s, extends through Barings and Long-Term Capital Management in the 1990s and on to Enron, Lehman Brothers and AIG in 2000s.
