fraud

Some traders and other folks in the securities business look askance at the SEC's case against Goldman Sachs in connection with the Abacus transaction because it seems like sour grapes from a party who wants to re-trade a deal that didn't work out very well.

A few months ago, I wrote about my surprise at Alan Greenspan's relaxed attitude toward fraud. Today, I'm wondering about the attitude of Warren Buffett, who said yesterday, "I haven't seen anything in Goldman's behavior that makes it any more subject to criticism than Wall Street generally."

Harry Markopolis's ideas on how to fix the SEC :

‘Too Many Attorneys’

“My bet is that Ms. Schapiro will find that she has too many attorneys and too few professionals with any sort of financial background,” he said.

I don't know about this report. It concludes that nobody high-up improperly influenced SEC action/inaction; instead, it throws lots of junior, "inexperienced" people under the bus, and when it identifies supervisors who did screw up, it doesn't name them. Why not? How else are we supposed to find out whether they're still screwing up somewhere else? Also, there is no explanation of why the investigators who wrote the report concluded that the supervisors didn't purposely tank the investigations. Bernie Madoff was a highly-connected, powerful person; it doesn't seem unreasonable to consider the possibility that he could have used his money and power to influence behavior at the SEC. This report doesn't seem even to consider the possibility. I find that surprising.

Just reviewing Matt Taibbi's "The Bailout: How Goldman Sachs Runs Washington" in Rolling Stone on newsstands now; but definitely don't miss Malcolm Gladwell's piece on why "Wall Street needs a few less Waddill Catchingses and a few more Sidney Weinbergs."

In a fascinating story first printed in Stanford Magazine, former head of the Commodity Futures Trading Commission Brooksley E. Born recounts her 1996 lunch with Alan Greenspan during which he told her

“Well, you probably will always believe there should be laws against fraud, and I don’t think there is any need for a law against fraud,” she recalls. Greenspan, Born says, believed the market would take care of itself.

What would happen if after a plane crashes, we said, "Oh, we don't want to look in the past. We want to be forward looking. Many people might have been, you know, we don't want to pass blame."