Who’s going to be the scapegoat for the present financial mess? In previous messes the public authorities, usually in the US, have found people to blame and thrown them in jail. It looks as if the same thing may happen this time.
After the junk bond mega-boom of the 1980s, it was Michael Milken of Drexel, Burnham, Lambert who went to jail. Mind you it was only for a couple of years, and he still had $1bn when he got out.
After the 1990s boom and bust, a selection of CEOs were convicted of corporate malpractice, among them Kenneth Lay, CEO of Enron, Dennis Kozlowski, CEO of Tyco, and Bernie Ebbers, CEO of Worldcom. Conrad Black is the last of that era to be convicted.
So this time round who will it be who gets his collar felt? Already the credit rating agencies are being lined up for scape-goating.
Apparently these agencies were prevailed upon to put AAA and AA class ratings on sub-prime mortgage debt which was actually high risk.
These debts were subsequently sold on to suckers (sorry, I mean distinguished financial institutions) who allegedly thought the AAA and AA ratings meant these debts were safe.
Being trusting, unsophisticated folk, they didn’t (allegedly) see fit to make their own investigations into the nature of the debts they were buying.
It is, of course, important to find scapegoats, otherwise the public may blame the regulators, or the civil servants and politicians responsible for the regulators, for allowing this whole sorry scenario to get out of hand in the first place.
And that would never do, would it?
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