“A Game Without Rules Is A Game For Fools”
“A game without rules is a game for fools.”
The first time I heard this was on the beach at Surfside Texas at a major regatta. I believe it was Hobie Alter that said it in a discussion we were having about racing rules. I remember that statement almost every day when I read the news from the financial sector. There is no doubt that it has been a game for fools since the rules were weak and not enforced in a timely manner.
Major financial companies have been playing a fools game with suspect profits and huge bonuses paid on those phony profits. An example in the NY Times outlined the Merril Lynch debacle. In 2006 they handed out between 5 and 6 Billion dollars in bonuses on reported profits of 7.5 billion dollars which were actually a mirage.
The actual figures turned out to be losses of about 3 times the amount of the reported profit according to the Times article.
During the debate in the House of Representatives on the Auto bailout, Representative Donald Manzullo strongly questioned the Treasury officer in charge of the Bailout proposal concerning bonuses. Manzullo wanted to know if the Treasury thought that a $3,000,000 bonus given to an AIG officer was appropriate after they had received billions of taxpayer’s money as their bailout. He wanted to know why any officer of the company who participated in putting the company to the edge of bankruptcy should get any bonus, no less one for $3,000,000.
His hard pressed questioning could not sway the Treasury officer to consider that the $3,000.000 was inappropriate.
The players in this game have the appropriate qualifications for a game without rules
The Bernard Madoff story had me speechless (for a moment) when it’s dimension was reported. When collecting billions for investment purposes isn’t some SEC filing required? Of course there is! Just how could this be possible. Hasn’t the SEC a history major in it’s employ who remembered Ponzi. Not only does the Madoff case need investigation, the compliance rules and administration of the SEC needs serious independent investigation..
It’s time to review the rulebooks governing the investment community based in New York City. This needs to be done post haste. I am sure there are problems outside of NY but the problem seems to be largely originating on or near Wall Street.
The phony bonuses need to be recovered. The SEC needs to take action on what seems to be criminal activity in structuring many of these outrageous bonuses. Martha Stewart went to the slammer for a seemingly minor transgression concerning her own money. She was sent her away for not telling the truth about the transaction, to the FBI.. These greedy financial institution officers need the same type of vigorous prosecution that was used on Martha for her far less egregious action.
The return of their phony bonuses should be the first order of business and criminal prosecution seems absolutely needed where bogus profit reporting was used to produce bonuses.
I hope that the SEC does not plan to play the affected shareholders and the American public as the fools in this game. There are obviously immediate adjustments needed in the rules to protect the public and our national interest.
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We’re seeing the culmination a generation of anti-regulationism. Thank you, President Reagan.