Downgrading

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Downgrading personnel is the process of finding a cheaper unit to do the same job.

When the JC was but a stripling clerk, his senior partner assigned to him the job of reviewing this speculative new contract for an important finance client. This was in about 1995.

“The client will take potentially massive, long-tenor exposures under this new contract,” said he, knoching his pipe out on my head. “Potentially ruinous ones. It is our sacred duty to make sure it is safe! And that means —”

The partner’s eyes glittered. It was the fierce gleam of a man envisaging the accrual of enormous professional fees.

I looked at the contract before me rendered on crisp onionskin. It was beautiful — strange — alien in its ineffable obliqueness. I mouthed its title, printed in block capitals across the front page: “Eye-ess-dee-aye”. Single Agreement. Merger without assumption. Netting. Gross up. Default Under Specified Transaction. What could it all mean?

Little did I know haw tediously familiar it would all become. ISDA negotiation moved from massive fee-generative bespoke legal work to inhouse teams, to negotiators, to operatrions clerks, to operations clerks in India.