This Week in Finance - 2/4/09 
A Pound of Flesh
© 2009 Edmundo Braverman, WallStreetOasis.com
Now that the media and Congress have succeeded in deflecting all blame for the current crisis to Wall Street, they've begun their frantic search for the fall guy. You know the guy I'm talking about. The one guy who personifies all that is wrong with the world and is deserving of limitless scorn and a hefty prison sentence. Think Ken Lay of Enron, Bernie Ebbers of WorldCom, and Dennis Kozlowski of Tyco.
In the Roman circus that is the 24/7 news cycle, the crowd is getting restless and they want blood. It's not their fault they were thrown out on their asses after defaulting on an adjustable rate mortgage that represented 65% of their take-home pay. That house was supposed to go up in value, damn it! Now their blood lust must be sated. Always a willing accomplice to government skulduggery, the media is deciding whom to throw to the mob, even as we speak.
We all know Barney Frank, arguably the chief architect of the housing demise, will never see the inside of a jail cell. Even though a strong case could be made that he colluded with Fannie and Freddie to cook the books, he can always plead ignorance and get away with it because we expect nothing better from the dimwits who represent us. Besides, he's part of one of the protected minorities in this country, which makes him both a media darling and untouchable. That's right. He's from Massachusetts. I said it. Oh, what did you think I was talking about?
The next obvious target is Bernie Madoff. Bernie doesn't fit the bill for several reasons. First and foremost, he's obviously guilty. The crowd is never satisfied with mere justice. They want to see someone taken down a few pegs before being destroyed. The element of unjust prosecution makes the American public positively giddy. When Bernie gets what he deserves, we'll hear a collective yawn from the hoi polloi.
They're looking for a high-profile Master of the Universe. They're readying their torches and pitchforks for the assault upon the house on the hill. They're just waiting to be told whose house.
The various prosecutors' offices, chiefly staffed by incompetent minimum-wagers, are incapable of building a case against anyone other than the low-hanging fruit. The lazy media is in the same boat. Too busy fawning over Obama to do any investigative journalism, they're waiting for the villain to emerge of his own volition.
It does, however, seem that they have an affinity for Thain. According to the hit piece in New York Magazine on January 23rd, John Thain seems to have pulled away from his competition with the disclosure of his lavish office accoutrements and the fact that he used the bumbling Ken Lewis to sell an overvalued company to the U.S. government.
Thain feels the heat, and he knows you don't have to be guilty to be convicted in this country. Over the past week, he hired the same PR firm that reps Ben Affleck and he said he'd pay back a million dollars to cover the refit of his office. We all know he didn't get to keep the parchment trash bin, so it speaks to how desperately he doesn't want to be the guy.
Lucky for Thain, there's always Dick Fuld. Dick can't seem to do anything right. Caught red-handed orchestrating a property shell game, he made the news again last week. Seems he sold his $14 million mansion to his wife for $100 back in November, apparently attempting to shield the asset from those pesky clients seeking remuneration. Dick's a pretty easy target. He cratered a 158-year old company, and got punched in the face on the way out. Plus, let's face it, he's not much to look at.
The way I see it, the mob will get its pound of flesh from one of these two, unless a truly spectacular alternative emerges. My money's on Fuld. I think Thain is sharp enough to disappear and avoid the obvious missteps that seem to be second nature for Fuld.
Either way, somebody's got to pay. It's the only way to keep Joe Six-Pack distracted long enough to pick his pocket.
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