Understanding the Debacle
[By Staff Reporters]
Did you know that Michael Lewis and David Einhorn recently gave a nice review of the financial system catastrophe, and its devastating flaws, causes and effects, in the January 3rd 2009 New York Times?
Exposing the Flaws
In review of How to Repair a Broken Financial World, they said:
1. Wall Street CEOs won’t self-incriminate or blow the whistle on their own companies [Think: thin-blue line]. And, they receive bonuses and are on peer-compensation committees. Perhaps they might even be fired if they self-accuse of irresponsibility.
2. The credit-rating agencies, which are supposed to carefully measure the amount of risk that companies take, dropped the ball.
For example Fannie, Freddie, GE and AIG all had triple-A ratings; remember Enron? But, they disguised the risk, rather than expose it. Why? Because they would have to re-rate tens of thousands of credits tied to them, as well as increase their own cost-of-capital; integrity and reputations be damned! And, did the big financial firms contribute to those very same credit-rating agencies [pay-2-play]?
3. Was Chris Cox and the Securities and Exchange Commission [SEC] competent enough, or motivated enough, to do its job and investigate the Madoff scheme even after being warned about it?
Assessment
Can you cite some other, even more pernicious, flaws? For example; how did the mortgage industry’s engorgement of commission-driven sales, and the consumer sentiment to “own a home – at all costs” factor into the fault-line?
Link: http://www.nytimes.com/2009/01/04/opinion/04lewiseinhornb.html?_r=1
Conclusion
Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.
Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos
Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:
- DICTIONARIES: http://www.springerpub.com/Search/marcinko
- PHYSICIANS: www.MedicalBusinessAdvisors.com
- PRACTICES: www.BusinessofMedicalPractice.com
- HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
- CLINICS: http://www.crcpress.com/product/isbn/9781439879900
- ADVISORS: www.CertifiedMedicalPlanner.org
- BLOG: www.MedicalExecutivePost.com
- FINANCE:Financial Planning for Physicians and Advisors
- INSURANCE:Risk Management and Insurance Strategies for Physicians and Advisors
Filed under: Book Reviews, Ethics, Insurance Matters, Investing, Op-Editorials | Tagged: AIG, Chris Cox, David Einhorn, Freddie, GE, Mac Fannie Mae, Madoff, Michael Lewis, SEC | 7 Comments »