Spitzer's “cure” doesn't fix Wall Street pestilence
Letters The recommended method for using a Roach Motel - the sticky coated cardboard bait - is to wait until the 'house' is full of the critters, at which point you stamp really hard on it with both feet.
We thought New York's Attorney General Eliot Spitzer had timed his jump to perfection on Friday, but many of you disagree.
Not enough of the vermin - in this case, the financial analysts who connived in the greatest loss of wealth in human history[*] - were in the trap when Spitzer made his move.
Dan Gillmor made the point emphatically in his journal here, and many of you disagree with us, and agree with Dan that the fine is insignificant and that the reforms are meaningless:-
Do you realize what really happened here ? The crooks made money off their unsuspecting clientele and now they are 'paying' for it with their clients' money ! Yes, the 'fines' are paid by the brokerages/investment banks and the payment comes at the expense of further losses by these firms to their clients.
And you are actually praising the honcho who brought this about !
A simple read of the Financial Times or The New York Times would indicate that Mr.Spitzers "victories" are illusory at best.
The fine against Salomon Smith Barney is less than they take in in one day, is that a penalty suitable for takings from the previous decade ? I think not.
Mr Spitzer has made many large and grand settlements along with initiating many lawsuits but none of them result in any real change just promises from the defendants.
Case in point:-
1) Microsoft's Seattlement ,a joke at best.
2) The brokerage house settlement ,how does it help the "little"guy ?No substantive reforms or regulations are proposed.
Both cases amount to a slap on the wrist and offer no benefit or protection to the consumer.
A man who would spend the amount of money Mr.Spitzer did to win election ,his own personal money, must be considered very carefully. His court cases have for the most part been civil not criminal. The burden of proof is much lower in a civil case, but they make better headlines. Mr.Spitzer is only interested in headlines - not substantive reform of out dated policy. He will wait until he is told to initiate reform type action by his boss the Governor and thus avoid playing the bad guy.
Mr.Spitzer does not seem to have the interests of the people in the forefront of his thinking ,he only seems to have those interests which will serve him and allow him to grab headlines.
Well, someone's going to grab the headlines. Are you going to see a blank space in tomorrow's newspaper?
SEC was sleeping, the civil administration is too busy becoming a militarized zone, and so who's left to do deliver any form of justice, real or symbolic?
I think Mr. Spitzer has firmly hit one of the many stock market nails on the head. I also believe he is absolutely right about the lack of responsibility analysts have shown in the past several years.
Over the last 3 years if anyone has paid the most meager of attention to the markets they can clearly see the shenanigans of VC's and everyone involved. I for one will not be investing for a long time. Not because of the analysts, they to some degree are the victims of pressure Spitzer pointed out but due to no trust in the rest of the players.
Roaches can survive a nuclear holocaust, we keep being told. They'll never go away. So the argument is about how best to deal with the problem, and I can't help comparing the qualitative approach to the problem over two decades.
When I lived in Manchester in the 80s, the council would issue us with Roach Motels™ with which to bait and crunch the vermin, which were then endemic. Today in San Francisco, the approved method is to leave tiny smears of a toxin ["Active Ingredients: Hydramethylon 2.15pc, Other Ingredients: 97.85pc"] with the hope that they'll carry the poison back to their nests. How times have changed, and what a timid approach to vermin control we have now.
What can rid us of these six-legged, persistent, and destructive MBAs? ®
[*] Or what The Independent, in a bout of maudlin amnesia, was still describing last week as "one of peacetime's greatest economic expansions" - a perfectly blameless coup.
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