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ECONOMY: Wall Street Produces More Villains In A Year Than the Hollywood

Bhuwan Thapaliya - 1/17/2009

Old habits die hard in Corporate America. One of the most durable is a reluctant to be at all honest about the health of the organization in charge by the top executives of the firm.

If you doubt it, then look at the history of past financial crises in the United States and consider the corporate scandals leading to the failures of Enron and WorldCom. Then the truth will come soaring right before your eyes.

There is too much fraud and deceptions in the corporate houses of America . For instance, Kenneth Lay, Enron’s former chairman, said the firm was in good shape a few days ago before it hurtled towards bankruptcy. What a deceiver he was? Not only him, many top brass executives before him and many after him are sowing the seeds of fraud and dupery.

And the American publics are paying the price for the misdeeds of these corporate vultures. And paradoxically these leeches blame it on the economic slowdown in America, but these leeches more than any other factors are the prime recipe makers of the economic crisis in America because they manipulate the actual economic transactions and data’s.

Or in other word: they reveal what should be concealed and conceal what should be revealed.

They say Wall Street produces more villains in a year than the Hollywood and the latest Oscar winning superstar villains are Dick Fuld, bankrupt Lehman Brother’s former head and Bernard Madoff, modern architecture of the colossal Ponzi scheme.

Mr. Madoff was a smart hedge fund manager. He has been fooling the masses, but his vast alleged Ponzi scheme came to light in mid-December.


“The $17.1 billion that Mr. Madoff claimed to have under management earlier this year is all but gone. His alleged confession that the fraud could top $50 billion looks increasingly plausible: clients have admitted to exposures amounting to more than half that,” according to The Economist.

Madoff used hoax data’s to attract new investors. Even as America was officially in recession, Mr. Madoff’s firm was untouched by this dire economic crisis.

“Mr. Madoff barely ever suffered a down month, even in choppy markets (he was up in November, as the S&P index tumbled 7.5%). He allegedly has now confessed that this was achieved by creating a pyramid scheme in which existing clients’ returns were topped up, as needed, with money from new investors,” according to the report published by The Economist.

On the other hand Mr. Fuld was not as smart as Madoff and neither was he as deceptive as Madoff. Mr. Fuld is very unlucky because Leham Brother’s is the only substantial form that was not bailed out by the government, and was allowed to fail.

American government pumped money into the banking system in a desperate bid to keep it alive but why it left the Lehman Brother’s to collapse is not yet known.

According to the media reports, during testimony before Congress on October 6th, about the firm’s demise, he said that until “the day they put me in the ground, I will wonder why AIG was rescued and Lehman not.”

It has been reported by the media that during the testimony Mr. Fuld first accepted responsibility of the failure and then drifted the blame on others, from short-sellers to the media.

Moreover, he has every reason to wonder as Lehman Brother’s has collapsed but being the captain of the boat; he should have wondering about the future of the firm and should not have concentrated only in getting himself enormous pay packages.

To save the financial system from further deterioration, America 's government announced a bank recapitisation plan- package of equity injections and loan guarantees to save the banks. But critics say that it is probably too late to save the economy from succumbing to the combined impact of shrinking wealth and the credit crunch.

Lehman Brother should have been bailed out and this will go down in the history as one of the biggest mistake of the government. But it is history now and there is no point talking about what needed to be done, the focus should be on, what should be done as America ’s financial condition is worsening day by day.