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FCIC Report: Wall Street and Washington Failed America

Posted by Larry Doyle on January 28, 2011 7:16 AM |

A multiple trillion dollar loss emanates from Wall Street and no crimes are committed? Will any form of real justice ever be served? Will those who facilitated and enabled this crisis to unfold ever be singled out? Are there individuals on both Wall Street and in Washington who just exhaled thinking, “We got away with it.”

The report released yesterday by the Financial Crisis Inquiry Commission highlights that Wall Street and Washington collectively failed our nation. Specifically the FCIC writes on page 23:

We do place special responsibility with the public leaders charged with protecting our financial system, those entrusted to run our regulatory agencies, and the chief executives of companies whose failures drove us to crisis. These individuals sought and accepted positions of significant responsibility and obligation. Tone at the top does matter and, in this instance, we were let down. No one said “no.”

How is it that these ‘supposed leaders’ failed to perform?

Because as the Financial Times highlights this morning in reporting, US Crisis Inquiry Points to Widespread Failure:

Lobbyists and members of Congress would “harass” regulators to prevent new regulations in a “kind of a blood sport to make the particular agency look stupid or inept or venal.”

– Arthur Levitt, former Securities and Exchange Commission chairman

While on one hand, I commend Phil Angelides and the members of the FCIC for getting very specific in terms of the issues and forces that caused our crisis, I believe they fail us in not getting even more specific in terms of ‘naming the names’ of (1) those who failed to say no; (2) those whom the lobbyists supported; and (3) the members of Congress who harassed the regulators.

Why is it that the FCIC does not get more specific? In my opinion, they would have to name individuals who remain in office, head regulatory agencies, and run major banking institutions. In fact, certain of these individuals who failed our nation are now the very same individuals charged with trying to repair the system. How does that work? You know just as well as I do, that does not work.

Regrettably, without naming names, the chances now for real justice may forever be lost. Without justice, lessons are not learned, risks and bad behaviors are allowed to flourish, and the American economy will likely underperform. Why? When capital is not protected, the price of that capital goes up. Higher capital costs implicitly mean slower growth.

With the FCIC report now having been filed, are we left to simply turn the page on this crisis? Not so fast.

Before we do that, I am compelled to put forth that I equate what happened on Wall Street and Washington in many ways to what happened in the Catholic Church and Muslim communities over the last number of decades.  Why aren’t there more leaders in these religious communities to stand up when having learned of failures, massive improprieties, or terrorist activities and say, “This is wrong!”

In a very similar fashion, and as the FCIC states and I repeat:

We do place special responsibility with the public leaders charged with protecting our financial system, those entrusted to run our regulatory agencies, and the chief executives of companies whose failures drove us to crisis. These individuals sought and accepted positions of significant responsibility and obligation. Tone at the top does matter and, in this instance, we were let down. No one said “no.”

But who? Which public leaders? Which heads of regulatory agencies? Which chief executives? Let’s name names.

I will start:

1. Alan Greenspan
2. Robert Rubin
3. Mary Schapiro

Who would you add to the list? Do not be bashful. Let’s finish the FCIC’s work.

Larry Doyle

Related Sense on Cents Commentary
Wall Street-Washington Incest

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own and not those of Greenwich Investment Management. As President of Greenwich Investment Management, an SEC regulated privately held registered investment adviser, I am merely a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Rob

    I would like to add:

    Dick Fuld: cooked LEH books to well done, had used the babe in the woods defense.

    Erin Callahan: Head chef of book cooking at LEH, used Repos to make a house of cards at LEH look like it’s made of bricks.

    The fact that we tarred and feathered execs at enron but have not indicted ONE wall street executive tells us all we need to know about who rubs this country.

  • flek

    Peaceful Revolution If Possible

  • robertsgt40

    “Wall Street and Washington collectively failed our nation”—“Failed” has the same number of letters of the word that should have been used.

  • DF

    I would add every member of Congress who voted for the Bailout.

  • Sal

    Endless bailouts for the bankers, yet another violation of our rights. Add it to the list of gov’t violations of our right:
    They violate the 1st Amendment by placing protesters in cages, banning books like “America Deceived II” and censoring the internet.
    They violate the 2nd Amendment by confiscating guns.
    They violate the 4th and 5th Amendment by molesting airline passengers.
    They violate the entire Constitution by starting undeclared wars for foreign countries.
    Impeach Obama and sweep out the Congress, except Ron Paul.
    (Last link of Banned Book):
    http://www.iuniverse.com/Bookstore/BookDetail.aspx?BookId=SKU-000190526

  • BMB

    “Failed” should not be past tense — they continue to fail us each and every day.

  • whoisjohngalt

    Larry, good post but I think most of your readers are knowledgeable concerning this. I want to give you another prime example of Wall Stree/Washington failing us again–the ethanol in gasoline mandate that was implemented in 2007. See the following chart:

    http://futures.tradingcharts.com/chart/CN/M

    Corn was in the $2-3 range until the mandate. Now it has gone up 2 to 3 times. This has lead to inflation at the supermarket since most foods are tied to corn in some way.

    How much of the unrest we are now seeing overseas is tied the increase cost of food? It is not difficult to make the connection in Egypt and elsewhere from Global Warming Hysteria/US ethanol mandate/increase food prices/riots. When you have no $, hope or food what do you have to lose?

    ADM, Monsanto, John Deere & others love E10 (10% ethanol in gasoline)and every midwestern Senator in both parties love E10. It is welfare for farmers and certain companies. It is not saving the environment and it is causing removal of the rain forests in Brazil where they use sugar(more efficient than making it from corn) to make ethanol for fuels.

    Finally, you lose 3.3% fuel economy with E10 and 27.5% with E85 vs normal gasoline.

    • LD

      Your point is well taken.

      The Fed’s response to our own crisis has clearly caused inflationary trends in a variety of commodity markets.

      What is the recurring theme?

      1. Our 2008 financial crisis and subsequent response by the Fed leads to…

      2. Stresses and strains within the economy as costs and burdens are shifted both domestically and internationally…

      3. Those economic costs and burdens leads to shifting political tides (witness what occurred here in November 2010, Ireland just last week, the UK, and elsewhere…)…

      4. As politics change but answers remain elusive and problems both linger and deepen, the shifting of costs and burdens leads to social strife and civil unrest, a la Greece, Egypt, and certainly elsewhere as well…

      Financial>>Economic>>Political>>Social/Civil…

      Thanks for the specifics on corn.

  • All-in they produced a more than 600-page book that may amount to nothing according to analysts. Many blamed bankers for irresponsible and illegal actions bringing the economy to near collapse. If I did that if he did that if we did that wed be in jail lamented a Wall Street protester in April.And in Washington people wanted fat cats firms to pay for multiple crises only big bankers could really explain.

  • John Defalque-Communist

    I hope everyone is realizing that no one is safe from automation and outsourcing.Since 99% of us don’t matter and can never have any molecule of security, we should all be given cyanide capsules.We should leave this world a heaven for the rich.If masses of us kill ourselves then hopefully survivors may get a better deal.Kaputalism is institutionalised injustice.It cannot be fair or share.Only briefly through a world war can Capitulationism provide full employment.We should all wish for war so that we may all be conscripted and if we die, it’s the best fate that can befall a pauper.

  • Petter

    You are doing wrong, but…






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