Zero Coupon.

• Author: Joseph, James C.

In his seventh venture into financial fiction, international banker Paul Erdman offers up an entertaining and fast-paced account of one man's quest for redemption. Zero Coupon tracks the exploits of Willy Saxon, former financier extraordinaire and now unrepentant ex-con who is determined to re-establish himself as a major player in the international markets. To achieve his objectives, Willy is prepared to take any risk and cut any corner if it brings him a step closer to that one big pay-off that will signal his return to the top.

The story begins with Willy's release from the federal correctional institution in Pleasanton, California, where he spent three years and one day as a guest of Uncle Sam for unspecified excesses in the junk bond market. Taking pride in the fact that he "refused to rink on anybody," Willy begins his single-minded pursuit of financial clout with a creative plan, wealthy friends and a nest egg of more than $74 million in a Liechtenstein bank.

Banned for life from acting as a broker or dealer in the United States, Willy sees his opportunity in municipal bonds--a financial playground he sees as the last "unregulated" market. (In fairness to Erdman, Zero Coupon was written prior to most of the recent efforts to place greater restrictions on the activities of municipal market participants.) Applying his cash reserves through a tangle of international blinds, our hero quickly acquires interest in a struggling San Francisco investment banking firm and the fictitious Western Credit Rating Agency.

It will be obvious to those readers familiar with the industry that Willy's prison research did not include a realistic assessment of profit margins in the municipal markets. Erdman's hero quickly realizes that rating fees and municipal underwriting spreads offer little opportunity for a return to the high profit margins of his leveraged-buyout days. Where does today's financial thrill seeker find the answer? Derivatives. According to one of Willy's investment banker partners, "derivative geeks" and their computers "spit out profits like Mrs. Fields...