One of Hong Kong’s most-respected bankers, who asked not to be identified, told me that the U.S.-owned investment company where he works made a mint in the last decade cleaning up sick Asian banks. They did so by importing the best U.S. practices, particularly the principles of “know thy customers” and strict risk controls. But now, he asked, who is there to look to for exemplary leadership?
“Previously, there was America,” he said. “American investors were supposed to know better, and now America itself is in trouble. Whom do they sell their banks to? It is hard for America to take its own medicine that it prescribed successfully for others. There is no doctor anymore. The doctor himself is sick.”
I have no sympathy for Madoff. But the fact is, his alleged Ponzi scheme was only slightly more outrageous than the “legal” scheme that Wall Street was running, fueled by cheap credit, low standards and high greed. What do you call giving a worker who makes only $14,000 a year a nothing-down and nothing-to-pay-for-two-years mortgage to buy a $750,000 home, and then bundling that mortgage with 100 others into bonds ”” which Moody’s or Standard & Poors rate AAA ”” and then selling them to banks and pension funds the world over? That is what our financial industry was doing. If that isn’t a pyramid scheme, what is?
Can’t argue. For years the Feds have been doing things, through law, that a private citizen would have gone to jail for.
The best way to restore ethical behavior to Wall Street is to start putting some of these folks in prison doing hard time for their corruption. Anything less than say, oh I don’t know, a one year sentence per $100,000 scammed is just encouraging them. All of their assets need to be siezed as well and used to pay off those that were the victims of their scams. Those who turned a blind eye in the SEC need to be held criminally liable as well. At the very least, the SEC folks and hundreds on the boards of directors have been criminally negligent in their duties to the share holders.
JAIL TIME.
“What do you call giving a worker who makes only $14,000 a year a nothing-down and nothing-to-pay-for-two-years mortgage to buy a $750,000 home…” He throws out this statement as if this is a case everyone is familiar with. If such a loan ever really took place, the only way I could imagine it taking place would include breaking already existing laws and regulations. His argument would be much stronger with a more realistic example of the kind of numerous defaults that have been taking place.
It was the Barney Franks of the world, not the bankers, who hammered the banks to make these subprime loans under the threat of disallowing future mergers etc. Then it was Flakie Fannie and Freddie – Democrat institutions all. This “party” has unilaterally brought financial ruin to the world with no accountability. Friedman gets far too much credit. It was our government who caused this problem – not the banks.
Br. Mike – exactly. If Madoff ran an “alleged Ponzi scheme” – what do we call Social Security?
And the Feds aren’t the only politicians doing this – the states are scamming their citizens and workers, building a house of cards that is beginning to collapse.