Dian's Column
Dian's Archive


Who's responsible for the financial mess we're in?

By Dian Vujovich

Jeremy J. Siegel is a professor of finance at Wharton at the University of Pennsylvania. Often referred to as “The Wizard of Wharton” in addition to teaching he’s also an author, speaker, columnist, and Wall Street bull. According to Siegel, if other institutions had behaved like Goldman, there wouldn’t have been a subprime mortgage mess. Bet Sachs’ Fabulous Fab likes hearing that.

So who’s to blame for our financial crisis if Goldman didn’t have a substantially sized hand in it?

Siegel writes in a column titled “Goldman Is the Wrong Target” that it’s CEOs like Jimmy Cayne of Bears Stearns, Dick Fuld of Lehman Brothers, Hank Greenberg and Martin Sullivan of AIG. “Not one of these individuals understood the huge risks that their own institutions were taking,” writes Siegel. “Had they taken defensive measures to offset their risk, as Goldman had, none of these firms would have failed and the crisis would have been averted.”

Hum. I recall reading or hearing somewhere that even Goldman’s CEO didn’t have a clue as to what was going on at his shop. Perhaps Professor Siegel forgot that.

His piece goes on to point out that losses incurred by the Internet bubble in 2000 were greater than those of the subprime mess but only a mild recession followed it.

Regarding the current pickle that we’re in, he says that more than CEOs are to blame. Enter the regulators. Alan Greenspan, Fannie Mae and Freddie Mac, the rating agencies and the SEC are all mentioned.

Clearly The Wizard is finger-pointing. But again he may have forgotten something: When one points their fingers at others, the thumb always points right back to us—the finger pointer. The “us” here is greed. Which happens to be the underlying tenet of Wall Street’s investment policy of “Make us as much money as possible at any cost.”

Read the entire piece at: http://tinyurl.com/2bam5h5 .

To read more articles, please visit the column archive.

[ top ]