Attention Blue-light Shoppers

“There’s no way we are ever going to make money at this”.. The two men charged with insider trading at Bear Stearns we acquitted due to lack of evidence. It is interesting that the most honest quote of the entire sub-prime fiasco was contained in a short email that did not provide sufficient evidence that these two men were trying to manipulate the market. They weren’t, and they couldn’t. What the hedge fund was trying to do was contain the damage and keep the bank afloat from the really poor decisions of those who had determined to get into the sub-prime business in the first place. We can’t blame the executives really. They are measured on how much money they generate for the bank, and in the short run sub-prime loans generated a lot of money. They got creative, they sharpened their pencils, to make a silk purse from a sow’s ear. But no matter how you polish it, when you start with droppings all you end up with are shiny droppings. Myth busters proved that you can get a shiny dung dropping with enough work. Scary. I digress. Back to sub-prime loans. The whole industry was desperate, the housing market could not sustain the growth and they needed additional revenue to continue, so they banks who had lent developers significant sums of money, decided to protect that bad investment with more of the same, by allowing people to gain access to overpriced homes and finding creative ways to get around the credit requirements. Very cool. I myself benefited from this creativity, and I am also currently paying the price for not paying enough attention to what I was doing. Heck at the time everyone was doing it, and we were all convinced that as long as things continued we would all be fine. That is a true statement. We would all be fine as long as things continued to rise. However, like our government we all made the simple mistake of not thinking, and just hoping for the best. Everyone regardless of education, intelligence, or savvy can be taken in based on information that seems right, but only under even minor scrutiny falls apart. We all trusted, but we did not verify. These two men were at the tail end of a long line of bad decisions, and rather than look to things like banking policy, the Federal Reserve and their heavy handed tactics, as well as the change in capitalization requirements, we looked to the hedge funds. Now these really need to be examined, but not by our government (we already know they wouldn’t recognize a hedge if they had to mow it), but by the stock holders of the banks, and through civil courts. The minority stockholders need to become more vocal and assertive in their right to obtain information and ensure integrity of the company. No company is too big to fail, and thus those that use hedge funds as a way to hide fraudulent activities should be banned from all securities transactions until corrected. Unfortunately, these much like the Anderson debacle, our judicial system failed to obtain correct information and understanding of the case and the ramifications of their actions. These two men were a link to the right target, but should not have been the targets.