THIS FROM THE GUARDIAN:
IS HE FABULOUS OR A FRAUD? Or, indeed, both? The London-based Goldman Sachs banker Fabrice Tourre, who is at the centre of a $1bn mortgage trading scandal, tentatively stepped into the public gaze today for an uncomfortable grilling by lawmakers in Washington.
It was a tough debut for the 31-year-old, who was greeted in Congress by a group of Code Pink demonstrators dressed in black and white prison stripes, bearing signs reading: "Stop looting America!" Yet Tourre was unflustered – in fact, he proved to be something of a smiler, wearing a faint smirk through opening exchanges in which senators made blustery statements of outrage over the excesses of Wall Street's wealthiest investment bank.
Fabulous or a fraud?
Tourre is neither fabulous nor necessarily a fraud. Rather, perhaps he's both. In truth, he's just a broker----like tens of thousands of others like him----with major swagger and world-class arrogance. He's also the middleman for financial opportunists who are hungry for exotic new financial one-night stands on all sides of the transaction.
It goes without saying that nothing here should fall outside the rule of law. However, just as online, virtual dating is legal, so is what some would call fast financial deals like Tourre brokers. Like booze and fast women, this will never be outlawed in today's speeding, loose world of virtual investments. To the extent that this is casino capitalism based on ephemeral products is considered legalized gambling, I would be for more transparency on every level. Still investors have taken long positions, then hedged their positions with shorts---on every conceivable investment known to man---since time began.
We live in a world of many houses of cards and both the private as well as the public sectors of all political stripes are responsible here.This is not a Republican verses Democratic issue.
So I suggest we tax the winners and refuse to bailout the losers, making things as transparent as possible along the way.
Again let me say, in the stratospheric world of arbitrage and 2nd and 3rd order financial derivatives--- along with those who broker, buy and sell them--- it's going to be very hard for bureaucrats, legislators and especially members of Code Pink to assess guilt and responsibility though they may certainly try. It's a heady world of sophisticated investors who are begging to go long and short on exotic risks. If they're more than willing to play this game and accept responsibility for their risky investment appetites then let them.
I fear too much government intervention will only assure that bailouts will soon become institutionalized thereby exhausting taxpayers even further over time.
The thing all Americans should really be concerned with is why government would ever bail Goldman Sachs and its ilk out with taxpayers funds in the first place. I had no stomach for then Treasury-Secretary Hank Paulson's rescue mission in the last days of the Bush administration. Let investors beware. Let stockholders beware. Let management beware. Let taxpayers/Tea Partiers beware and say NO! to bailouts and the silly policy of Too Big to Fail, especially on all virtual financial products now under scrutiny.
Bethany McLean tells why she agrees and writes at the NYT.
BTW, I don't disagree with anything Sen. Claire McCaskill says below in theory. However, not even Congress can legislate an end to these sophisticated virtual financial products---in long and short form-- anymore than it can do away with the Internet. Both are here to stay for better or for worse.