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Finally! A bright spot in an otherwise gloomy day.
Old 10-06-2008, 04:58 PM   #1
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Finally! A bright spot in an otherwise gloomy day.

Read it and cheer. Hopefully they pursue them into h3ll!

Criminal probes likely in financial crisis - The Connecticut Post Online
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Old 10-06-2008, 05:04 PM   #2
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Personally, I hope they focus all their energies on getting the economy back on track.

This desire for vengance and punishment is simply an unhelpful distraction that will benefit no one (except a few politicians and future politicians glory-seeking prosecutors: "Look, we fixed the problem!").

The government should be looking forward, not backward, and making systemic changes (e.g. eliminating mortgage deductability) rather than symbolic gestures.
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Old 10-06-2008, 05:35 PM   #3
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I didn't see any mention of going after the rating agencies (Moody's, Standard and Poor's, etc.). Why are these guys gettting a pass when they are the ones that gave AAA ratings to risky mortgage related securities? How does the market ever regain confidence in their ratings?
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Old 10-06-2008, 05:48 PM   #4
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I didn't see any mention of going after the rating agencies (Moody's, Standard and Poor's, etc.). Why are these guys gettting a pass when they are the ones that gave AAA ratings to risky mortgage related securities? How does the market ever regain confidence in their ratings?
Here's the thing. The bond rating agencies are mostly looking at whether a borrower can pay the money back. The thing is, with the change to mark-to-market accounting rules, even a lot of performing debt lost 10%, 20% or more of its value from par because of illiquidity and a frozen, panicked market.

Most of these MBS that were AAA rated did perform -- but the market taking their value down 25% is a different story.

A buyer of a bond just *assumes* more price stability and less economic sensitivity in a AAA-rated bond. When the market gets dysfunctional and constipated enough, even "safe" and performing assets get marked to market way below par. I'm not sure how the ratings agencies can -- or should -- consider mark-to-market concerns in rating a bond.
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Old 10-06-2008, 05:59 PM   #5
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I agree that the ratings agencies should be investigated. I believe AIG is still rated A or A-. What the heck?
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Old 10-06-2008, 06:06 PM   #6
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Ziggy, my understanding is that it's the homeowners that own the mortgages that have to perform, not the corporations that packaged the debt together. True, those corporations succesfully "performed" their job of packaging up a lot of stinky mortgages into a nice opaque wrapper. But surely the MBS ratings must be intended to guide expectations on something other than the packaging, right?
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Old 10-06-2008, 06:08 PM   #7
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Read it and cheer. Hopefully they pursue them into h3ll!

Criminal probes likely in financial crisis - The Connecticut Post Online
go get 'em, guys and gals.
RICO is a tough law to beat in court. woohoooo, i love it!
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Old 10-06-2008, 06:13 PM   #8
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A buyer of a bond just *assumes* more price stability and less economic sensitivity in a AAA-rated bond. When the market gets dysfunctional and constipated enough, even "safe" and performing assets get marked to market way below par. I'm not sure how the ratings agencies can -- or should -- consider mark-to-market concerns in rating a bond.
Ziggy,
Thanks. I guess it's a case of buyer beware, but it still seems to me that the ratings agencies were complicit in all this.
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Old 10-06-2008, 09:33 PM   #9
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Originally Posted by Milton View Post
Personally, I hope they focus all their energies on getting the economy back on track.

This desire for vengance and punishment is simply an unhelpful distraction that will benefit no one (except a few politicians and future politicians glory-seeking prosecutors: "Look, we fixed the problem!").

The government should be looking forward, not backward, and making systemic changes (e.g. eliminating mortgage deductability) rather than symbolic gestures.
Really? Is that how you feel about catching other criminals? (burglars, rapists, murderers, bank robbers, etc.) Obviously this could be argued 'til the end of time, but most would agree that there is deterrent value in holding people accountable for their crimes; in addition to good old justice.

I think I understand what you're getting at though. That we can't just sit around now pointing fingers and spending all our resources and time on stringing people up for vengeance sake. But we can do both.
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Old 10-06-2008, 10:00 PM   #10
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I think it'd be nice if the folks who spindled up risky assets and sold them as better than they were got punished to a good degree so that their future selves would consider carefully before trying to make a fast buck.

I see no difference between their actions and simple theft.
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Old 10-06-2008, 10:03 PM   #11
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Originally Posted by Milton View Post
Personally, I hope they focus all their energies on getting the economy back on track.

This desire for vengance and punishment is simply an unhelpful distraction that will benefit no one (except a few politicians and future politicians glory-seeking prosecutors: "Look, we fixed the problem!").

The government should be looking forward, not backward, and making systemic changes (e.g. eliminating mortgage deductability) rather than symbolic gestures.
I understand this point of view if chasing the bad guys was all we did. But different people have different jobs. Let the prosecutors do all the chasing they want. Their job isn't to get the economy on track.
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Old 10-06-2008, 10:17 PM   #12
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I understand this point of view if chasing the bad guys was all we did. But different people have different jobs. Let the prosecutors do all the chasing they want. Their job isn't to get the economy on track.

OK for the prosecutors.... But I think I smell congresscritters focusing their attention on this in an obvious attempt to win some voter support before elections. I'd like to think they're primarily concerned about our future and can easily go back and beat up the appropriate culprits when they've determined how to get the train back on the tracks.

It's a matter of prioritization. I don't care if the bad guys have their cell doors clang shut 3 months from now or 6 months from now or 9 months from now as long as we get the economy back on track NOW!
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Old 10-06-2008, 10:22 PM   #13
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I have no doubt that we'll round up a number of the usual suspects for a series of news broadcasted perp walks, just so people will put down the torches and pitchforks.

They'll be guilty of something, but they wont be the guys who really lined their pockets.
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Old 10-06-2008, 10:24 PM   #14
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I understand this point of view if chasing the bad guys was all we did. But different people have different jobs. Let the prosecutors do all the chasing they want. Their job isn't to get the economy on track.
Based on your avatar, are you interested in the job?
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Old 10-07-2008, 02:31 AM   #15
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Personally, I hope they focus all their energies on getting the economy back on track.
I think they are doing what they can within the framework of our government.

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This desire for vengance and punishment is simply an unhelpful distraction that will benefit no one (except a few politicians and future politicians glory-seeking prosecutors: "Look, we fixed the problem!").


IMO - They need to be pursued vigorously.

I saw part of Fuld's testimony before congress... he exclaims "no one could foresee what was to unfold..." yada yada yada.

The fact is they packaged trash and knew it. To entice investors to buy it they made it riskless by creating and selling CDS (without proper reserves...). Then (they and the industry) began selling CDS to speculators that did not even hold the MBS (trying to get money for nothing).

The insiders knew exactly what was happening and the potential repercussions to the company. They knew the risk they were taking... they may have not fully understood how it could wreck the world's economic system.... The scheme took on a life of its own. But they are still the culprits and the architects of the disaster. They must pay the price!

Fuld is putting forward the Ken Lay Defense excuse... I didn't know what was happening!

The man ran the company into the ground taking excessive risks and to add insult to injury gorging on obscene compensation. He must pay and the rest like him must pay.
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Old 10-07-2008, 02:51 AM   #16
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Don't hate the playa, hate the game. The corporate CEO's job is to maximize profits by taking as much as they can get from wider society. Collapse of the world economy is an externalized cost, which does not factor in to corporate decisionmaking (except to the extent that it affects the company's prospects). It's the job of regulators (congress) to put up walls (regulations) around these greedy and psychotic entities we have established called corporations. Starting with requiring complete transparency of solvency for anything we need to depend on like banks and insurance companies.

I've said it before and I'll say it again: watch the movie "The Corporation" to see the bigger picture.
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Old 10-07-2008, 04:00 AM   #17
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Don't hate the playa, hate the game. The corporate CEO's job is to maximize profits by taking as much as they can get from wider society.
Uh-huh... Maximize profits in an ethical way that does not kill the company, ruin investors, ruin business partners and scr3w the company's customers!

The fact that a toxic side effect was to cause systemic economic failure and a freezing of the financial system... shows just how far they went with the scheme.

I think that they knew what was happening but it got so big it got away from them... now they are caught in their scheme and are trying to cover up (play dumb).
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Old 10-07-2008, 11:06 AM   #18
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Uh-huh... Maximize profits in an ethical way that does not kill the company, ruin investors, ruin business partners and scr3w the company's customers!
Good ethics are good practice, but not a legal requirement. Proving that specific laws were broken is rather different from showing that executives were negligent, incompetent or greedy: in a non-kangaroo court, anyway (let's hope that a desire to satisfy the bloodlust of an aggrieved proletariat doesn't sacrifice due process).

By definition, scapegoating always distracts attention from root causes.
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Old 10-07-2008, 11:10 AM   #19
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OK for the prosecutors.... But I think I smell congresscritters focusing their attention on this in an obvious attempt to win some voter support before elections.
Well, if our choice is having them focus on things like this or steroid use in baseball.....
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Old 10-08-2008, 02:43 AM   #20
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Good ethics are good practice, but not a legal requirement. Proving that specific laws were broken is rather different from showing that executives were negligent, incompetent or greedy: in a non-kangaroo court, anyway (let's hope that a desire to satisfy the bloodlust of an aggrieved proletariat doesn't sacrifice due process).

By definition, scapegoating always distracts attention from root causes.

You are stating the obvious!

I do not believe those execs are being used as scapegoats. :confused:

Heck, even if you look at the govt that relaxed regulations... those business execs paid them for the favor. Part of the system is broken and needs to be fixed.

But... We will soon see if any laws were broken.

I am hoping the ones that were cleaver enough to cover their @$$ with the accounting rules trip up and try to cover up... Whether they go to jail for perjury or cooking the books or just being greedy @$$sholes that caused all of us great financial loses... the same result happens. They lose money and their freedom.

At the very least I hope the full force of the Criminal Justice System is focused on them like a laser. Hopefully they will be sued for negligence and have to disgorge every last cent and barred from working in the financial services industry for life. The should be ruined just like they ruined many average people.

Here is the result of their handy work. http://money.cnn.com/2008/10/07/news...ion=2008100715

They did the financial equivalent of dumping nuclear waste in every residential neighborhood coast to coast.

Those AIG execs are still living it up.

http://www.sfgate.com/cgi-bin/articl...MNMD13D2SN.DTL
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