SIN CITI ... AND THE CRIMINALY STUPID

I had lunch this afternoon with a friend. A very conservative friend. We rarely agree on anything, and are polar opposites when it comes to politics and religion. I still remember a heated "exchange" we had in a restaurant, only to stop long enough to see the people seated around us staring, with one of them finally blurting out: "Go on ... this is better than Cross Fire."

Today we agreed on several things (and no one was staring). We agreed on what needs to be done to fix the economy. But we were especially in tune when it comes to this: there should be punishment and accountability for the big players who contributed to the economic mess we're in.

In a flash of serendipity, when I came home today I found this article, "Sin Citi", which called for exactly the same thing. The rationale for punishing financial stupidity was simple.

Homeowners who made ... bad judgments, by taking on mortgages that they could not afford, are being thrown out on the street. Thousands of Citi employees will be gracing the unemployment lines this holiday season, not because of anything they did but because the people who run their company are, and were, incompetent.

The author of "Sin Citi" is arguing that homeowners and Citigroup employees - those at the bottom of this financial food chain - shouldn't be the only ones held to account here. This is especially the case since homeowners simply took what was offered, while Citigroup employees did their jobs. Someone had to set the game up. And they need to be held to account.

While the "Sin Citi" piece makes a good argument for going after those who helped create the conditions for the market's collapse, this article from Michael Lewis - author of Liar's Poker - explains how we got into this mess by pointing out just how clueless Wall Street Bankers really are. But Lewis' article also tells us something else. There may not be any legal wrongdoing for us to pursue. Incredibly, most of what Wall Street did was legal.

OK. New Christmas wish. Is there any way we can punish the criminally stupid? Just asking.

- Mark

P.S. If you want to understand the individual logic that got us into this market mess you need to read Liar's Poker. Not only is it informative, but it's the funniest book on market players there is. Lewis is a very good writer.