The devil is not in the detail. The devil is the detail
Der Teufel mag im Detail stecken, aber Gott steckt in den Lücken![1]
It is a well-worn trope: there is so much one can commoditise, but the final mile is across ice-fields and shattered obsidian and you must walk it in the moccasins of deep expertise, lest you cut your feet to the bone. It may be true that 80 per cent of your bond documentation is boilerplate, but the rest — oof — is a monster.
Of course, the boilerplate is pretty monstrous, too.
On this commonplace is much of the Magic Circle’s patter premised: they are ably aided in it by their clients, many of them refugees of that brotherhood whose livelihoods are similarly guaranteed by the presumption. And, to be sure, should you peruse your average securitisation — here’s the prospectus for Multifamily Connecticut Avenue Securities Series 2019-01 Notes Due October 2049 — you will soon be scooping out your eyes with the proverbial spoon.
Some 25 years ago the European Commission hit upon the idea of requiring structured products manufacturers to produce a one-page summary of the key risks of financial products being offered to the public. The document, a Key Investor Information Document became a part of financial products regulation oer the immense objections of the legal community on the grounds that it is impossible to adequately explain the risks of a complicated legal product in fewer than the 80-100 pages it was presently taking.
To which the regulators’ response was, “if you can’t explain the big picture risks in a single page, the product cannot be suitable for the general public”. Which is a kind of zinger.
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- ↑ “The Devil may be in the detail, but God is in the gaps.”