Derivative Napalm


Alain Sherter (BNET)  is on the hunt today. The enemy is New York Democrats seeking to weaken financial regulations at the behest of the that very same financial industry.

In his article Sherter discusses those trying to weaken the bill and notes that –

In defense of preserving the current rules on derivatives Rep. Mike McMahon said:

Wall Street is to New York what cars are to Detroit and corn is to Iowa.

To which Sherter responds –

And derivatives are to the U.S. economy what napalm is to human flesh, but who’s quibbling.

If words were daggers, McMahon would look like a pin cushion.

Read the article. It’s rage, reason and satire, you don’t see that much. Not many people can write like that. It should be appreciated.

James Alan Pilant

Alain Sherter at BNET


When re-organizing my favorites to tighten up my review of important sites, I lost Alain Sherter who is not only one of my favorite authors but an extremely adept analyst of the often arcane financial dealings of Wall Street. He is back on my list with considerable regret on my part for having left him off for a week and a half. His post today is cautionary tale of corporate value amid changing fortunes and different styles of leadership. He concludes that leaders should stick with what they do best.

Alain Sherter


Alain Sherter’s work appears on BNET. He is a great writer and thinker whose work often points in original directions. His outrage over the ethical shortcomings of American business mirrors my own.

Here’s a sample of his writing

Banks that foreclose on a home must first prove they own the mortgage. So affirmed the top Massachusetts court today in ruling against U.S. Bancorp (USB) and Wells Fargo (WFC) in a decision could boost homeowners fighting foreclosure and end up costing banks billions.

One financial expert told Bloomberg the ruling could “open the floodgates” to similar suits in the state and bolster cases around the nation. Financial pundit Barry Ritholtz also called the ruling a victory for the rule of law and property rights, noting in a related post discussing the case:

This is more than a technical issue; at risk is whether we, as a nation, are going to allow corporate entities to violate existing law, or even worse, attempt to create their own, extra-legal, non democratic policies.

Certainly investors seem worried. U.S. Bancorp and Wells shares immediately dipped on the news, with broader bank stocks also tumbling. It’s no secret why. As the “robo-signing” furor has shown, banks for years have flouted legal requirements to document their right to seize homes. Foreclosure affidavits were rubber-stamped or even faked. Local laws regarding property transfers were ignored. Financial firms eager to mince mortgages up into securities violated rules intended to establish a clear chain of title in foreclosure cases.

Alain Sherter’s regular column, Financial Folly, is an invaluable guide to the shenanigans of the financial world. I recommend him to you.

James Pilant

Consumers Losing Faith in Business


The article itself from BNET is a little self paroding talking about Business as the engine of recovery that people ought to look up to and respect but worries that it will take time to regain that respect. You think! This is what happens when business ethics disappear in the search for greater profits. This is what happens when the next quarter’s profits are the only measure of success and not what kind of people we are.

For many people talking about business ethics is just a brief joke, something whose existence is as likely as the Easter bunny. We can do better. No longer can business ethics be taught as a search for ways to avoid public relations problems but a search for what is good and right in all men in all ages.

From the article: Pay is part of the problem but the discontent goes wider. Four out of five people don’t trust business leaders to put the needs of staff or shareholders above their personal interests, according to Edelman’s Trust Barometer. A similar proportion think business ethics have deteriorated.

For years the workers and middle class have been the targets of bad legislation and exploitation by increased costs from banks, internet providers, and health insurance. A vulture culture devoted to worshiping the predator is not conducive to business ethics. It is conducive to lip service and a superficial appearance of compliance with the values of society. This is a great country with an amazing history of accomplishment. We can do better.

http://blogs.bnet.co.uk/sterling-performance/2009/10/29/why-nobody-trusts-business-anymore/