bobbyw24
03-16-2010, 04:19 AM
Crossposted with The Baseline Scenario.
Last week, Senator Ted Kaufman (D., DE) gave a devastating speech in the Senate on "too big to fail" and all it entails. A long public silence from our political class was broken -- and to great effect. Today's Dodd reform proposals stand in pale comparison to the principles outlined by Senator Kaufman. And yes, DE stands for Delaware -- corporate America has finally decided that its largest financial offspring are way out of line and must be reined in.
Now, the Senator has gone one better, putting many private criticisms of the financial sector -- the kind you hear whispered with conviction on the Upper East Side and in Midtown -- firmly and articulately on the public record in a Senate floor speech to be delivered tomorrow (this is a direct link to speech). He pulls no punches:
"fraud and potential criminal conduct were at the heart of the financial crisis"
He goes after Lehman -- with its infamous Repo 105 -- as well as the other entities potentially implicated in those transactions, including Ernst and Young (Lehman's auditors). This is the low hanging fruit -- but have you heard even a squeak from the White House or anyone else in the country's putative leadership on this issue?
And then he goes for the twin jugulars of Wall Street as it still stands: The idea that we saved something, at great expense in 2008-09, that was actually worth saving; and Goldman Sachs.
"[T]his is not about retribution. This is about addressing the continuum of behavior that took place -- some of it fraudulent and illegal -- and in the process addressing what Wall Street and the legal and regulatory system underlying its behavior have become."
Our system has long been imperfect, but it used to work much better:
"When crimes happened in the past (as in the case of Enron, when aided and abetted by, among others, Merrill Lynch, and not prevented by the supposed gatekeepers at Arthur Andersen), there were criminal convictions."
Here's the most intriguing bit -- he challenges the moral authority of those who think they are doing "God's work" in finance.
"If we uncover bad behavior that was nonetheless lawful, or that we cannot prove to be unlawful (as may be exemplified by the recent reports of actions by Goldman Sachs with respect to the debt of Greece), then we should review our legal rules in the US and perhaps change them so that certain misleading behavior cannot go unpunished again."
But that's not all -- he actually lays out the parameters of what should be, if our legal institutions still functioned, a compelling case against Goldman.
Continue:
http://www.huffingtonpost.com/simon-johnson/senator-kaufman-fraud-sti_b_500146.html
Last week, Senator Ted Kaufman (D., DE) gave a devastating speech in the Senate on "too big to fail" and all it entails. A long public silence from our political class was broken -- and to great effect. Today's Dodd reform proposals stand in pale comparison to the principles outlined by Senator Kaufman. And yes, DE stands for Delaware -- corporate America has finally decided that its largest financial offspring are way out of line and must be reined in.
Now, the Senator has gone one better, putting many private criticisms of the financial sector -- the kind you hear whispered with conviction on the Upper East Side and in Midtown -- firmly and articulately on the public record in a Senate floor speech to be delivered tomorrow (this is a direct link to speech). He pulls no punches:
"fraud and potential criminal conduct were at the heart of the financial crisis"
He goes after Lehman -- with its infamous Repo 105 -- as well as the other entities potentially implicated in those transactions, including Ernst and Young (Lehman's auditors). This is the low hanging fruit -- but have you heard even a squeak from the White House or anyone else in the country's putative leadership on this issue?
And then he goes for the twin jugulars of Wall Street as it still stands: The idea that we saved something, at great expense in 2008-09, that was actually worth saving; and Goldman Sachs.
"[T]his is not about retribution. This is about addressing the continuum of behavior that took place -- some of it fraudulent and illegal -- and in the process addressing what Wall Street and the legal and regulatory system underlying its behavior have become."
Our system has long been imperfect, but it used to work much better:
"When crimes happened in the past (as in the case of Enron, when aided and abetted by, among others, Merrill Lynch, and not prevented by the supposed gatekeepers at Arthur Andersen), there were criminal convictions."
Here's the most intriguing bit -- he challenges the moral authority of those who think they are doing "God's work" in finance.
"If we uncover bad behavior that was nonetheless lawful, or that we cannot prove to be unlawful (as may be exemplified by the recent reports of actions by Goldman Sachs with respect to the debt of Greece), then we should review our legal rules in the US and perhaps change them so that certain misleading behavior cannot go unpunished again."
But that's not all -- he actually lays out the parameters of what should be, if our legal institutions still functioned, a compelling case against Goldman.
Continue:
http://www.huffingtonpost.com/simon-johnson/senator-kaufman-fraud-sti_b_500146.html