Honesty is such a lonely word.
Everyone is so untrue.
Honesty is hardly ever heard.
And mostly what I need from you. – Billy Joel
Last week was ripe with scandal in both the banking industry and on Wall Street, first came the announcement that failed Washington Mutual (WAMU) seemingly perfected the art of Fraudulent Lending and close on its heels was the S.E.C. suing Goldman Sachs due to their Mortgage Backed Securities of Doom.
I believe that this is but the tip of the iceberg and that we will see many other firms joining WAMU and Goldman in this ongoing debacle.
Honesty, apparently, is obsolete in today’s world.
Tactics like cutting and pasting a borrowers name to a more attractive bank statement or steering a customer to a loan device that was not in their best interest were commonplace at WAMU. Loan Officers directing borrowers towards products that benefited their own self-interests (like nice big fat bonuses) rather than ones that were in the best interest of said borrower seems blatantly wrong. However, WAMU and its employees were somehow decidedly lacking a moral compass because they did those things and more.
Enter in the Unwitting Taxpayer, riding the Great White Steed of the Banking Bailout! WAMU (now owned by Chase), Goldman Sachs, and hundreds of others just like them all got in the hand out line, palms out stretched for the money necessary to prop up their institutions.
Why even the Regulators are no match for these scoundrels because apparently, banks are moving bad assets off their balance sheets on “Reporting Day” and sliding them right back on the day after, thereby looking better financially than they really are.
The question becomes, where will this all end?
These same banks and investment firms are paying premium compensation to their employees under the guise that “they need to pay good salaries and bonuses to keep good employees,” yet another Great Deception being sold to the taxpayer. They have perfected the tale of Robin Hood; however, they are robbing the poor to make themselves richer!
Untangling this mess will not be an easy process, to be sure, however if we don’t try it will just keep getting worse and the taxpayer will once again have to ride in to the rescue. There needs to be stricter rules governing lenders and investment firms that have consequences that will deter this kind of behavior.