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A history of forgetting

"Some on Wall Street forgot that behind every dollar traded or leveraged, there is a family looking to buy a house, pay for an education, open a business or save for retirement," President Obama said on Thursday. Steve Pearlstein doesn't think "forgot" is quite the right word. "Uninterested" is more like it.

I honestly don't know whether Goldman violated Section 10(b) of the Securities Exchange Act of 1934. What I do know is that the facts outlined in the government case are a powerful and convincing reminder of Wall Street's complete and utter amorality. There, concepts like truth, justice, fairness, trustworthiness, duty of care, right and wrong are now totally without meaning. There is only buy or sell, long or short, win or lose. ...

In a trading culture, because buyer and seller are both customers, the Wall Street firm owes its loyalty to neither. It's free to be loyal only to itself. And things get even more complex when firms like Goldman use their own capital to take positions without disclosing it to anyone.

The fundamental truth about Wall Street firms is that they succeed by having better information than most of their customers. They gain this edge by doing more trades, in a wider variety of markets, than most of the people they trade with. And they gain it by underwriting the securities and structuring the derivatives that are being bought and sold.

More than the skill of its traders or the brilliance of its executives, it is this information asymmetry that is the source of Wall Street's outsize profits. It is information asymmetry that allows Wall Street to preserve its oligopoly and keep upstart competitors from gaining a foothold in the market. And as the SEC has reminded us once again, it is this information asymmetry that offers opportunities to manipulate markets and pull the wool over the eyes of even sophisticated investors.

By Ezra Klein  |  April 23, 2010; 10:00 AM ET
 
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Comments

they're as forgetful about it (or as nonchalant as Steve says) as the government is about spending taxpayer money.

That's why we always need to remind both entities of it as often as possible.

And again neither group will care much.

Posted by: visionbrkr | April 23, 2010 10:21 AM | Report abuse

It should make all Americans of every political persuasion boiling mad the way the greed of these hedge fund guys nearly brought down our country and caused untold human suffering -- yet they get off scott free with the millions they made off the massive scam while leaving taxpayers to clean up their mess. Unbelievable.

http://www.propublica.org/feature/all-the-magnetar-trade-how-one-hedge-fund-helped-keep-the-housing-bubble

Posted by: hillgirl8024 | April 23, 2010 10:22 AM | Report abuse

http://www.usatoday.com/news/washington/2010-04-22-health-care-costs_N.htm?csp=24&RM_Exclude=Juno

Speaking of forgetting

Posted by: NoVAHockey | April 23, 2010 10:39 AM | Report abuse

I had a little difficulty accepting Pearlstein's column. The SEC Complaint contains allegations of fact, not facts: while some less than honorable behavior is reasonably clear, there is yet no fact. Concepts "like truth, justice, fairness" apply to everyone, Wall Street and WaPo included: as a counterexample, should we assume that every allegation presented in the PPACA litigation is fact?

The Feds aren't always as honest in allegations as one might hope, so I'm not yet willing to pre-judge the matter based on one-sided accusations. Sadly, I trust Wall Street investment bankers more than I trust the Administration attempting to vilify them.

Posted by: rmgregory | April 23, 2010 10:40 AM | Report abuse

NoVAHockey,


sssh. We're not talking healthcare anymore around here.

Now the bad guy is Wall Street. We also haven't heard word one about how several large insurers are allowing dependents to be covered up to 26 earlier than the requirements.

We haven't heard the end result of the CA Anthem increase that shoved HCR over the finish line.

Posted by: visionbrkr | April 23, 2010 11:02 AM | Report abuse

it is not forgetfulness, it is willfulness.

there is a very defining line between right action, and not right action. i believe that people know when they commit acts of selfishness and wrongdoing.
sometimes, people will say, "it is just another way of thinking. or they see the world differently."
but i dont agree.
when you hurt or harm a person, or group of people... or trick them....or watch them suffer because of your intentional actions that cause them pain, and can turn a blind eye, or be in denial of their suffering, and are either the cause of their suffering, or one who rationalizes, denies and makes excuses for this, you have transgressed.
when what you desire, brings disharmony and turmoil into the world of others, and you take away their dignity and wellbeing and safekeeping, you have crossed the line.
it is a great sadness, when the consequences of actions stop mattering to whole parts of a culture.
it is not forgetfulness. it is a choice, when the consequences that you cause, and the harm that befalls others, simply stops mattering, or making a difference.
during the presidential election, i wrote many times, that character and a sense of conscience was the most important thing in a candidate, or a public servant, or in a human being.
it is true.
there is right action and wrong action.
people know the difference in their hearts.

Posted by: jkaren | April 23, 2010 11:07 AM | Report abuse


But sadly when some regulators should have been, well, regulating. They were surfing for porn. Kind of sad, pathetic, scary all wrapped into one if you ask me.

http://www.cnn.com/2010/POLITICS/04/23/sec.porn/index.html?hpt=T2


Now this won't get play around here I suspect and i know that this doesn't apply to all as these were isolated incidents but how can this even be allowed? I'm no computer expert but can't government offices be set up so that you can't go on even questionable websites? Some of my clients don't even allow their employees internet access at work so they can't even be tempted to do this. I know that the SEC employees need to access the internet to function properly but they should have done something to stop this. I especially like the one where the employees' computer was so filled with it that he had to store it to CD's and DVD's that were accumulated in boxes in his office.

I'm thinking someone needs some serious therapy.

Posted by: visionbrkr | April 23, 2010 11:16 AM | Report abuse

"There, concepts like truth, justice, fairness, trustworthiness, duty of care, right and wrong are now totally without meaning."

For a minute I thought you had jumped subjects to the Democrats and the process used to produce the healthcare bill.

Posted by: WrongfulDeath | April 23, 2010 11:24 AM | Report abuse

This is analogous to arms dealers in World War I still selling armaments to both sides even after hostilities started in August of 1914. Vickers and Krupp really didn't care. Every one expected it to a short war, over by Christmas, and then back to business as usual.

Goldman Sachs and its brethren have shown the same lack of morals and integrity as war profiteers. It might help to start treating them as such.

Posted by: tomcammarata | April 23, 2010 4:21 PM | Report abuse

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