Every month I receive a financial statement from one of the Wall Street behemoth firms. The raw materials used in the mailing—paper and stamps—are generally worth more than my account balance.
Like the New York Times, they are useless to me. But like the New York Times, they make me feel important.
I have been lazily following the Goldman Sachs debacle in Washington. The Securities and Exchange Commission (SEC) filed a fraud lawsuit against the investment bank, claiming executives failed to disclose a conflict of interest in selling the financial security Abacus.
They say Abacus was created at the request of a prominent hedge fund manager, who asked Goldman to create a package of flimsy mortgages that he could “short”—or bet against. In essence, Abacus was designed to fail. When it did, the hedge fund manager cleared about $1 billion.
So basically, a few years back, when folks with $40,000 annual incomes were buying $4 million dollar homes with no credit check or money down, this intellectual leviathan thought to himself: something is awry.
I feel bad for the poor folks who lost everything in the wake of his gain, but frankly, worse for me. I thought something was awry, too. I just didn’t have the intelligence, experience, nerve or criminal machinations at my disposal to capitalize on it.
I missed the boat once, when Bill Gates beat me to the top of Silicon Valley; I have been trumped again. Back to the drawing board.
Capitol Hill has joined the fray, pushing for financial reforms that would curtail these shenanigans, and in theory prevent a repeat of the 2008 near-market collapse.
They hauled Goldman executives to committee hearings last month for their requisite public flogging. These guys—accuser and accused—just look guilty.
The Goldman executives remind me of the brash kid back in college. The one who matched his intelligence with an “I know something you don’t” arrogance. You knew he would never make anything, per se. Except money. And alimony payments
In characterizing the fellows from Goldman, one prominent law school professor who specializes in white-collar crime noted that “these are people with very big egos, and very big pockets, and they’re used to doing what they want.”
Others note that Washington regulations cannot keep pace with Wall Street ingenuity. They are too smart to ultimately fail (get caught); as militant about making money as Washington “watchdogs” are their hour-long lunches and vacations.
Actually, I like Capitalism. And most rich people. I don’t begrudge their success. Most of them earn it. Amen. And maybe Goldman is just a scapegoat here. But the depth of these shady Wall Street deals and profiteering schemes is unfathomable.
There was an interesting “60 Minutes” interview last year with Harry Markopolos—an obscure Boston-based financial analyst. He is credited with going to the SEC and blowing the whistle on Bernard Madoff’s $50 billion fraud.
Asked how long it took him to figure out something was wrong, he said, “It took me five minutes to know that it was a fraud. It took me another almost four hours of mathematical modeling to prove that it was a fraud.”
I don’t know what mathematical modeling is.
But shouldn’t somebody on our side know … somebody in one of those federal buildings in Manhattan or D.C.? Vegas casinos often bring in former cheats to help monitor the floor. Why don’t we do the same? Pay them all they want. Money well spent.
It would be nice to haul these watchdog bureaucrats one-by-one before an accountability board and, in the tradition of the classic film “Office Space,” ask them a simple question: What would you say you do here?
What can we glean from this whole farce?
If you meet someone at the park wearing a pastel tie who deals in derivatives, uses the word “collateralize,” or hedges things with a laptop, probably best to keep ‘em away from the kids.
Ben Clarke has worked in Washington, D.C. as a political consultant and speechwriter for the past 10 years. He has served as chief political writer for GOP strategist Frank Luntz, speechwriter for Senate Majority Leader Bill Frist, and communications consultant for Rudy Giuliani’s 2008 presidential campaign. He has worked on countless House, Senate and Gubernatorial campaigns across the country.