Monday, April 19, 2010

Stickups by the Stuck Up

It used to be thieves that robbed banks. John Dillinger, Bonnie and Clyde, Pretty Boy Floyd, Jesse James. They pulled off some of the great heists of the l9th and 20th centuries. There was a science to safe cracking. Great holdups predicated on complex planning and timing were the stuff of movies like Thief and The Bank Job.  But in the 21st century, the nature of criminality has taken a new turn. Banks rob from themselves and from their own customers. Recent descriptions of what has gone on in the world of banking resemble the process that occurs when the body attacks itself at the onset of auto-immune disease. Former treasury secretary Robert Rubin, under questioning by the Financial Crisis Inquiry Commission, is hard put to explain actions that were the equivalent of an attack on the very institution he was supposed to be helping to guide (“Panel Criticizes Oversight of Citi by Two Execs,” NYT, 4/8/10).  HSBC and UBS are accused of allowing clients to avoid taxes by actively abetting the creation of off-shore accounts (“2 Charged in International Tax Evasion Scheme Said to Involve HSBC," NYT, 4/15/10). Lehman Brothers uses creative accounting to hide losses (“Lehman Channeled Risks Through ‘Alter Ego’ Firm,” NYT, 4/12/10), and Goldman Sachs is accused of betting against the very products that it was selling to its own customers (“S.E.C. Accuses Goldman of Fraud in Housing Deal,” NYT, 4/17/10). There have always been financial scandals, and the precincts of so-called respectable finance have never been freed from their Long Term Capitals, their Enrons, their Ivan Boeskys, Marc Richs and Michael Milkens. But it does appear that in the last decade the tide has really turned. The stickups are being perpetrated by the stuck up. There are very few reports of masked men entering banks today (even by neophytes of the kind Al Pacino played in Dog Day Afternoon), and if you look at the doors on today’s bank vaults, it is obvious that nothing short of a tactical nuclear device would be able to dislodge them from their hinges. The real threat seems to lie not with the so-called robbers, but with the guys in wingtips and rep ties sitting confidently behind their desks and holding the combination. Aren’t these the same Masters of the Universe Tom Wolfe wrote about in Bonfire of the Vanities? Are you going to trust them with your money?

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