Posted on 12/23/2007 6:13:39 PM PST by txzman
BASICALLY, a crossroads was passed in the Drexel/Milken scandals. Although hundreds and perhaps thousands of men and women were profiting from misconduct, only a few people, including Mr. Milken himself, went to prison. And even he emerged from prison a very rich man (and by what I see here in Los Angeles, a model citizen).
Today, in the midst of the mortgage mess, we see people breaching their fiduciary duty and getting away with it. A few may lose their jobs and wander off to a wealthy retirement. But the ordinary stockholders of the banks and mortgage companies are staggered.
(Excerpt) Read more at nytimes.com ...
Its not capitalism—its cronyism pure and simple. The financial elite form a fraternity—they went to the same schools, worked at the same companies, and now cover each others ass—be if from the Industry or the Government side.
There is a book called “Mergers and Acquisitions” by Dana Vanchon. It is short and very humorous, but doubtless mirrors what really goes on on Wall Street.
Once bitten, twice shy.
Around here, it seems to take three or four times. But eventually, there will be no customers.
The "erection election" of 1992 was the beginning of the fall.
Then the feds should enforce the gosh-darned laws. If people broke them they should be gone after and punished.
For one thing, he directs his ire at the wrong people. Ultimately, what is the reason that these CMOs and similar vehicles have been written down? Answer: because a lot of people took money from banks/mortgage brokers (often under false pretenses) and now are reneging on paying it back. So a diatribe about "trust" seems fair enough but shouldn't it be directed at the borrowers?
Stein admits he has no expertise on risk management, yet hints at something untoward regarding Goldman's position, which he acknowledges he has no details of, yet he hints darkly that there's something sinister about Goldman not opening their client list to him, even though that would be a breach of privacy and a violation of the very same "trust" whose supposed loss Stein bemoans.
Stein frets over "small investors" exposed to CMOs. Small investors should not be investing in these things in the first place. Maybe some of them were "ultimately exposed" by an indirect means (e.g. Florida city governments): this would be the fault of their money mangers for irresponsibly buying them, not the banks for selling them.
I think I’ll go with Ben on this one.
There is no one left in the US Federal Government that has the aptitude, ability, permission level and political backing to take on the financial institutions and their executives in this country and abroad.
Demanding that someone in the government do something about this is relatively equal to supporting a socialist populist like Eliot Spitzer to be the President in this country.
You are off base. Go with Stein on this one.
Every financial institution was fudging ratings to pump out business. There wasn’t and isn’t a single source of reliable information available for outside investors to make properly informed decisions on incredibly obfuscated investment vehicles.
They had no real choice as "those things" have been rolled into pension funds and 401K funds with the usual amount of financial and legalezed obfuscation.
“The investor’s interests always had to be superior to those of the investment bank, financial adviser or broker.”
We can enforce these laws only if we hold those receiving their ill gotten gains accountable. WS only does what it does because it can always buy Congress off. We need to go after the crooks on WS like we do the drug lords...confiscation of all property that is related to the crime. We always forfeit our part in stock losses. Traders make money whether you win or lose.
Can you imagine buying houses on Martha’s Vineyard for pennies on the dollar. Well I had to add a little humor.
Your points are spot-on, and Ben is off-base.
Capitalism works when those who put money at risk profit when their bets are wise ones... and the flip side is necessary and inescapable: capitalism works when those who put money at risk lose when their bets are unwise. It’s called discipline, and it was sorely lacking here. In this case, lenders in the go-go late-’90s shoveled money with temporarily discounted cost to people who could not afford the loans when the discounts ran out. Bad bet. Lots of folks are hurting, and there’s a huge human toll, but the problem is not capitalism, nor is it greedy bankers.
Encouraging people to spend money they don’t have is never a bargain, long term.
Ben Stein’s a national treasure. That said, it’s time to change Wall Street incentives...
The link to cocaine was told to me by a friend, passed a few years ago in his nineties. He was a head bank examiner. A auditor of bank examiner out of NYC. A son of Edinburgh. A real Scot. He left the trade out of disgust for the attitude, the pervasiveness of the drug and the live-greedily-for-the-moment attitude the use of it amplified.
They failed and aren’t paying the price.
I don't begrudge Wall Street their profit. I do begrudge them their fraud.
If I hear one more person who knows nothing about capitalism in China talking about how "all Chinese work as slave laborers" I'm going to vomit.
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