Guilty Knowledge

Dylan Rattigan of CNBC (shown in this clip from yesterday's MSNBC Morning Joe) was on *today's* show calling for FBI investigations of every highly leveraged bank and insurer. He said, and I am paraphrasing, "There must be emails out there that say that we can't do this or we can't cover these policies. That is criminal."



Mr. Rattigan, you are wrong . Three points:



1. If you want to hunt people criminally, there are actual criminals out there to hunt. There were so many mortgage lenders that used underhanded techniques to lend that we could just reconceive the FBI as the "Fraud on Borrowers Investigatorium" for the next ten years. Of course.



2. The institutions that you are talking about were regulated and had capital requirements - i.e. the amount of cash they had to have on hand in order to lend or insure what they did. If you don't like those requirements, just wait - they're changing. If there were those that violated that requirements, I don't think there were many of them, and I think the litigation, etc. will bring that to light. Bottom line: most of this was legal per the rules of the market at the time.



3. The emails you cite would come from people who realized that the emperor had no clothes. So, if you were stupid enough not to notice, you get off scott free. If you were smart enough to sound a quiet alarm, we throw the book at you for not speaking up louder. Seems to me we should promote you instead. Sure, you could have spoken up, but if you have this kind of vision - which is both clear and relatively conservative - I think we want you on the executive floor for the coming few years instead of warming a cell in a MinSec block somewhere in Kansas.



Which brings me to my final point: This media, the same one that didn't sound any alarm until the market was well beyond recovery, is now looking for its next story: a high-profile trial. That won't help. It will turn into a witch hunt and distract us all from the real work that needs to be done on Wall Street. You want to "hurt" these people? Have the companies fire 'em. Trust me, they had all of their money in the market so they are bleeding with the rest of us.