Finance Matters

Archive for March 16th, 2010

This weekend we noted how left-wing hero Dennis Kucinich could prove to be the deciding Congressman against healthcare. Because Obamacare doesn’t go far enough — he wants a full-on nationalized system — he’s announced his opposition to it.

But there’s been a lingering suspicion that the the former boy mayor of Cleveland could come around.

Well, we’ll find out tomorrow. He’s scheduled a 10:00 AM announcement, and all eyes will be watching. If he says he’s a “yes” thatn that will be a major boost for Obama. But if he stands on his beliefs and kills the damn thing, then he’ll have officially Naderized himself with the left. Stay tuned!

And don’t miss our 60-second guide to the legislation >

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See Also:

• 10 Things You Must Know About The Healthcare Bill That’s Just Days Away From Being Voted On
• Finally! Sarah Palin Takes A Break From Healthcare To Rip Obama Over The Middle East
• Will Liberal Hero Dennis Kucinich Ultimately Be The Killer Of Healthcare Reform?

Still confused about what all the ruckus is about in Washington?

Don’t be.

Though the actual healthcare bill is nearly 2000 pages long, and filled with all kinds of legalese and goodies and gifts to politicians, it can be broken down into a few basic elemants.

10 things to know about the healthcare bill >

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See Also:

• Obama Switches To Healthcare Reform Plan B: Price Controls
• If Health Care Reform Dies, Blame The Democrats
• How Does Reconciliation Work In Congress?

Famed venture capitalist John Doerr of Kleiner Perkins is stepping down from Amazon’s board of directors, according to an SEC filing. 

Doerr has served as a director since 1996. There’s no explanation in the filing or elsewhere for why he decided to step down.

Via Rafat Ali

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See Also:

• John Doerr: We Will Save Economy By Building Roads, Factories, And Solar Panels
• SEC STALKER: John Doerr Dumps $30 Million Of Google Stock
• John Doerr, Kleiner Perkins Say Algae Won’t Save World

Ryan Chittum is so outraged at my argument that we should not criminally prosecute Lehman Brothers executives for the Repo 105 transactions that his head is exploding.

 

In my post yesterday I pointed out that the Repo 105 deals did not bring Lehman down. In fact, we have no evidence that criminality was involved in the collapse of Lehman at all. Instead, it seems that a series of tremendous failures of business judgment brought down Lehman.

 

Chittum seems confused about why I made this point. I was not saying that deceiving the market by using the Rep 105s to conceal the true state of Lehman’s financial condition did not harm anyone. It almost certainly did harm investors, creditors, and clients of Lehman, some of whom were persuaded to stick with the company much longer than they might have if they had known the truth. 

 

The question is whether or not this harm should be punished criminally. In my earlier post, I gave some practical reasons not to bring this into the criminal justice system. I could also add concerns about abusive prosecutorial tactics, judges biased against the wealthy, and the inability of juries to grasp complex accounting cases.

 

Following each big crisis in financial markets, regulators and prosecutors target high profile Wall Streeters in an attempt to restore investor confidence. This isn’t justice so much as politics.

 

But the core of the matter is a deeper question: are the alleged misdeeds by Lehman Brother executive to manipulate the company’s balance sheets best addressed through the criminal process?

 

My argument is that they are not. The Lehman executives who were authorizing these transactions were not engaged in anything that resembles traditionally criminal actions. Specifically, the evidence indicates that they were not hiding the Repo 105 deals from government inspectors. They were not undertaking the deals in order to embezzle shareholder funds.  They lacked an evil motive or any awareness that they were doing something wrong.

 

It seems clear to me that Lehman’s executives believed they were taking a rationale approach to dealing with a market that they were convinced was irrational. They were trying to save the company from what they viewed as a temporary financial panic.  And they apparently believed that in order to get that accomplished, they needed to deceive the outsiders they thought had become irrational.

 

Now—to be perfectly clear—I think the Lehman executives were terribly wrong at every stage of this process. The market was not irrational in 2008. It was actually reacting rationally to the reality of the housing downturn, which was itself a rational reckoning of home values with the preferences and wealth of the American people.  Lehman’s executives should not have decided that investors were too dumb to know the truth. In fact, this hubris—this unwillingness to admit that outsiders might have things right—is part of what doomed Lehman. 

 

The SEC probably should bring a civil action against the executives for Repo 105. The accountants and lawyers who enabled the transactions should be investigated. Without a doubt, huge class action suits will be filed on the part of deceived investors.

 

But, as far as I can tell, Lehman’s executives did not do anything that rises to the level of criminality. So far no one—even Ryan Chittum—has offered a satifactory explanation about why the Repo 105 transaction should be considered criminal. Which leaves me to suspect that much of the desire to see the likes of Dick Fuld go to jail is rooted in a desire to punish him for the failure of Lehman.

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See Also:

• Here Are The People Who Are Going To Get Nailed In The Lehman Examiner Fallout
• Here’s Why We Should Not Criminally Prosecute Lehman Executives
• The Enronization Of Lehman Brothers

From 9 to 5 Mac:

Sillicon Valley-based Crowd Science released results from its survey of 1,140 respondents today revealing some interesting findings.  Almost 40% of Blackberry users surveyed said they would “prefer Apple’s iPhone for their next smartphone purchase,” aka when their contract is up, they are mos…

Continue reading at 9 to 5 Mac »

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