Over this week and weekend there have been several stories breaking in the news, which I have to admit have brought me some small self-righteous feelings of satisfaction. First, on Monday or Tuesday came the announcement that the Governor of Illinois had been indicted by the federal prosecutor for blatantly conspiring to "auction off" the Illinois Senate seat vacated by Barack Obama when he was elected president. Interestingly, there is going to be some collateral damage among a few wide-eyed politicians, including Jesse Jackson, Jr., whose team has been aggressively "fund-raising" to pay the governor's demanded fee-- the press is calling it "pay to play." I have no reason to doubt Mr. Jackson's integrity (aside from the fact he's a second generation politician in the country's most corrupt city), but the man's "who, me?" protestations of innocence, along with his staff's pointed, goal-oriented fund-raising (they were already in the process of raising a couple of million!) are, you have to admit, a little amusing. And Governor Rod Blagojevich has proven himself to be a corrupt low-life who was destroyed by greed. It will remain to be seen how many other officials he brings down with him.
And speaking of greed, how about the New York attorney, Marc Dreier? Arrested this week on extensive and quite spectacular fraud charges, and allegations he defrauded clients out of as much as 350 million dollars, and possibly much more. He was caught trying to impersonate the lawyer for a teachers pension organization in Canada trying to sell phony securities, and he was right in the building of the pension fund when he did that. And even after he was taken into custody, he managed to call his comptroller (the money person at his large, and formerly reputable law firm), and while the comptroller wouldn't agree to transfer 30 million dollars out of an escrow account into Mr. Dreier's own account, he did agree to transfer the call to the firm's banker, and the banker agreed to make the transfer. (That makes me think of the time I tried to withdraw $600 of my own money from my account at an ATM machine. Yeah, right.) The first thing I read about the case was the headline that the judge had refused bail in the case, since Mr. Dreier was a major flight risk. I can imagine that problem will probably go away since I assume one good lawyer would also hire a good lawyer. And when the fallout ends, I expect Mr. Dreier will probably do some hard jail time. Stealing from the rich is frowned upon in the courts.
And finally this weekend, speaking of stealing from the rich, there's Bernard Madoff, one-time chairman of the NASDAQ stock exchange, who spun off an investment fund from his successful brokerage house, and proceeded to create an estimated 50 billion dollar Ponzi scheme, by taking in new investments and using the funds to pay dividends on older funds. He'd done this for many years, and was good enough at it to have persuaded small investors to become bigger investors, and for some fairly large funds to also invest, based on his cool and calculated reputation, as well as his fund's stated returns. This is another case where greed turned a basically honest, hard-working man's life into a walking-talking financial disaster, and taking the hard work, dreams, aspirations, and life-savings of hundreds or thousands with it. The man is seventy years old and could possibly spend the rest of his life in jail.
One possibly interesting angle on all three of these stories is there were some early warnings that things could be amiss, but the warnings were ignored by regulators or investigators or anyone else with oversight or authority. People don't like to appear to be impolite to plutocrats-- not even federal securities regulators! And who's going to sue the well-heeled and flamboyant head of a large, successful law firm? It had better be an even bigger fish (or the federal government).
Which brings us to the current outgoing presidential administration. If there was ever an advertisement for the downside of reducing regulation and promoting the interests of the wealthy over those of ordinary citizens, these three are the poster children for that. Just like the falllout after the fall of the Reagan administration, we're seeing the greediest and most rapacious being picked up and hauled off in handcuffs. And I have to say, with all the 401K's and pension funds and homeowner's savings being wiped out right and left by the mortgage scandals, I guess I am glad to see at least a little of the middle class misery being spread up the ladder. Snoop around some more-- I know there are more bad guys!
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