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How about that Canadian non-bank sponsored ABCP?

This sounds like a perfect episode of Seinfeld
|Written By Morley Gorsky

After hearing that there would be a November 2009 reunion of the Seinfeld cast on Larry David’s Curb Your Enthusiasm, and with my recollection of Kramer’s addiction to watching reruns of Canadian Football League games, I decided to suggest some ideas to the Seinfeld creative team which focus on Canadian themes, even if somewhat obliquely. It seems that the mere mention of Canada in American sitcoms is enough to provoke laughter.

And while I’m doing this, why not kill two birds with one stone. With Edward Waitzer, former chairman of the Ontario Securities Commission (“Education no substitute for regulation,” The Globe and Mail Report on Business, July 13, 2009) kind of pouring cold water on my idea that government has a vital role to play in educating Canadians about the pitfalls that lie in wait for the unwary investor, why not turn the task over to the private sector? A most unlikely part — the creative team of Seinfeld. It’s really a win-win situation.

With that purpose in mind here are some of my ideas for a script that will be true to the spirit of Seinfeld, and yet, in an entertaining way, educate. 


My suggestions for script ideas make use of the characters we so looked forward to hanging out with: Jerry, Elaine, George, Kramer, Alan Greenspan. Alan Greenspan? Surely you remember Elaine’s vain, pompous boyfriend, who insisted on being called “Maestro,” as some people were wont to call Alan. The show will incorporate the underlying philosophy of the original, with a novel twist: it will still be a show about nothing, which manages to turn something into nothing. 


In the episode, George, who had been a real estate agent in previous ones, is now selling sophisticated financial products, including derivatives, for his father’s company, after completing an intensive two-day course intended to give him the expertise required to service his clients. The only other employee, Maestro, is played by Greenspan. The episode is loosely based on one where George’s father started selling computers out of his garage, employing George and Lloyd Braun, a fallen political star. 


George approaches the now wealthy Jerry in his $60-million-dollar house in the Hamptons — the one George, in a previous episode, intended to pass off as his own to his late fiancée’s parents — and points out that with his huge success Jerry has millions of idle dollars to invest. Those bucks should be earning great returns instead of being parked in low-yield U.S. treasuries.

The miracle product is called a collateralized debt obligation and is, simply put, made up of bundled bonds. The beauty part is that the rating agencies have given it their top investment grade, the same as government treasuries. Jerry goes through his skeptical investor routine, suggesting that he is still worried and is not sure how such an investment can yield the promised returns and be rated AAA. Not, he says, “that there’s anything wrong with it.”  


George, as usual, pretending that he knows what he is talking about, assures Jerry that for anything to go wrong with his miracle investment, there would have to be “15 Enrons.” After more of his patented shtick, in which he exhibits physical and emotional discomfort, Jerry succumbs to the blandishments of AAA.

But he becomes even more uneasy when George tells him about a small formality. Nevertheless, he signs the document that requires him to take on a massive line of credit with an Irish bank, a subsidiary of a German one.

 
After a commercial, the scene shifts to Jerry’s old apartment, where he has to live again as a result of George’s “slight” miscalculation. It seems that instead of buying a collateralized debt obligation, Jerry has, somehow, been sold a synthetic CDO; the bottom line being that he has wound up insuring the bonds in the CDO he thought he was buying.

Worse news: his investment is highly leveraged, and a six-per-cent failure rate will translate into the loss of his investment “and more.”  


While all of this is going on, Kramer enters, flailing in his inimitable way, officiously intermeddling with queries of, “what’s leverage?” and pronouncements that his friend Bob Sakamoto might be able to help because he knows someone who works for the Royal Bank of Canada, which put together the synthetic CDO that Jerry bought.

And, “Hey buddy, shouldn’t you know what you’re investing in before you pay out your hard-earned cash?” 


The last scene features a solo shot of Maestro, who says: “If I’d only seen this show, the meltdown might have been avoided.”   

Fade to the credits that acknowledge the source of the episode, which is an accurate representation of what actually happened to the Whitefish Bay School Board in Wisconsin, as reported by the New York Times on Nov. 1, 2008. The school board ultimately invested $200 million, mostly borrowed from an Irish bank.

The credits also acknowledge that Kramer’s warning not to invest unless you understand what you are investing in was a paraphrase of what was said by then-Quebec finance minister Monique Jérôme-Forget when admonishing the directors of the Caisse de dépôt et placement du Québec — the body responsible for investing public and private pension funds and insurance plans — after their disastrous $13-billion-dollar investment in Canadian non-bank sponsored asset-backed commercial paper froze. 


And yes, the Royal Bank figured in the story.  


Because this is only one of a vast number of related stories, the new Seinfeld could go on forever.   

Morley Gorsky practised law in Ottawa, and taught law at Queen’s University and the University of Western Ontario. He is presently an arbitrator/mediator and can be reached at mgorsky1501@rogers.com.

  • The Unknown Professor

    Howard Wolch
    I am very glad and not surprised to see that Professor Gorsky is still going strong some 32 years after I first saw him in Civil Procedure playing the unknown professor, to be confused with the bag-over-the-head unknown comic of Gong Show fame.

    This was much more entertaining than the Seinfled reunion episode of Enthusiasm. I hope he becomes a regular.

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