Front page headline of today's Wall Street Journal, "Geithner Banks on Private Cash."
When I first read that, I saw the word "banks" as a noun, and Geithner as an adjective. I tried to makle sense out of that: what kind of bank is a Geithner bank, anyway?
It took me a few seconds to mentally transform "banks" into a verb and read the headline as a sentence in which the Treasury Secretary's name is the subject.
Brad DeLong explains in Seeking Alpha that the gist of the plan is to make the US Treasury the world's biggest hedge fund investor.
As the plan unfolds we might have plenty of opportunity to discover what kind of institution might deserve the name "a Geithner Bank"!
Showing posts with label Wall Street. Show all posts
Showing posts with label Wall Street. Show all posts
Monday, March 23, 2009
Wednesday, February 4, 2009
Bless the Cassandras
Much that has happened in recent days has persuaded me to speak today to the conflict between stock market optimists and pessimists, pollyannas and cassandras, bulls and bears, in the broadest of terms. There is a general thesis to be uncovered here, one that has its basis deep in human psychology and has a rather intense manifestation just now in pop culture, and what passes for economic discussion, in the US. The thesis is: we need more cassandras, not fewer: correspondingly, we need to encourage those we have, not chase them about with sticks.
Ideally, I suppose, pessimists and optimists could be partners, taking on the common search for truth about the economy, about particular companies, about stock prices, etc., from distinct but complementary perspectives. Every glass that is half empty is also half full. For that matter, every glass that is three-quarters empty is one-quarter full. No glass is entirely full, no benefits in this world come without costs. So why need bull and bear compete when it is so much more important and interesting to inquire?
But we as human beings want to be optimists. Sociobiologists could trace it to the survival instincts on the Serengeti -- the pessimist who saw every source of water as contaminated and dangerous would die of thirst and pass along no genes. At least the optimists would drink -- they wouldn't die of thirst -- and although some of them would die of the contaminants others would live and pass along those optimist's selfish genes. If you accept such reasoning then, you'll suspect that optimism is by now the greater danger, and the pessimism discouraged by genes needs to be encouraged by memes.
Even if you don't accept such reasoning, you can and should look about you at American pop culture and see where the danger comes. Every incarnation of "Miracle on 34th Street" teaches that belief, even gullibility, is good and skepticism is a condition that requires magical cure. More contemporary movies, like Jim Carrey's "Yes Man" convey the same message. Saying "no" is bad. Sum up such influences, and then let your inner contrarian take over. When everyone is telling you how wonderful it is to be a bull, then perhaps the perspective of the bear is the one that needs reinforcement.
Yet again: look at the recent history of the stock analysts' vocation. When someone predicts a stock will rise, and it rises, is he roundly condemned as a huckster and hype artist? No ... he is praised for getting the call right of course. On the other hand, when someone predicts a stock will fall, and it falls, is he generally praised for getting the call right? No ... he is accused of "talking it down," defrauding those who bet the other way ... he is sued. This is not a theoretical concern. People who expressed reasonable (and as it turned out, accurate) concerns about Novastar Financial Inc., for example, were ridiculed and reviled, their points routinely dismissed. When Novastar tanked, did the dispensers of that ridicule feel, well ... ridiculous? of course not. The bias toward hype and the prejudice against skepticism is so widely shared it can survive any number of such disconfirmations.
All of this is only to say that we tend to blow ourselves bubbles, and then when the bubbles burst as they must we respond by blaming those who had warned us of the fragility of the bubble at the moment of its prime. This blame is irrational, and since what we need most from an economy is an evenness of rotation, an end to the boom-bust nonsense, we must resist our impulses. We need to celebrate the bears.
Ideally, I suppose, pessimists and optimists could be partners, taking on the common search for truth about the economy, about particular companies, about stock prices, etc., from distinct but complementary perspectives. Every glass that is half empty is also half full. For that matter, every glass that is three-quarters empty is one-quarter full. No glass is entirely full, no benefits in this world come without costs. So why need bull and bear compete when it is so much more important and interesting to inquire?
But we as human beings want to be optimists. Sociobiologists could trace it to the survival instincts on the Serengeti -- the pessimist who saw every source of water as contaminated and dangerous would die of thirst and pass along no genes. At least the optimists would drink -- they wouldn't die of thirst -- and although some of them would die of the contaminants others would live and pass along those optimist's selfish genes. If you accept such reasoning then, you'll suspect that optimism is by now the greater danger, and the pessimism discouraged by genes needs to be encouraged by memes.
Even if you don't accept such reasoning, you can and should look about you at American pop culture and see where the danger comes. Every incarnation of "Miracle on 34th Street" teaches that belief, even gullibility, is good and skepticism is a condition that requires magical cure. More contemporary movies, like Jim Carrey's "Yes Man" convey the same message. Saying "no" is bad. Sum up such influences, and then let your inner contrarian take over. When everyone is telling you how wonderful it is to be a bull, then perhaps the perspective of the bear is the one that needs reinforcement.
Yet again: look at the recent history of the stock analysts' vocation. When someone predicts a stock will rise, and it rises, is he roundly condemned as a huckster and hype artist? No ... he is praised for getting the call right of course. On the other hand, when someone predicts a stock will fall, and it falls, is he generally praised for getting the call right? No ... he is accused of "talking it down," defrauding those who bet the other way ... he is sued. This is not a theoretical concern. People who expressed reasonable (and as it turned out, accurate) concerns about Novastar Financial Inc., for example, were ridiculed and reviled, their points routinely dismissed. When Novastar tanked, did the dispensers of that ridicule feel, well ... ridiculous? of course not. The bias toward hype and the prejudice against skepticism is so widely shared it can survive any number of such disconfirmations.
All of this is only to say that we tend to blow ourselves bubbles, and then when the bubbles burst as they must we respond by blaming those who had warned us of the fragility of the bubble at the moment of its prime. This blame is irrational, and since what we need most from an economy is an evenness of rotation, an end to the boom-bust nonsense, we must resist our impulses. We need to celebrate the bears.
Sunday, October 5, 2008
Shorting Financial Stocks: Back in Town
In the middle of September, the SEC issued an emergency order, originally designed only to last two weeks, that banned all short-selling in the stock of financial services companies.
All short selling. This wasn't an order aimed at the "abuse" of short selling in one way or another. It prohibited the practice as a whole.
Two weeks later, the SEC extended that order until October 17 -- the end of the full 30 day period allowed for its "emergency" decrees under statute.
Fortunately (for those of us who think the ban was a stupid idea in the first place) the extension contained something of a loophole. The ban was re-jiggered to end at the earlier of two events: the expiration of the 30 days, or the passage of three business days from enactment of the Wall Street bail-out bill.
That bill -- another really stupid idea, but let that pass for now -- became law with the President's signature on Friday. Thus, the brief backbencher's revolt that had broken out Monday proved a cheering but brief incident.
Anyway, with the bail-out bill signed, the emergency order will expire Wednesday. Authentic price discovery is back. A small silver lining to the cloud of dumb political and bad financial news in recent days and weeks.
All short selling. This wasn't an order aimed at the "abuse" of short selling in one way or another. It prohibited the practice as a whole.
Two weeks later, the SEC extended that order until October 17 -- the end of the full 30 day period allowed for its "emergency" decrees under statute.
Fortunately (for those of us who think the ban was a stupid idea in the first place) the extension contained something of a loophole. The ban was re-jiggered to end at the earlier of two events: the expiration of the 30 days, or the passage of three business days from enactment of the Wall Street bail-out bill.
That bill -- another really stupid idea, but let that pass for now -- became law with the President's signature on Friday. Thus, the brief backbencher's revolt that had broken out Monday proved a cheering but brief incident.
Anyway, with the bail-out bill signed, the emergency order will expire Wednesday. Authentic price discovery is back. A small silver lining to the cloud of dumb political and bad financial news in recent days and weeks.
Wednesday, September 17, 2008
The Last Tycoons (2007)
Consider this just a book notice, not a proper review.
The Last Tycoons is an unauthorized history of Lazard Freres & Co., the international banking consultancy that lasted as a privately-held concern for more than 150 years, until finally it was taken public in 2005, transforming itself into Lazard LLC.
The passing of the old ways represented by the public offering inspired this book, by William D. Cohan.
Lazard Freres dates to the 1840s, when brothers (unsurprisingly) named Lazard opened a dry goods store together in New Orleans. Soon thereafter, the discovery of gold in Califdornia lured the brothers out west, and they became engaged in the export of the bullion. From there the gradual move into banking services was natural.
Lazard was involved in many of the highest-profile deals, and public controversies, of the second half of the 20th century. The purchase of The Hartford insurance company by ITT in the early 1970s falls under both of those headings.
Cohan's interest is the period of 35 years roughly beginning with the whole ITT/Dita-Beard controversy, and extending until the IPO of 2005.
I learned a good deal from Cohan about Wall Street during that period, and was struck by new perspectives even on matters I had known.
Perhaps I'll have something more to say about the materials here, and its relevance to the headlines of recent days, when we meet again this coming Sunday.
The Last Tycoons is an unauthorized history of Lazard Freres & Co., the international banking consultancy that lasted as a privately-held concern for more than 150 years, until finally it was taken public in 2005, transforming itself into Lazard LLC.
The passing of the old ways represented by the public offering inspired this book, by William D. Cohan.
Lazard Freres dates to the 1840s, when brothers (unsurprisingly) named Lazard opened a dry goods store together in New Orleans. Soon thereafter, the discovery of gold in Califdornia lured the brothers out west, and they became engaged in the export of the bullion. From there the gradual move into banking services was natural.
Lazard was involved in many of the highest-profile deals, and public controversies, of the second half of the 20th century. The purchase of The Hartford insurance company by ITT in the early 1970s falls under both of those headings.
Cohan's interest is the period of 35 years roughly beginning with the whole ITT/Dita-Beard controversy, and extending until the IPO of 2005.
I learned a good deal from Cohan about Wall Street during that period, and was struck by new perspectives even on matters I had known.
Perhaps I'll have something more to say about the materials here, and its relevance to the headlines of recent days, when we meet again this coming Sunday.
Monday, August 18, 2008
Another Soros Buy
I'll follow up a bit on the subject of yesterday's entry ... what is George Soros investing in these days?
Soros Fund Management has of late increased the size of its position in the investment bank Lehman Brothers. At the end of the first quarter of the year, SFM owned only 10,000 shares of Lehman. But by the end of the second quarter, June 30, it owned 9.47 million.
He is fishing in troubled waters. Lehman's shares have fallen by 75% so far this year as the credit crunch has played itself out. When Bear Stearns tanked in March and had to sell itself for the proverbial song, rumor had it that Lehman was 'next.'
Indeed, the SEC has reportedly investigated those rumors, on the theory that they may have been spread by stock munipulators.
Soros' confidence may itself prove an important shot in the arm for Lehman.
Meanwhile, today's Wall Street Journal, specifically the "Deals & Deal Makers" column, paints a doom-and-gloom portrait of Lehman's present situation, saying that it is likely the bank will report third quarter losses, "instead of the modest profit they previously expected."
The 3d quarter isn't over yet. I suspect Lehman itself is encouraging such reports, in order to lower the bar so that if it DOES have to report 3d quarter losses when the time comes, the street will regard the report as "old news."
Have I mentioned lately that nothing I say in this blog should be regarded by any rational person as investment counsel? If not: consider it mentioned!
Soros Fund Management has of late increased the size of its position in the investment bank Lehman Brothers. At the end of the first quarter of the year, SFM owned only 10,000 shares of Lehman. But by the end of the second quarter, June 30, it owned 9.47 million.
He is fishing in troubled waters. Lehman's shares have fallen by 75% so far this year as the credit crunch has played itself out. When Bear Stearns tanked in March and had to sell itself for the proverbial song, rumor had it that Lehman was 'next.'
Indeed, the SEC has reportedly investigated those rumors, on the theory that they may have been spread by stock munipulators.
Soros' confidence may itself prove an important shot in the arm for Lehman.
Meanwhile, today's Wall Street Journal, specifically the "Deals & Deal Makers" column, paints a doom-and-gloom portrait of Lehman's present situation, saying that it is likely the bank will report third quarter losses, "instead of the modest profit they previously expected."
The 3d quarter isn't over yet. I suspect Lehman itself is encouraging such reports, in order to lower the bar so that if it DOES have to report 3d quarter losses when the time comes, the street will regard the report as "old news."
Have I mentioned lately that nothing I say in this blog should be regarded by any rational person as investment counsel? If not: consider it mentioned!
Monday, March 17, 2008
Bear Stearns
Will the shareholders go along?
Bear Stearns, JPMorgan, and various central banking and Treasury Dept. greybeards seem to have had a busy weekend, arranging the deal whereby JPM will buy Bear.
So desperate to sell itself was BS, in fact, that JPM got a fire sale price. That raises a question in my mind: will the deal hold?
In many respects, this is analogous to the deal in November 2001 whereby Dynegy agreed to buy what was left of rapidly-imploding Enron Corp. But there was a lot of room for slippage between contract and closing. And this one never came off.
And Enron had to enter bankruptcy, resulting in eventual liquidation, anyway.
In the case of Bear Stearns, the unravelling if it comes would take a somewhat different form than it took than. It may take the form of shareholder rebellion.
"Even the headquarters building and the land on which it stands would seem to be worth more than JPM is offering for the whole company." Expect to hear some form of THAT sentence more and more often in the days to come, until you'll think Wall Street has been taken over by Henry George's disciples.
Bear Stearns, JPMorgan, and various central banking and Treasury Dept. greybeards seem to have had a busy weekend, arranging the deal whereby JPM will buy Bear.
So desperate to sell itself was BS, in fact, that JPM got a fire sale price. That raises a question in my mind: will the deal hold?
In many respects, this is analogous to the deal in November 2001 whereby Dynegy agreed to buy what was left of rapidly-imploding Enron Corp. But there was a lot of room for slippage between contract and closing. And this one never came off.
And Enron had to enter bankruptcy, resulting in eventual liquidation, anyway.
In the case of Bear Stearns, the unravelling if it comes would take a somewhat different form than it took than. It may take the form of shareholder rebellion.
"Even the headquarters building and the land on which it stands would seem to be worth more than JPM is offering for the whole company." Expect to hear some form of THAT sentence more and more often in the days to come, until you'll think Wall Street has been taken over by Henry George's disciples.
Sunday, January 27, 2008
"I Know That Sounds Irresponsible"
I think of James Cramer just as "the scary guy," because when I see him on television I'm always afraid a chair is going to come crashing at me through the screen.
Fortunately, there's a YouTube Cramer-clips collage available now that gives you the gist of Cramer's performance in the last year or so without the fear factor.
The highlight is a clip from October 2007, in which Cramer notes that stock market prices were then at record levels, that prices were way above the valuation of the underlying assets, but that the bull market would continue anyway.
It seems that somebody named Don Harrold put this together, but I saw it on Seeking Alpha, and I'll link you there.
Click Here.
The clip begins with a challenge to Jim from Rick Santelli. Jim responds by saying that he's been correctly "bearish" all along, and that Rick clearly hasn't been watching his show. But the clips proving otherwise, interspliced with Maria Bartiromo's lovely laugh, follow immediately.
The "I know that sounds irresponsible" comment comes less than two minutes in.
Fortunately, there's a YouTube Cramer-clips collage available now that gives you the gist of Cramer's performance in the last year or so without the fear factor.
The highlight is a clip from October 2007, in which Cramer notes that stock market prices were then at record levels, that prices were way above the valuation of the underlying assets, but that the bull market would continue anyway.
It seems that somebody named Don Harrold put this together, but I saw it on Seeking Alpha, and I'll link you there.
Click Here.
The clip begins with a challenge to Jim from Rick Santelli. Jim responds by saying that he's been correctly "bearish" all along, and that Rick clearly hasn't been watching his show. But the clips proving otherwise, interspliced with Maria Bartiromo's lovely laugh, follow immediately.
The "I know that sounds irresponsible" comment comes less than two minutes in.
Tuesday, January 8, 2008
Lubys: The Other Foot
The story so far: The Pappas family runs Lubys,with the brothers occuping the CEO and COO posts. The incumbent board is happy with this, although some investors, notably Ramius Capital, object that given the other interests of the Pappas' this is a situation rife with conflict.
Yesterday, we spoke about how the incumbent board responds to the conflicts charge while playing defense. We saved for today the fact that their chief response has been to take the offensive. The conflict shoe, they say, is on the other foot.
As CEO Chris Pappas said in a letter to the Houston Chronicle, which it printed this Sunday: "Ramius ... doesn't care about Luby's history or our future. Ramius doesn't bring relevant restaurant experience, only a risky notion to strip Luby's of its real estate assets, the sort of short-term financial scheme typical of Wall Street thinking."
The general charge here is a common one, that there is an inherent opposition between Wall Street and Main Street, and that it the opposition between the New Yorkers who care only about the next quarter's bottom line -- or who aren't even thinking that far ahead, because they're hoping the get a quick churn-around on the stock maybe this afternoon or tomorrow -- and those decent heartland-dwelling folk who stick around to build a business over years or decades.
Personally, I think that opposition is nonsensical. If the accounting is done honestly, next quarter's bottom line will be what it is because of long-term considerations, the two are only in opposition if the corporate management is allowing or encouraging its accountants to let them be in opposition. And the big problem in such a case is in the heartland, not on Wall Street.
As to real estate ... this is a more specific example of the broader nonsense of the above quoted rhetoric. Yes, Ramius has said that if its nominees get on the board they'll study the possibility of real estate sales. And why should they not? Is it essential to the success of a restaurant that it own the land its sitting on? Surely not. Indeed, maybe Lubys are sitting on leased land as it is (anbd sometimes the leasor is another Pappas family interest), so the question of whether some land ought to be sold is a question of moving along a continuum, not a matter of yes-or-no.
In general, I think Luby incumbents have presented a plausible defense to the charges of conflict, but their offense Sticks. Maybe neither side has any conflicts of a sort about which non-aligned shareholders ought to worry. In that case, the shareholders may have to study the respective track records of the two sides to make up their minds.
They'll have to do so without any further assistance from me, though, because this blog must move onward, ever onward. Tomorrow, I plan to discuss JANA and CNET.
Yesterday, we spoke about how the incumbent board responds to the conflicts charge while playing defense. We saved for today the fact that their chief response has been to take the offensive. The conflict shoe, they say, is on the other foot.
As CEO Chris Pappas said in a letter to the Houston Chronicle, which it printed this Sunday: "Ramius ... doesn't care about Luby's history or our future. Ramius doesn't bring relevant restaurant experience, only a risky notion to strip Luby's of its real estate assets, the sort of short-term financial scheme typical of Wall Street thinking."
The general charge here is a common one, that there is an inherent opposition between Wall Street and Main Street, and that it the opposition between the New Yorkers who care only about the next quarter's bottom line -- or who aren't even thinking that far ahead, because they're hoping the get a quick churn-around on the stock maybe this afternoon or tomorrow -- and those decent heartland-dwelling folk who stick around to build a business over years or decades.
Personally, I think that opposition is nonsensical. If the accounting is done honestly, next quarter's bottom line will be what it is because of long-term considerations, the two are only in opposition if the corporate management is allowing or encouraging its accountants to let them be in opposition. And the big problem in such a case is in the heartland, not on Wall Street.
As to real estate ... this is a more specific example of the broader nonsense of the above quoted rhetoric. Yes, Ramius has said that if its nominees get on the board they'll study the possibility of real estate sales. And why should they not? Is it essential to the success of a restaurant that it own the land its sitting on? Surely not. Indeed, maybe Lubys are sitting on leased land as it is (anbd sometimes the leasor is another Pappas family interest), so the question of whether some land ought to be sold is a question of moving along a continuum, not a matter of yes-or-no.
In general, I think Luby incumbents have presented a plausible defense to the charges of conflict, but their offense Sticks. Maybe neither side has any conflicts of a sort about which non-aligned shareholders ought to worry. In that case, the shareholders may have to study the respective track records of the two sides to make up their minds.
They'll have to do so without any further assistance from me, though, because this blog must move onward, ever onward. Tomorrow, I plan to discuss JANA and CNET.
Tuesday, January 1, 2008
Eliot Spitzer and mutual funds
Spitzer, before his present term as Governor of New York began, was the state's Attorney General. This is an elective post in NY. He first won it in 1998, and won re-election easily in 2002.
He reconceived the role of that office, making himself the "sheriff of Wall Street." Probably two investigations stand out in that regard: one into market-time and late trading within mutual funds; one into the influence of investment banks upon market research.
As to mutual funds, it came to Spitzer's attention beginning in 2003 that certain managers of publicly traded mutual funds were allowing favored clients to engage in two practices that seemed to guarantee them (the favored) easy profits.
One of these practices was "late trading," i.e. the favored ones would file trades at the previous day's price after the market close. The other was "market timing," i.e. the purchase or sale of shares in the funds more frequently than allowed under the funds publicly published rules.
The cool thing about bringing actions against white-collar defendants (as another aspiring prosecutor/poltician, Rudy Giuliani, had discovered before Spitzer) is that there is no equivalent of the code of silence that often obtains among more hardened criminals. The public accusation, and the "perp walk" if matters go that far, is itself a devastating blow to most of Wall Street's denizens, and they'll often tell the enforcement authorities what they want to hear, or sign a consent decree, much more readily than their counter-parts.
The suspicion has gathered itself around both Spitzer's and Giuliani's handiwork, then, that they were picking off low-hanging fruit.
Nearly all of the mutual fund managements whom Spitzer charged with allowing market timing or late trading settled, so he didn't have to prove wrong-doing in court. He got his consent decrees, got fines, re-organized the industry under threat of continued vigilance, and took his bows.
The one instance in which someone did fight, interestingly, didn't go well for his office. in August of 2005 Spitzer the only trial arising from these investigations ended indecisively. A jury could not reach a verdict on all counts in a case brought against Theodore Sihpol, III, a broker with Bank of America who introduced the hedge fund Canary Capital to that bank.
Canary was the supposedly favored trader, indeed the first one targeted by Spitzer's investigations into this practice -- Sihpol its supposed puppet allowing the shenanigans.
After a hung jury, the state could of course have pressed for another trial. But both parties had had enough,so that in October 2005, the Mr. Sohpol settled a follow-up case that the SEC had brought in the wake of Spitzer's charges (agreeing to pay a $200,000 fine and accepting a five-year ban from the securities industry) and the state of New York withdrew all remaining charges against Mr. Sihpol.
The Washington Post, in reporting on the October resolution, quoted a former federal prosecutor, Evan T. Barr, who spoke for many when he said: "The resolution of the case on such favorable terms for the defense certainly calls into question whether Sihpol should have been indicted in the first place."
But Spitzer had had two years of favorable publicity by then and was well on his way to the Governor's office.
I think Mr. Sihpol has an almost heroic stature under the circumstances, and I look forward to his return to the fray in 2010.
He reconceived the role of that office, making himself the "sheriff of Wall Street." Probably two investigations stand out in that regard: one into market-time and late trading within mutual funds; one into the influence of investment banks upon market research.
As to mutual funds, it came to Spitzer's attention beginning in 2003 that certain managers of publicly traded mutual funds were allowing favored clients to engage in two practices that seemed to guarantee them (the favored) easy profits.
One of these practices was "late trading," i.e. the favored ones would file trades at the previous day's price after the market close. The other was "market timing," i.e. the purchase or sale of shares in the funds more frequently than allowed under the funds publicly published rules.
The cool thing about bringing actions against white-collar defendants (as another aspiring prosecutor/poltician, Rudy Giuliani, had discovered before Spitzer) is that there is no equivalent of the code of silence that often obtains among more hardened criminals. The public accusation, and the "perp walk" if matters go that far, is itself a devastating blow to most of Wall Street's denizens, and they'll often tell the enforcement authorities what they want to hear, or sign a consent decree, much more readily than their counter-parts.
The suspicion has gathered itself around both Spitzer's and Giuliani's handiwork, then, that they were picking off low-hanging fruit.
Nearly all of the mutual fund managements whom Spitzer charged with allowing market timing or late trading settled, so he didn't have to prove wrong-doing in court. He got his consent decrees, got fines, re-organized the industry under threat of continued vigilance, and took his bows.
The one instance in which someone did fight, interestingly, didn't go well for his office. in August of 2005 Spitzer the only trial arising from these investigations ended indecisively. A jury could not reach a verdict on all counts in a case brought against Theodore Sihpol, III, a broker with Bank of America who introduced the hedge fund Canary Capital to that bank.
Canary was the supposedly favored trader, indeed the first one targeted by Spitzer's investigations into this practice -- Sihpol its supposed puppet allowing the shenanigans.
After a hung jury, the state could of course have pressed for another trial. But both parties had had enough,so that in October 2005, the Mr. Sohpol settled a follow-up case that the SEC had brought in the wake of Spitzer's charges (agreeing to pay a $200,000 fine and accepting a five-year ban from the securities industry) and the state of New York withdrew all remaining charges against Mr. Sihpol.
The Washington Post, in reporting on the October resolution, quoted a former federal prosecutor, Evan T. Barr, who spoke for many when he said: "The resolution of the case on such favorable terms for the defense certainly calls into question whether Sihpol should have been indicted in the first place."
But Spitzer had had two years of favorable publicity by then and was well on his way to the Governor's office.
I think Mr. Sihpol has an almost heroic stature under the circumstances, and I look forward to his return to the fray in 2010.
Monday, December 31, 2007
Happy New Year, everyone
In yesterday's entry, I wrote about a story in this month's issue of Vanity Fair, one that concerned Mayor Giuliani's campaign for president and, in consequence, the law firm in which he is a name partner, Bracewell & Giuliani.
Today I'd like to stay within the four corners of VF. For it has another story with at least a tangential relationship to the themes of this blog: David Margolick's article on Governor Elior Spitzer of New York, and the tough year he has had in Albany.
The reason that's of interest to Proxy Partisans, of course, is that in his last job, as state attorney general, Spitzer put himself front-and-center as the "sheriff of Wall Street." In his view, the SEC wasn't doing its job, so he would.
Margolick contends that Spitzer developed a model of "strategic craziness" -- planned tantrums, really -- for getting what he wanted in terms of changes in the way business is done on Wall Street, but that this model, become a habit, has backfired on him.
He quotes an unnamed source explaining the difference between being a prosecutor and being a governor -- a difference that (this is the gist of the piece) -- Spitzer has yet to grasp: "If you're a C.E.O. at a company and I call and I say, 'I'm going to fuck you, I'm going to destroy you, I'm going to indict your company,' and I sound totally crazy, you hang up on the phone, and you go see your chairman of the board, and you say, 'This guy is crazy, we need to settle,' because you're given no option. If you're a state legislator and you get the same thing, you hand up the phone, you call the Albany Times Union, and you say 'This guy is crazy,' because you don't give a shit."
Perhaps tomorrow I'll look back upon Spitzer's days as New York A-G, especially in connection with two high-profile scandals (a) "market timing" in regard to mutual fund shares, and (b) the relationship between research and underwriting.
Today I'd like to stay within the four corners of VF. For it has another story with at least a tangential relationship to the themes of this blog: David Margolick's article on Governor Elior Spitzer of New York, and the tough year he has had in Albany.
The reason that's of interest to Proxy Partisans, of course, is that in his last job, as state attorney general, Spitzer put himself front-and-center as the "sheriff of Wall Street." In his view, the SEC wasn't doing its job, so he would.
Margolick contends that Spitzer developed a model of "strategic craziness" -- planned tantrums, really -- for getting what he wanted in terms of changes in the way business is done on Wall Street, but that this model, become a habit, has backfired on him.
He quotes an unnamed source explaining the difference between being a prosecutor and being a governor -- a difference that (this is the gist of the piece) -- Spitzer has yet to grasp: "If you're a C.E.O. at a company and I call and I say, 'I'm going to fuck you, I'm going to destroy you, I'm going to indict your company,' and I sound totally crazy, you hang up on the phone, and you go see your chairman of the board, and you say, 'This guy is crazy, we need to settle,' because you're given no option. If you're a state legislator and you get the same thing, you hand up the phone, you call the Albany Times Union, and you say 'This guy is crazy,' because you don't give a shit."
Perhaps tomorrow I'll look back upon Spitzer's days as New York A-G, especially in connection with two high-profile scandals (a) "market timing" in regard to mutual fund shares, and (b) the relationship between research and underwriting.
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