Sense on Cents

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

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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.

This entry was posted on Friday, January 28th, 2011 at 7:16 AM and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.