You and Us. UBS and The Cops

“Keeping Our Word,” “Trustworthiness,” and Other Corporate Myths

I guess I’m grumpy most about hypocrisy.

While the Right spins “values” into political gold, appealing to the righteousness gene in Americans, they spin a parallel theology, the holiness of “the market.” So it’s time (again and again) to look at actions, not words. Is the market actually self-correcting? Do market excesses and dishonesties actually fix themselves when the cop isn’t on the beat?

Apparently not. In the Weekend Edition of The Wall Street Journal, two stories leap off the pages and slam into my hypocrisy button.

1. Corporations have been trying to save money by screwing their older employees by “freezing” their pension plans. Congress (a reluctant cop) tried to stop the vicious practice, but they did an inadequate job. Plus the offended corporations did what they do best, bribed the cops. According to the WSJ article, “Employers responded with a volley of lobbying, enlisting more than two-dozen lawmakers…” putting pressure on the Treasury Department to back off enforcement. The “market” at work!

2. Gee, there also seems to have been some big time dishonesty behind much of the sub-prime mortgage mess. Never mind the hard-sell mortgage brokers enticing naïve consumers into buying houses they couldn’t afford. Think bigger. Think gigantic. The giant banks were flipping the “financial instruments” made of the weak mortgages at completely dishonest valuations, fully knowing what they were doing.

This time, the cops are taking notice. The WSJ has an update on the CSI-Wall Street action. “Federal criminal prosecutors in New York are investigating whether UBS AG misled investors by booking inflated prices of mortgage bonds it held despite knowledge that the valuations had dropped…” And, “The SEC, deepening its own set of investigations into whether Wall Street firms improperly mispriced mortgage securities, recently upgraded probes of UBS and Merrill Lynch & Co. into formal investigations…” And, “The Federal Bureau of Investigation has said it has opened criminal inquires into 14 companies as part of an investigation of the subprime-mortgage crisis.”

The difference in how active the “cops” get might be related to whether it is investors or employees gettin’ the screwin’… But that might just be my silly suspicion talking. I’m glad to see regulators doing some regulating in any event. Now if Congress would just kick out the lobbyists…

P.S. Times are tough, unless you are Exxon Mobile.

Bobby Cartoon credit