Friday, April 23, 2010


If you are searching for the tipping point of New Deal era public disgust with Wall Street bankers, historians will point you to the "Pecora Hearings".  The turning point in those hearings may have been the moment JP Morgan was photographed with a female midget who lived in a tent sitting on his lap.

Here is a link to the Time Magazine coverage of the hearings: Time

Here is the story behind this photo from the book "Great News Photos and the Story Behind them":

Click image to enlarge

Next week, Lloyd Blankfein is going to be making the pitch of his Squid life. He and Fabulous Fab have both been called to testify before the Senate Permanent Subcommittee on Investigations at a hearing inquiring into the role of investment banks in the financial crisis.

You can expect a momentous piece of political public theater. Whether the style will be Kabuki or Vaudville or more than likely a combination of both,  remains to be seen. But my guess is not matter what style, this will be a no win predicament for the Squids. 

Putting aside populist anger, next week Mr. Wall Street will run head to head into the moral business compass of Mr and Mrs Main Street. Until last weekend, the average man on the street had little or no idea what a synthetic CDO or credit default swap is.

Now, after this week's media barrage, people still have no idea what they are. But they do understand one important thing: they know a con game when they see one. Therein lies Mr. Blankfein's cephalopodic dilema.
The more he tries to explain why the Squids are innocent, the more the public will understand how the ABACUS synthetic CDO scam works.  Blankfein will be giving a short lecture on the wily ways of that shady cesspool of greed and deceit, Wall Street USA.  

Blankfein and his midget, Fabulous Fab, can yammer till the cows come home. The final result will be the same. Guilty as charged...
For once, the public may well be able to say: "Heads we win, tails you lose Mr Wall Street" 

For this reason, I predict the ABACUS case will go down as one of the SEC's finest moments.  ABACUS is a perfect example of how Wall Street operates and that is precisely what was needed  at this time. Right FAB?
Psst,  anyone know a midget willing to travel to Washington next week?

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