Wednesday, February 6, 2008

Money in Your Mattress?

Wachovia knew that they were working with con artists and continued to do business with them—because the thieves had to pay the bank when the frauds were uncovered, so the bank made money off the frauds. I'm oversimplifying, of course, but that's basically what the Times is saying today. I can't tell you how angry these kinds of stories make me; it's all so colossally stupid! 

There are a few quotes pulled from an e-mail talking about the fraud by a "high-ranking employee" that say "Yikes" and "Double-Yikes." Yeah, that's the kind of insightful analysis we've come to expect from MBAs. My first thought (after "These people are as inarticulate as they are morally reprehensible") was "They talked with each other about this in e-mails?!" I mean, I didn't go to business school, but if I receive notice that my company is working with vendors who are defrauding our depositors— and assuming I'm not going to try to STOP those vendors—I think I'd know better than to use e-mail to comment on the fraud!

This is why people who talk about free markets drive me insane. Big Business will always do whatever is in the best interest of Big Business: when it's to their advantage to do right by you and me, they will; and when it isn't, they're going to hope they don't get caught or that the penalty if they do get caught is dwarfed by their profits from screwing us over. Wachovia made $1.5 million from just one of these swindlers in an 11-month period. We all know that the bank will settle whatever lawsuits arise (because they'll obviously lose in court... at least, I hope they will...). And I'll bet you anything that while they'll end up losing some of their overall profits, they'll ultimately have made money on the whole mess. 

So what's to stop the next mega-bank from doing the same thing? The besmirching of their public image? Embarrassment? The knowledge, deep down, that it may be profitable but it's just wrong, darn it all?

Call me cynical...

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