Posted by Karl Denninger
There are times that I wonder if the looting will keep on until the people express their anger with necktie parties – or worse.
The arrogance of Wall Street knows no boundaries. The latest is on display in these two stories, first from Bloomberg:
Now the firms and their chiefs, confronting a wave of public anger against their bonuses awarded in the wake of the financial industry bailout, are trying to devise a strategy to fight both the proposed new limits on banks’ size and activities as well as the bank tax. While they are still plotting tactics, one thing has become clear: The banks don’t want to go to war with the commander-in-chief.
“We don’t want to fight the administration,” said Rob Nichols, whose trade group, the Financial Services Forum, represents the chief executive officers of the largest financial companies. “We just want to sit at the table and have a productive conversation about the kinds of reforms needed to address the real causes of the recent crisis.”
I’ll tell you exactly what sort of reforms are necessary:
No more obfuscation, lies about credit quality, and intentionally peddling things you think are worthless. And don’t start that crap about shorting things “as a hedge” when you constructed them – if you’re the company that put them together if you’re not damn sure they’re marketable, you don’t sell them. Ever see the sign in a restaurant: “If you’re not proud of it, don’t serve it”? WELL?
Those who have committed this sin must atone. This means admitting what you did, it means giving back as much money as is left, and it means if you broke the law on top of it pleading guilty and accepting your punishment.
Since “animal spirits” seem to be impossible to tame, it also means breaking up lending and depository functions into what amounts to a regulated public utility. Gamble with your own money – but never with ours, and never, ever with a sovereign backstop. Ever. This means depository and lending institutions may not participate in any way, shape or form in the securities markets – including the purchase, sale, holding or trading of derivatives. Period.
No more “mark to myth” and no off-balance-sheet anything. Every investor must be able to read a balance sheet and have a full and fair view of your firm’s assets and liabilities. Period.
Oh, and stop trying to influence Bernanke’s appointment – that’s reported in this story as well. Attempting to influence the selection of your regulator should be treated as a felony – just like bribing someone – because it effectively is.
Bankers stood shoulder-to-shoulder at the Swiss ski resort of Davos to try to prevent a scatter-gun approach to new financial regulation by different countries.
They united against Barack Obama’s threat to break up banks and Gordon Brown’s growing enthusiasm for a Tobin tax on all financial market transactions.
Again: Quit stealing.
The founder of the World Economic Forum has said there is a lack of public trust in political and world leaders.
Klaus Schwab told the BBC that business leaders must show that they serve society to heal this rift.
It’s hard to show that when you’re robbing everyone you see blind.