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Greed and blindness

There's an ugly, human thread that runs through all of the collapses and fraud on Wall Street. Two items I read this morning point it out clearly. The first is a excerpt from William Cohan's forthcoming book, House of Cards -- A Tale of Hubris and Wretched Excess on Wall Street. It goes inside the collapse of Bear Stearns.

In this Fortune article, Cohan says:

Years from now, when academics search for causes of the stock market crash of 2008, they will focus on the pivotal role of mortgage-backed securities.... What scholars should not miss is the role that the human element - call it greed or ignorance - played in this tragedy.

Namely, the greed and ignorance of Bear Stearns traders Ralph Cioffi and Matthew Tannin, who lost about $1.6 billion while allegedly misleading investors.

Example number two comes from Vanity Fair. It's a in-depth piece about the Noel family, who ran FGG, the Fairfield Greenwich Group. It was a feeder fund for Bernie Madoff. FGG had half its capital tied up with Madoff. From the article:

Sources close to F.G.G. have said that the Noels will argue in court that, if the S.E.C. didn't spot Madoff's fraud, why should they have? But, unlike F.G.G., the S.E.C. was not taking investors' money and charging 1 percent in fees and 20 percent of profits for looking after it.

Yes, thank you. It's called responsibility. It's called accountability. People making easy money never seem to question it. And they inevitably get other people to drink their cool-aid.
Hindsight is 20/20, but easy money must rob people of any shred of foresight they might've had that led them to their wealth.

Both these stories are compelling reading, but they're also nothing new. $650,00 Ferraris and $13 million town homes. You've heard this tale before. Enron. Worldcom.

Cioffi and Tannin are awaiting trial. The Noels are getting sued. They all might wind up poor, but I'm sure they'll be seeing things a bit more clearly. Unfortunately, as is always the case in these situations, there are many, many people who are suffering as a result of their greed and blindness.

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the SEC was not taking investors money and charging 1 percent in fees and 20 percent of profits for looking after it.

they take income out of every one of my paychecks. watching that guy on c-span really chapped my hide, he was telling them for 9 years this was happening, they blew him off. an unpleasant reminder of why i did not 'fit in' at my old government job(s)

Thank for this little excerpt. It is true with the credit industry, including the bureau's. Consumers were also knee deep in this, trying to flip houses and drive up homes values through city ordinances forcing uniformity.

Our legislative body is at the forefront of all this, allowing and encouraging this behavior.

Further, our consumer protections have been rolled back. While bankruptcy is never a good thing, there is a reason it exists. However, during the past administration, it was watered down to near uselessness. People need to be able to restart their finances in dire situations, such as what many people are now in.

And yet further still, companies over the past decade have trimmed their fat to the least amount possible, in order to maximize profits, without consideration of how to balance their budgets during rough economic times. Previously, companies could trim unessential services to bring themselves into the black, but now, that has already been done to maximize their profits.

I hope that the nation will return to a belief in Ethics. I don't care what individuals beliefs, spiritual or physical; ethics have a real impact, especially when they are ignored. We are reaping the results now.

We can still change the way things are. There is so much suspicion, it's time to risk trust and sacrifice a little to help everyone. It's not just fanciful wishes, but something that can be done to benefit of all, the businesses included.

I want to know who is going to do the in-depth article and book on the avarice and greed of credit card companies and their MAJOR contribution to the collapse of consumers and the overall economy.

Who's doing that one? How have they been allowed to get away with charging loanshark interest rates and fees thanks to congress, the fed, regulators -- elected representatives of the banking industry -- people like VP ex senator Joe Biden -- now he wants his sont o continue his bankrupt legacy!

the dems are just as responsible for this financial meltdown as the republicans since they haven't had the backbone to do what's right for consumers either. they're only slightly less culpable than the greed-over-people republicans and wall street masterminds.

Scott:

Just wanted to say thanks for citing these primary sources which I have started to read. I was struck by the juxtaposition of the Vanity Fair article: the 5 beautiful, privately educated, multi-lingual Noel daughters who with their husbands all ran the Fairfield Greenwich Group. None of them could figure out Bernie Madoff? I would find it amusing but for the horrible pain they have cost; especially the retirees I have watched on TV loosing their homes.

It's the constant seduction: if your smart enough, well connected you can enter this inner circle of wealth. Guess not.

My credit card co just sent a letter stating it is raising my rate to 18% and I"ve been paying my whole balance off each month for years. I'm cancelling this card. good riddance. Greed and blindness go hand in hand. But we can't blame the whole government for the failure of the SEC regulators. There are good honest hardworking people in government who are trying to look out for the best interests of the people. (I hope).

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