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The Scam Wall Street Learned from the Mafia

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Re: The Scam Wall Street Learned from the Mafia

#41

Post by boboblong »

adventureful wrote: post #33
boboblong wrote: post #28

Earlier quoted context omitted.

The municipalities didn't try to game any system. Any potential buyer who found closed auctions to be somehow unfair was free to choose not to participate. This is equivalent to what you're saying: "The supermarket is trying to sell 20-oz sodas for $1.50 a pop, and now they get mad when I steal them instead? A policy of giving sodas away for free would not have created the stealing problem in the first place."

Saying the municipalities weren't trying to game the system, is not proven by saying you don't have to participate. The statement that if you don't like the rules you don't have to participate plays to the nature of your position. This isn't a private business or private project, these are public municipalities that are spending tax payer dollars. In the name of transparency for voters they should not be able to hide…

Wait, so it's the voters who are clamoring for the use of open auctions to determine what bank to invest public funds with? Um, no. As for "[hiding] what they're doing", what do you mean? The article mentions nothing about the municipalities hiding things from the public. If you're referring to the closed auctions, that's just a way of selling something that benefits the seller. It's not "closed" in any other sense.

So what you're saying is that, because a municipality is a public entity, it shouldn't be allowed to invest funds in a manner that would be perfectly acceptable for a private entity not because the entity's constituents disapprove, but because the banks don't like it? That's absurd. If buyers shouldn't be allowed to dictate the negotiation tactics of private sellers, they shouldn't be allowed to dictate the negotiation tactics of public sellers either. You seem to be conflating (or attempting to conflate?) the banks with the municipality's constituents. It's true that a municipality must answer to its constituents, but it doesn't have to answer to any private bank that feels like whining.

Re: The Scam Wall Street Learned from the Mafia

#43

Post by kahawe »

leot wrote: post #5

Perhaps most amazing is many people's apparent assumption that banks would never engage in this kind of behavior. It seems the most cynical predictions and explanations of large bank behavior are likely to be the ones closest to the truth.

> Perhaps most amazing is many people's apparent assumption that banks would never engage in this kind of behavior.

I was sort-of witness to a shouting match between a well educated son and his hard-working working-class rest of the family over the fact that banks give out let's say ~ten times as much as they actually have. They called him stupid, outrageous and how could any company possibly do this and they can certainly not run their small wood-shops and small companies like that so how should a bank be able to do that? Mind you, these are average good natured law abiding folks, the kind that certainly is the majority of the population.

This goes to show that there certainly is a vast amount of blind trust in banks in the average population; looks like acting all serious-business and putting on a suit AND being able to control or at least have an important stake in a lot of major aspects of working-class citizens' lives (tight budgets, making ends meet) makes for a powerful combination.

Re: The Scam Wall Street Learned from the Mafia

#44

Post by brazzy »

tedunangst wrote: post #26
leot wrote: post #5

Perhaps most amazing is many people's apparent assumption that banks would never engage in this kind of behavior. It seems the most cynical predictions and explanations of large bank behavior are likely to be the ones closest to the truth.

There are people who think three bid systems actually work? Everyone I've ever talked to about three bid systems knows they mostly exist to give a faint dusting of propriety to the fact that somehow the mayor's brother in law is always the guy winning the contract. Are there roads in your town? Do you think they were paved by the honest lowest bidder?

Do you have a link that explains what exactly a "three bid system" is? The top hit on Google for the term describes a card game...

Re: The Scam Wall Street Learned from the Mafia

#45

Post by grabeh »

brazzy wrote: post #44
tedunangst wrote: post #26

Earlier quoted context omitted.

There are people who think three bid systems actually work? Everyone I've ever talked to about three bid systems knows they mostly exist to give a faint dusting of propriety to the fact that somehow the mayor's brother in law is always the guy winning the contract. Are there roads in your town? Do you think they were paved by the honest lowest bidder?

Do you have a link that explains what exactly a "three bid system" is? The top hit on Google for the term describes a card game...

My understanding is that it is simply a closed bid system where three separate banks submit bids (interest rate that will pay on sums invested with them) with the highest one winning.

Re: The Scam Wall Street Learned from the Mafia

#46

Post by SideburnsOfDoom »

tedunangst wrote: post #26
leot wrote: post #5

Perhaps most amazing is many people's apparent assumption that banks would never engage in this kind of behavior. It seems the most cynical predictions and explanations of large bank behavior are likely to be the ones closest to the truth.

There are people who think three bid systems actually work? Everyone I've ever talked to about three bid systems knows they mostly exist to give a faint dusting of propriety to the fact that somehow the mayor's brother in law is always the guy winning the contract. Are there roads in your town? Do you think they were paved by the honest lowest bidder?

What are you trying to say? The argument that "everyone knows it's crooked" does not make it legal. It does not make a prosecution impossible.

Re: The Scam Wall Street Learned from the Mafia

#47

Post by ewood »

JumpCrisscross wrote: post #22
gyardley wrote: post #6

'Wall Street does X' and 'the Mafia does X' does not in any way imply that Wall Street learned X from the Mafia - and there's no evidence in the article, either. Typical Tabibi bombast. I suspect bid-rigging, while unethical, is pretty common behavior given this type of auction mechanic - all the buyers are knowledgeable and known to each other, while the seller is relatively ignorant and only participates in the mar…

Actually, as a former trader, bid rigging is a big no-no. There is a fine line, ofcourse, e.g. the IPO process's inherent factoring of IPO investors over the issuer or M&A process'a tendency to work off bankers' relationships. But this is unambiguously wrong. Where this becomes classic Taibbi is in his implication that this is business as usual on Wall Street (it's the only place in America I know of where someone's…

Sure and there are chinese walls etc but if there is the possibility of making huge amounts of money someone within the structure will attempt to subvert those controls. The question is to what extent firms seek to root out those practices or if they become part of the culture and (unofficially of course) accepted.

The current cases involving LIBOR rigging (http://www.bloomberg.com/news/2011-11-23/london-banks-seen-r...) seem to mirror this article and the debate over Goldman Sachs possible collusion with hedge funds trading against CDOs in 2008 seem to point to the need to ask serious questions about how banks and investment firms conduct themselves.

Re: The Scam Wall Street Learned from the Mafia

#48

Post by davidw »

anon808 wrote: post #32
tumult wrote: post #31

Matt Taibbi is awful. This article, and all of his others, are hyperbolic demagoguery. This one is particular is so bad that I can't even bring myself to tear it apart line by line. You're doing yourself an injustice by reading it. Unless you take pleasure in misinforming yourself and becoming angered over falsehoods, you're just playing into the hands of a particularly nefarious and persistent rabble-rouser.

Your doing us an injustice by not tearing it apart. Help us, inform us. He may be a rabble rouser prone to hyperbole, but that by itself doesn't mean what he's writing is false. Look past the drama and tell us what's incorrect.

You're all doing us an injustice by not flagging it so that it and other off-topic articles like it are not relentlessly expunged from this site.

Re: The Scam Wall Street Learned from the Mafia

#49

Post by pja »

mafro wrote: post #35
tumult wrote: post #31

Matt Taibbi is awful. This article, and all of his others, are hyperbolic demagoguery. This one is particular is so bad that I can't even bring myself to tear it apart line by line. You're doing yourself an injustice by reading it. Unless you take pleasure in misinforming yourself and becoming angered over falsehoods, you're just playing into the hands of a particularly nefarious and persistent rabble-rouser.

I'll give you that 75% of this article is unnecessary hyperbole which adds nothing to the central message. The central message is very interesting though.

But without the hyperbole, people won't get engaged, they won't get angry.

Now, to some extent that engagement is being sought in order to sell Rolling Stone, but I think that both Matt and the Rolling Stone editors believe that they're talking about something that matters & that people should be angry about. Hence the hyperbole.

If they wrote a dry academic paper and published it in some economics journal somewhere it might contain exactly the same information but it would have negligible impact.

Re: The Scam Wall Street Learned from the Mafia

#50

Post by mjwalshe »

kahawe wrote: post #43
leot wrote: post #5

Perhaps most amazing is many people's apparent assumption that banks would never engage in this kind of behavior. It seems the most cynical predictions and explanations of large bank behavior are likely to be the ones closest to the truth.

> Perhaps most amazing is many people's apparent assumption that banks would never engage in this kind of behavior. I was sort-of witness to a shouting match between a well educated son and his hard-working working-class rest of the family over the fact that banks give out let's say ~ten times as much as they actually have. They called him stupid, outrageous and how could any company possibly do this and they can cer…

But presumably these "working class" peopel had a morgage that is highly leveraged - did they not see the diference?
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