Bear Stearns is Why Sarbanes-Oxley Sucks!

Yesterday, authorities arrested two Bear Stearns hedge fund managers on grounds that they defrauded investors in the mortgage meltdown. Ralph Cioffi and Matthew Tannin were accused of encouraging investors to remain in the Bear Stearns funds even when they knew the market was tanking and the pair were selling their own positions. The total hit to investors is around $1.8 billion dollars.

Now, I don’t want to go off on a rant here, but how are these guys different than any CEO out there touting the virtues of their particular company’s stock, while at the same time they are selling it behind closed doors? These two a-holes could face up to 20 years in prison and face serious fines but I don’t think these two knuckleheads are the reason the mortgage market took a dump.

The People Always Want Their Frankenstein

In every boom, there is a bust, and every bust has it’s villain. The 80’s corporate greed had a face and a name, and that name was Ivan Boesky. Charles Keating Jr.’s Lincoln Savings and Loan bailout was but a fraction of the total $153 billion dollars in taxpayer money used to clean up that abortion, but the angry mob had its man. Michael Milken became the poster boy for his role in the junk bond led LBO mess back the late 80’s. All symptoms of a financial checks and balances system that had gone off the rails.

So We Passed Some Laws

Another financial scandal broke during the 90’s that gave us the accounting equivalent of hear no evil, see no evil, speak no evil.  Huge firms like Merrill Lynch, Xerox, Bristol Myers, and BMW all had “nudge, nudge, wink, wink, transactions on their books that the “Big Four” accounting firms of Deloitte & Touche, Ernest & Young, KPMG, and PriceWaterhouseCoopers all said were fine. Well they weren’t fine you a-holes, so I introduce to you….Sarbanes-Oxley.  Sarbanes-Oxley was supposed to clean up these indiscretions by making the CEO and the Board of Directors responsible for what goes on inside that company…can you believe that!

And That is Where This Story Gets Good

Sarbanes-Oxley has done nothing to prevent the messes it was intended to fix. If it did, then the two schmucks hauled off in front of the cameras yesterday wouldn’t be the only ones feeling the pain. For the prosecution, I present to the jury of common sense;

Jimmy Cayne!

That’s right boys and girls, it’s our pot smoking, too busy playing cards to save his company D-head that somehow parachuted out of the Bear Sterns collapse with $61 million large! Yep, he walked away Scott free, after losing about one billion dollars in net worth from the collapse of Bear Stearns’ stock, he sold his entire stake in the company for $61 million while the guys he was supposed to be managing got eff’d along with all of the people at Bear Sterns. Now, I am not saying these two douches don’t deserve a federal bitch slapping, but Jimmy should be making the trip too! Instead, he is going to be sleeping here, while his boys are going to be sleeping here.

This is why Sarbanes-Oxley SUCKS!