One of Hong Kong\u2019s 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 \u201cknow thy customers\u201d\u009d and strict risk controls. But now, he asked, who is there to look to for exemplary leadership?<\/p>\n
\u201cPreviously, there was America,\u201d\u009d he said. \u201cAmerican 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.\u201d\u009d<\/p>\n
I have no sympathy for Madoff. But the fact is, his alleged Ponzi scheme was only slightly more outrageous than the \u201clegal\u201d\u009d 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 \u201d\u201d which Moody\u2019s or Standard & Poors rate AAA \u201d\u201d and then selling them to banks and pension funds the world over? That is what our financial industry was doing. If that isn\u2019t a pyramid scheme, what is?<\/p>\n