Tom Adams: Face to Face With Polished Wall Street Psychopathy (SEC Says that ICP Stole from My Old Company Edition)

By Tom Adams, an attorney and former monoline executive

When the financial crisis hit, I was in the direct line of fire. My company blew up very early in the crisis, giving me the dubious opportunity to see how bad things were going to get long before most of the rest of the world, including other banks, insurers, investors, administration officials or Federal Reserve members, were able to perceive the trajectory of the crisis.

After Lehman and AIG blew up, however, suddenly, everyone was talking about my industry and how horrible it was. I had already concluded that I had failed at the business I had worked at for over twenty years. I blamed myself for rationalizing taking credit risks that, with each passing month, were becoming more obvious and acute.

I was not alone in the many mistakes I had made. My competitors, including the largest and savviest banks and investors had made the same errors on an even grander scale. If you were to take them at the word, the highest ranking regulators, officials and economists had failed to anticipate the decline in home prices and its impact on mortgage bonds and, even worse, the impact of such declines on the US and global economy.

As this realization began to sink in, I began to wonder how I had made such mistakes. I began to look into the parties and transactions and the connections between them and what they knew, should have known or had no way of knowing. I pulled the loose threads of some questions I had about how the problems were so widespread and how so many people could have made such large mistakes.

The more I pulled on these threads, the more I discovered that much of what I thought I knew was based on things that weren’t really true. And by that I don’t mean assumptions about housing prices, I mean information people like me had been provided about specific deals by other parties to those transactions. While many of the failings of the structured credit market were due to unsound reliance on historical data, some were not mistakes in judgment but were the result of bad actors, misinformation and wrongdoing.

Over the past year, journalists, investigators and law enforcement officials conducted their own investigations into what went wrong in the financial markets. The veil was pulled back on actions of people like Magnetar, John Paulson and various banks such as Goldman Sachs. While some of these parties have managed to stay within the boundaries of the law, it’s become clear that the CDO market itself was filled with dubious participants, misaligned incentives and damaging activities.

Back in April of this year, Yves Smith and I suggested that some of the responsibility for the widespread failure of CDOs might lie with CDO managers. CDO managers were tasked with assembling the assets that went into CDOs and overseeing the transactions. While they failed miserably at creating successful deals, they have somehow managed to escape the wrath of the broader world. Large investment companies, such as TCW, Putnam, BlackRock and even Pimco, had assembled and managed CDOs backed by toxic mortgage bonds as had well-regarded banks such as Goldman, Merrill, UBS and Citibank.

Thanks in large part to the CDO managers own assertions of expertise, investors trusted in their ability to wisely select safe mortgage bonds while avoiding the increasing risks that were appearing in the mortgage market. By 2008 it was obvious that the faith that investors had in these highly skilled and highly paid managers was misguided.

After several months of analyzing the deals and participants in the market, I began to suspect that the CDO managers, had ample opportunity and motivation to knowingly or negligently contribute the collapse of the deals under their charge.

As jaded as I have now become, I must confess that I am still surprised at just how blatant and casual some of the thievery in the CDO market appears to have been. As an example, I look to the SEC’s complaint against a company called ICP. I met with the folks from this company many times and my former company insured a large transaction that they assembled. This week the SEC accused the company and its founder of defrauding my former company and AIG in the way they managed the transaction after it closed. The SEC accuses ICP of inflating the prices of bonds it sold to the CDOs and defrauding the investors in the transactions by manipulating the bond price data, violating the terms of the agreements and effectively stealing from the investors and insurers in order to line their own pockets. The actions of ICP helped offset their own losses and bad investment decisions (they purchased a $1.3 billion pool of mortgage bonds from the blown up Bear Stearns hedge funds at what they thought was a great bargain but what turned out to be overly optimistic prices).

ICP’s alleged manipulation of bond prices also, conveniently, helped them keep the deals in compliance with their triggers, which helped them wrongfully earn millions of dollars in fees at the direct expense of the bondholders. The bondholders and insurers on the deals suffered many millions of dollars in losses as a direct result of these alleged activities. Because AIG insured two very large deals from ICP, US taxpayers were ultimately on the hook for some these losses because the Federal Reserve bought the CDO bonds at par and placed them into the Maiden Lane transaction.

Over the course of diligence visits, meetings and dinners, I had formed the impression that the people at ICP were knowledgeable, smart and reputable. Mr. Priore, ICP’s founder, was held in high regard in the industry and occasionally spoke about his views on the market to reputable news organizations such as Bloomberg Television, the New York Times and Reuters. He was listed by Investment Dealers Digest magazine as one of the 40 under 40 worth watching. So not only was I completely taken in by his knowledge and interpersonal skills, so were many others. In fact, given his sterling reputation, voicing suspicion of him would have been seen as paranoia rather than well founded skepticism.

The CDO transactions at issue in the SEC complaint were not structured as speculative, risky bets on the housing market. The deals were backed by a pool of AAA-rated mortgage bonds (by contrast, the overwhelming majority of CDOs contained much lower-rated assets). The CDO bonds to which the insurers took exposure had an additional cushion of protection in the amount of approximately 10% to create “super senior” AAA bonds. Nonetheless, within about a year, the super senior bonds were valued at about 60 cents on the dollar and required cash payments of about $2 billion by AIG and the Federal Reserve to make bondholders whole (see previous discussion of AIG and Maiden Lane amounts here:

As described in the SEC’s complaint, ICP stole from my old company and from AIG and caused millions of dollars of losses, the loss of many jobs, the misapplication of taxpayer funds and contributed to the destruction of the economy. They did so while smiling and shaking our hands, vowing to protect our interests and then asking about our children and our families. They did so while taking that money and paying themselves millions of dollars of misappropriated fees and bonuses, even as our companies ran out of money and struggled to understand why.

What is most interesting about the ICP case to me is not that the people involved were unusual or evil, but rather how common and normal they seemed. They seemed to be knowledgeable and reasonable people; above average, by my assessment of the industry. As the CDO manager was allegedly committing its fraudulent activities they probably believed that their actions were justifiable and, indeed, were a normal way to conduct CDO business. I would agree: their behavior was likely commonplace, not extraordinary, and part of the acceptable course of business.

Investors purchased CDO bonds based in large part on the expertise, experience and reliability of the CDO managers to create and manage safe bonds. As it turns out, investors were foolish to hold such beliefs. The CDO market was far more opaque than it appeared and the structures permitted far too much latitude and created far to many opportunities for the managers to line their own pockets at the expense of their investors. Following its complaint against ICP, the SEC may finally be uncovering the widespread, ordinary frauds that lurked behind the failed CDO market.

Print Friendly, PDF & Email


  1. Richard Kline

    So Tom, it can’t be pleasant reviewing failed transactions one was personally involved in assessing, and all the more for that I appreciate your candor here. The fact is, folks bought the reputation; a good name, a reputation, evident competence, a team attitude. That’s what was sold and what was bought, not the product or it’s specs. If it was a Nigerian email contact with evident troubles in standard English diction, the same product and specs wouldn’t have been touched with an echolocator. But because it was GS, Putnam, ICP sitting down across the table the same deals got done; “Just give us the money; we’ll look after you.” Turns out the only diffrence between the two types of sources is their GPS coordinates.

    And you know how those folks could sit on the other side of the table and make small talk about your family and who’s going where on vacation? It wasn’t personal; it was business. If they had an information assymetry (and they did), if they controlled the trigger flows (and they did), if they had the power they just took what was there for the taking because that was the business they were in. They weren’t out to get you, so I’m sure they don’t feel like the bad guys: they were just out to get theirs. And they did.

    There’s no place in the world that needs the business those guys were in, but we’ve turned our country into a place where their conduct is business normal. —And still nobody is in jail, and I wouldn’t bet a dime to a finn that anybody ever will be. A few fines will be assessed, at best, before the mid-terms, and the rest will be lawyered to death with the willing compliance of the (ir)regulators. Sez I.

    1. jdmckay

      There’s no place in the world that needs the business those guys were in, but we’ve turned our country into a place where their conduct is business normal. —And still nobody is in jail, and I wouldn’t bet a dime to a finn that anybody ever will be.


  2. i on the ball patriot

    Yes, thanks for your candor, but with this you appear still gullible …

    “Mr. Priore, ICP’s founder, was held in high regard in the industry and occasionally spoke about his views on the market to reputable news organizations such as Bloomberg Television, the New York Times and Reuters.”

    Reputable news organizations … really?

    As for prosecutions the recent SCOS (supreme court of scamerica) “honest services” ruling gives an indication of which way the wind is blowing and how you will fare …

    You know, Supreme court, JUST US!

    Yes, the law is now very clear! Corporate scum bags can not “deprive citizens of the intangible right to honest services, “through bribes or kickbacks”, however, any other good old fashioned unethical business behavior, that might otherwise be considered ‘merely unethical’ in the business and political arenas, is still OK, and this SCOS scum bag ruling will encourage that behavior and impact future prosecutions!

    Contrast that with the recent SCOS scum bag ruling that you can not talk peaceful resistance methodology to the arbitrarily declared by congress terrorists, the global victims of corporate rape and plunder who dare resist, and you get a good feel for what scamerican JUST US is all about.

    Fucking scum bags ALL!

    Deception is the strongest political force on the planet.

    1. Piero

      I’m a little mystified at how you profess not to trust anyone in the system but seem *absolutely* sure that the government should be given more latitude in prosecution. People like Skilling should not be trusted but neither should federal or state prosecutors. And the fact that Skilling was a crook does not exclude the possibility that an unscrupulous prosecutor bent and broke rules to go after him. You could applaud that. But what happens when that same prosecutor is then emboldened to do the same to someone who turns out to be innocent?

      1. i on the ball patriot

        “I’m a little mystified at how you profess not to trust anyone in the system but seem *absolutely* sure that the government should be given more latitude in prosecution.”

        You put words in my mouth. No mystery at all …

        I was not lamenting the “honest services” decision, rather I was more pointing out the hypocrisy of SCOS in lowering the bar for the wealthy ruling corporate elite while raising the bar in another recent decision for those who would advocate peaceful resistance to congressionally judged and found guilty victims of wealthy elite corporate Imperialism.

        In addition I pointed out how it will serve to continue business as usual.

        I think the scamerican government is TSTS — Too Sleazy To Save — and election boycotts are in order.

        Deception is the strongest political force on the planet.

    2. sgt_doom

      Thanks, i on the ball patriot, you made the point I was going to make.

      The only exant equation everyone should be paying attention to is not the misapplied gaussian cupola, but the following:

      Predatory Legislation + Predatory Jurisprudence =

      Predatory Capitalism

  3. John J Xenakis


    I thank you for that fantastic story. It shows how dishonesty, lack of ethics, and professional incompetence have characterized huge parts of the behaviors of the current generation of Boomers and Generation-Xers. Bernie Madoff, his co-conspirators, his employees his SEC regulators and politicians were not an exception, but were and are the rule.

    You left out one important point however: The same people who perpetrated the crimes you describe are still in charge today. They’ve adapted their methods, but they’re still making promises that they know are fraudulent. You see them every day on CNBC, in WSJ, and in Congress. That’s why the financial crisis we’ve seen so far is nothing compared to the one that’s coming soon.

    John J Xenakis

    1. jdmckay

      The same people who perpetrated the crimes you describe are still in charge today.

      … and managing TARP assets for the feds.


    “…Fucking scum bags ALL!….”

    Yes indeed, no exceptions……. All these fine upstanding citizens cloaked in respectability, great humanitarians, honored for their contributions to humanity.

    It’s all about trust… Me, I learned at a very young age to trust thieves to steal, cheaters to cheat, liars to lie and killers to kill. I always made sure to let them know that they should trust me too.

    No exceptions…..!

    Best regards,


  5. Todd

    The vast majority of people who have succeeded on Wall Street are not cursed with self-reflection, an interest in the greater good, or values not measured in currency. I’m sorry, but you sound a little naive if you got taken in. Yes, they are appealing people – but borderline sociopaths and narcissists are generally alluring until you realize that they care as much about you as a white shark.

    Throughout history the power and wealth of people like this ebbs and flows. Let’s hope the value of yachts and expensive homes in the NYC-Stamford area is headed towards zero.

    1. NOTaREALmerican

      Re: Stamford area is headed towards zero.

      It might ebb and flow but (unfortunately) it will never go to zero.

      What better evolutionary trait is there than being a smart amoral scumbag (smart sociopath)? It’s inevitable that these “kind of people” would win.

      I personally think the failure lies in the liberalism’s embrace of bigness (the worship of their own “establishment” – who, of course, are all sociopaths, as they must/should be). The only defense the “nice people” have from the sociopaths is if the sociopaths are (somehow) fighting amongst themselves for the loot. Socialism concentrates all the loot in a few “power locations” making it easier for the smart amoral scumbags.

      This is why fascist ultimately wins.

      The teabaggers know this (in their gut) but their brains are too tiny to fight the story the sociopath shrills in their media project. If any change for the good happens it will have to come from the destruction of the Democratic Party (the socialists) to be replaced by something else (which I can’t comprehend). All the socialists do is make it easier for sociopaths to win.

      1. Anonymous Jones

        Isn’t that the lesson we learned all too well in Scandinavia? Those effing socialists turned that part of the world into an effing fascist playground, destroyed and then firebombed the local communities, and made life a living hell for all involved such that suicide was the only logical, palatable option remaining.

        1. NOTaREALmerican

          Socialism isn’t the same everywhere. I’m not talking theoretical socialism, I’m talking applied socialism (socialism run by the best and the brightest of society – the sociopaths).

          US applied socialism is the government redirecting taxpayer loot to the buddies of the politicians (services for fees) which is the ONLY system of government the US has at all levels (loc -> feds).

          Of course Europe will be (slightly) different. The societies will apply the socialism differently. European nationalism (and localism) has a nice tendency to keep the various governments (and the related sociopaths) somewhat beholden to their OWN citizens. (Italian citizen: If those goddamn Germans can have [fill the blank] for its people then so should we!)

          American don’t have socialism “for the people” BECAUSE we all despise each other more than any outside nation (say Canada).

          1. NOTaREALmerican

            State capitalism, applied socialism, neo-bozoism…

            What difference do the names make? If you gather all the loot into one big pile (say DC) the sociopaths will own it all.

            It’s the STORY (mythology) that the sociopaths tell their true-believers (via the media) that determines what system the dumbass peasants “think” is in place. The guilty smothering mommy party story is socialism. The shame-filled kick-ass daddy party story is fascism. Different clowns (and gender), same circus.

            Notice how BOTH stories will be true for different sets of dumbasses, and AT the same time.

          2. RagingDebate

            The story of the Golden Calf after Isrealites left Egypt comes to mind. The people left with gold, silver and other spoils by walking off the job. It was probably bribe money for the slaves not to revolt.

            Anyways, Moses comes down from the Mt. Sinai to find that the people have melted down all of the gold into a Golden Calf. Why is that a problem? Because you can’t exchange a Golden Calf for goods to march through the dessert!

            TBTF will be broken up as the people clamor for basic sustinaince. Decentralization is inevitable. Global military misadventure will be the choice of TPTB over melting down the Golden Calf. I am preparing accordingly to have a less hair raising march through the dessert.

      2. sgt_doom

        ‘It’s inevitable that these “kind of people” would win.’

        Well, yes, in a particular context or confined area, that is frequently true.

        But in today’s context, they will end bring everyone else down, such that inevitably those 65,000 and counting synethics introduced — without being tested for toxicity — those neverending ecology catastrophes — and this BP gusher is taking on the look of an Extinction Level Event (methane and all) — and the forever spiraling down of quality of life for the living, while the Infantilized Zombie Consumertards blithely believes progress is marching on, such behavior is completely and permanently contra-survival

  6. mitchw

    As someone that went to school with these types I had the chance to observe their great social skills/rapacious self interest at an age when I had little to lose. Really Tom, you didn’t know?

    1. NOTaREALmerican

      Re: Really Tom, you didn’t know?

      No. I still don’t know. I suspect, but my brain intuitively worships “my betters”. For humans to have developed the societies and AND history we now observe there would HAVE to have been an instinctive worship and trust of authority.

      And, who would be better to be “the authorities” than the sociopaths.

      (See anthropic).

      1. sgt_doom

        Forgive me for bringing “pop culture” into a pop cultural context, but two films released over the past several years each have a classic portrayal of events today:

        First, in The International (Clive Owens, Naomi Watts), the actor playing the Defense (aviation) industrialist in Italy (Calvino), explains debt and the control it allows and forfeits to the banksters.

        Second, in 8MM2 (Bruce Davison, Lori Heuring, etc.), Bruce Davison holds forth on the attitudes the rich are born with — and does so brilliantly (acting wise).

        These two vignettes say it all….

  7. wallyworld


    Brave to admit your own doubt and shortcomings but how much of Ambac’s losses in your estimation came from fraud? Given how easy it was to ignore potential losses due to historial information like HPA I think optimism played a much larger role than crookery for the downfall of your industry. Blaming the scumbags in the world will help everyone sleep better at night but it probably wont help disaster from striking again.


    1. Yves Smith Post author


      You clearly did not read the post closely. Tom states that overoptism and undue faith in historical data was the main cause of his and other players’ errors.

      1. steehead23

        Yves, From where does this overoptimism originate? I believe that Tom’s lament identifies a form of socio-pathology or group-think on Wall Street and beyond. Just as a fearful teenager might be persuaded to cliff-dive by his taunting peers, financial firms were goaded by their peers into taking risks they might otherwise have eschewed. Enron, and Jeff Skilling’s motorcycle mania are telling examples of such testosterone poisoning. More frightening to me than the revelation that some nice guys are crooks is the realization that, due to their wealth, these crooks are able to manipulate public opinion (though MSM) and politicians (through bribery) to such an extent that rationality is being rapidly replaced by boosterism. This does not auger well for sensible management of the coming catastrophe.

      2. John J Xenakis

        >> “You clearly did not read the post closely. Tom states that overoptism and undue faith in historical data was the main cause of his and other players’ errors.”

        Yves, “overoptimism and undue faith in historical data” doesn’t make sense. Maybe that excuse worked in 2003, or 2004, or 2005. But by 2006, it was clear to me and lot of other people (eg Calculated Risk and Tanta) that the real estate bubble was bursting, and that the financial models were wrong. If these CDO managers had been honest, then they would have at least warned investors of the danger. Instead, they did the opposite: The sales of fraudulent CDOs surged in 2006-2007, as they raced to sell as much crap as possible before the music stopped. There is absolutely no way that these “experts” who were committing this fraud, or their managers, did not know that they were committing fraud.

        This is circumstantial evidence, but it proves that there are millions of stories of fraud still out there, where there aren’t people like Tom Adams that have the courage to tell them. “Overoptimism and undue faith” is a copout and an excuse being used by people who belong in jail.

        John J. Xenakis

      3. wallyworld


        “As this realization began to sink in, I began to wonder how I had made such mistakes… The more I pulled on these threads, the more I discovered that much of what I thought I knew was based on things that weren’t really true. And by that I don’t mean assumptions about housing prices, I mean information people like me had been provided about specific deals by other parties to those transactions. ”

        That makes it sound like hes shifting the cause for the systemic blindness from Big Picture Misunderstanding to Malicious Agent Manipulation since that is the whole point of this post.


  8. Tom Crowl

    What a tragic and costly lesson – that probably WON’T be learned – about the “Emperors” we choose.

    We ‘believe’ on the basis of their “clothes”!

    …And all the metaphoricals ARE included here: facade, image, style, family connections, academic pedigree, etc.

    (Pssst… They’re naked!)

    But the facade goes on!

    Here’s an interesting article from the Atlantic with a take on this kind of ‘showbiz’ that American companies are currently using in China:

    “Rent a White Guy – Confessions of a fake businessman from Beijing”

    Kudos to “i on the ball patriot”…

    Naked Emperors are dependent on no one looking to closely at the parade.

  9. JohnD

    So it seems the adage that ‘in the land of the blind, the one eyed man is king’ is only valid if the one eyed man is not looking the other way, to keep the revenue rolling in.

  10. jdmckay

    Thanks for the mea culpa on behalf of CDO managers… agree, they were fraudulent.

    But… what bothers me more: they were many, many signposts along the way that were ignored by +/- 99% of your industry. Among them…

    a) The huge volume of pooled ARM’s, w/very high resets
    b) Passing of ARM paper on very fast turnaround (30/60/90 days by Countrywide)
    c) Dramatic downturn in highpaying domestic jobs/industry, well underway by ’03: eg… who can afford these payments?
    d) Huge deregulation (eg. completely ignoring) everything financial by Bush Admin… across the board, from the git-go. Given scope of Enron/Ca. energy scam, and fact Enron was both WS darling and in bed w/BushCo… no meaningful reform, much less investigation: eg. if these guys were cooking books, perhaps maybe, just maybe, some of the other big boys might be doing the same?

    This stuff was common sense… finger-in-the-wind stuff.
    The few who raised red flags at various points along the way were utterly shunned.

    So anyway, I am happy to know these CDO managers were crooks. I do wonder why DOJ never issued doc preservation orders to all the others complicit… just relying on their goodwill?

    And what about all the fund managers, public & private, who literally abandoned due diligence on all this stuff? Across the board, from state to state, these managers bought these bonds at behest of high powered WS reps infiltrated through state govs, also collecting huge fees, w/little (and often no) due diligence in bond’s composition: eg. professional managers were little more than pass-through-bots.

    From where I sit, finance industry is far more saturated w/disease than you imply. And from where I sit, fact that 2+ years after consequences of this malfeasance, practically nothing in way of systematic review/correction has taken place…

    I dun’o, I think this “biggest financial crisis since the great depression” was simply round 1.

    1. NOTaREALmerican

      Re: practically nothing in way of systematic review/correction has taken place…

      And, really, how could it be fixed if the dumbasses keep voting Republicrat year after year after year after year. It’s all the same people owned by the same families and corporations.

      Until cynicism rots away at enough of the American mythology that the peasants get depressed, nothing can change. It’s all about optimism and bullshit. The nobility knows this, the vassal sociopaths know this too.

      Green shoots!

      1. Fred

        Reform comes when the top 10% gets fed up with the behavior of the top 1%. That will happen when the stock market crashes again. As an investor, one of the reasons I am sure the stock market will crash again is precisely this. Without a crash, no reform, because without a crash, the top 10% isn’t hurting and when they aren’t hurting, they don’t want to rock the boat. But with no reform, the situation will fester such as to make a crash inevitable. Thus there will be a crash unless we get reform, and there will be no reform unless we get a crash. Ergo, we will get a crash eventually. (They don’t teach this logic in finance school.)

        1. NOTaREALmerican

          Yeah. Probably true. The bottom 90% have no influence, that’s for sure.

          But, it will have to be both the stock and bond market collapsing, no?

          Lot’s of people I know have cycled out of stocks, but almost all of them to long bonds (after all, these have the best historic returns and – we all know – past performance is a guarantee of the future).

          1. Fred

            Plenty of people still have a lot in stocks, but you are correct that it will take a crash of both stocks and bonds to really move the pain needle into red territory. That will take inflation. Which explains why there so much hysteria about inflation these days. The asset owners (the wealthy) know that inflation and higher interest rates will really bring asset prices crashing down and they want to push this day of reckoning as far into the future as possible, and damn the unemployment rate.

            So what I’m predicting is first a Japan style deflationary crash of stocks and housing, while bonds do great. This will go on for maybe 5 more years. Eventually, of course, the constant budget deficits and money printing will cause the deflation to end, and then we get much higher interest rates to control the inflationary pressures. Stocks and housing are inflation hedges, but the higher interest rates will offset this factor, so they will stay where they are (down), and meanwhile it will be the bonds turn to come tumbling back to earth. There will be no safe havens, at least for passive investors. The best a passive investor can do is win at zero-sum games, by opportunistically buying dips and selling rips, thereby milking the saps who do the opposite. Not just stocks, but anything. Bonds, gold, housing, farmland, whatever. Needless to say, make sure there really are some dummies out there waiting to be fleeced, and fleeced by you in particular, before entering zero-sum games. Else you may be the one getting fleeced.

            For those unfortunates who still have to work for a living, getting into the government security complex is a good idea, because I also predict an age of domestic terrorism awaits us somewhere down the road about 10 years out. Right now Americans are just beaten down victims, but I predict a day will come when the young people get off their asses and decide, hey if I can’t get a job, at least I might as well do something exciting with my life, like be a terrorist. There will be booming budgets in the police departments when this happens.

            Another way of looking at our situation is that the good jobs and businesses for the next 20 years or so will involve picking over the rotting carcasses of declining society, as opposed to creating new industries. This won’t go on forever, but the transition to a new growth era is a long way out.

    2. readerOfTeaLeaves

      Agree that this was ‘finger in the wind’ stuff, and never could figure out how it got so out of hand…. oh, wait: Bush administration’s “ownership society” propaganda.

      As for Tom Adams, I admire your candor and it seems to have prompted an array of very interesting comments and reactions. Now that you are older and wiser, you’re obviously applying your knowledge in some meaningful fashion — like this post.

      I’m really struck at how well this post synchs with one of the key themes (at least, as I read it) of Econned**: economics is in large part a social science, a social phenomena. But accelerating in the 20th c, it became ‘mathematized’ so that it would appear more academically credible. Along with that shift, many of the underlying assumptions of economic authorities were actually morphed toward abstractions bent in order to make the math formulas more workable; this slight-of-hand would have become obvious in the harder sciences, but in economics cause-effect relationships are tougher to nail down, so the problem grew like kudzu in the night.

      Given that you probably aren’t a mathematician, it makes sense that you relied on ‘trust’. Because markets rely on trust to function.

      It does not seem possible to me that markets can recover if there is no penalty for massive theft, lies, and fraud. Markets are social creations, and they obey the laws of human psychology, in which the ‘mathematized rationalizations’ certainly play a psychological role — indeed, I’d argue that is their primary role is psychological: to make people feel safer, and that’s exactly why they are so terribly dangerous. They sanctify Free Market Ideology with engineering or ‘sciencish’ decorative motifs.

      I don’t know whether the people that you dealt with used math formulas to appear more credible, or ‘trustworthy’ while asking after your family. But I do admire your guts in trying to figure out what happened.

      I suspect that only those ‘badly burned’ by the last phase of economic folly will have most to contribute going forward, and it’s my hunch that DownSouth’s path into neuroeconomics and social factors that underlie and build trust are some of the most critical avenues to pursue going forward.

      Well, that and ecosystem dynamics.
      From my environmental studies perspective, you were the victim of a species of predator that uses disguise to its advantage: how to keep those predators at bay by figuring out ways to reveal their true identity is the Next Big Thing in finance, at least from this aging environmentalist’s perspective. The simplest way is clearly to make the system more transparent; obviously, the predators abhor that notion.

      1. NOTaREALmerican

        Re: The simplest way is clearly to make the system more transparent; obviously, the predators abhor that notion.

        That’s a funny connection. I never looked at “transparency” as removing the camouflage from the sociopath predators.

        At the 2Big2Fail zombie I work for management is always sending us worker drones to “transparency classes”. Not how to be transparent, but why it’s so good to have it.

        1. readerOfTeaLeaves

          I’m not the least bit surprised to read your comment.
          How else would they be able to claim credit for ‘sending you to transparency classes’, while hiding behind their facades of complexification and opacity?

          If the deals we’ve seen revealed by Yves, by the FCIC, and by Matt Taibbi and others were done in plain sight, the national mockery and ridicule woud be enormous. The MOTU wouldn’t have the nerve to appear in public, and their methods of extracting money would be quite clearly not based in creating real value for the larger economy.

          Their biz model is based on opacity, as near as I can tell.
          Because that’s where they can generate their fees.

        2. jdmckay

          At the 2Big2Fail zombie I work for management is always sending us worker drones to “transparency classes”.

          “transparency classes”… not sure whether that’s depressingly Orwellian or hilariously funny.

      2. jdmckay

        it became ‘mathematized’ so that it would appear more academically credible. Along with that shift, many of the underlying assumptions of economic authorities were actually morphed toward abstractions bent in order to make the math formulas more workable; this slight-of-hand would have become obvious in the harder sciences, but in economics cause-effect relationships are tougher to nail down, so the problem grew like kudzu in the night.

        Fully, completely agree.

        It does not seem possible to me that markets can recover if there is no penalty for massive theft, lies, and fraud. Markets are social creations, and they obey the laws of human psychology, in which the ‘mathematized rationalizations’ certainly play a psychological role — indeed, I’d argue that is their primary role is psychological: to make people feel safer, and that’s exactly why they are so terribly dangerous. They sanctify Free Market Ideology with engineering or ’sciencish’ decorative motifs.

        Again, fully agree. And to me, this is among the most egregious condition of this “meltdown”, and the condition which gets ignored while everyone… everyone, flails in the wind while the same behavior continues.

        Like so many other processes with complex interactions: physics, climate etc., the flow/dynamic(s)/representation of financial system functioning is this endeavor is entirely understandable to most people if (and I emphasize if) it is explained to people.

        But it largely has not been explained to people. And by my observation, fed gov. has not only avoided the explaining, it has aided the obfuscation while re-financing the crooks.

        In my professional life (tech), from mid-80’s through millineum, there was critical mass which was committed to (at minimum) seeking excellence. The Ralph Peters types, they were all over the place. And allowing for a gap between honest effort towards excellence and attention to filling gaps where those efforts fell short, huge… huge progress was made. IBM, HP, and bunch of others toed the line of their own accord: it was a dominant inertia.

        This commitment to results, in highly technical fields which demand getting it right (eg. if you don’t get it right, the product fails)… it has evaporated across the board: financial, tech, engineering (sic. BP spill). And lobbying efforts combined w/saturating MSM to the masses have persuaded a citizenry that layers upon layers of quick/dirty product, requiring humans to at least endeavor to be honest and master their skill set, have been deliberately compromised, covered up, and misrepresented.

        Nowhere is this more evident then financial industry, for many of the reasons you state. And beyond what they state, the abandonment of professionalism… of mastering a trade and being responsable for integrity of a person/group/corp’s little corner of the system…

        COOKED! UNRELIABLE. FALSE, and often deliberately so.

        When a profit motive, by law, allows those in stewardship of finance representing the collective wealth of a society, to leapfrog the due dilligence thing, to have their profit trump the health of the society in which they function… when in fact their profit motive repeatedly has demonstrated it will undermine this health…

        What do people expect?

        The whole damn thing is a house of cards, it’s managed by people who, for some time now, have been able to get their gospel of fraud-is-moral into the main working of finance/economy… really, what do people expect.

        And given it’s continuing unabated, all the more… this crap is AFAIC representative of American now, it’s taken hold, and ensuing results are vague only to the extent of not knowing particulars: that small groups of captains-of-finance will get the spoils at expense of the remaining 99% +, that… that, given current system, is pretty much a given.

        1. readerOfTeaLeaves

          Agree that ‘professionalism’ and respect for mastering a craft or profession has become increasingly difficult as ‘profit’ trumps all, and markets have become ethical sewers in too many instances.

          I’ve occasionally pondered how long it would take Pixar to explain this mess to the US public using animations; no doubt, some of the derivatives could be drawn with the same kind of menacing sneers given by Pixar to the worse offenders in “Up” or “Little Nemo” or “Toy Story”.

          Fundamentally, some of the relationships are not at all complicated.
          However, from some of Nomi Prins’ writings, and William Black’s writings, and others that I’ve encountered, it’s horrifying to get a sense that many in government don’t actually bother to try and understand: ‘what is a dervative?! HOW does someone make one? Show me the steps; explain this process to me…’

          Hence, IMVHO, Yves and her posters are doing yeoman’s work in explaining HOW this mess was finagled. And how much of it was based on social networks, on complexity that few mere mortals could untangle — so, like Tom Adams, they trusted reputation. We all did.

          And as ?Vinny points out, sociopaths can be extremely charming.
          They’d have to be, in order to pull of the kinds of heists we’re seeing. No one with a SnidelyWhiplash persona could have pulled this off. It surely required charm and confidence to convey: ‘you can trust me’. And they remembered to ask after his family? Of **course** they did!

          But could they, like any ethical engineer, consider the implications of what would happen if their systems failed? No.
          Could they move through phases of Quality Anal? I see no evidence that they ever did any such thing; why test something that’s built to fail, after all? That would only let the cat out of the bag.

          We’re in an age where we suffer from mixed metaphors and mistaken analogies. (I myself am guilty of this constantly; most creative thinkers are.) The fact that heat ‘flows’, and that money also ‘flows’ does not mean that money ‘flows’ in the same ways that heat does.

          Indeed: money ‘flows’ according to basic functions of human psychology.
          Whereas heat ‘flows’ according to basic functions of physics.

          You’d think responsible adults would ask themselves in what ways their analogies were flawed.
          But obviously, too few did. Particularly those extracting executive munificence.

          So now, less money all around for genuine investment in the kinds of professionally driven, responsible, excellence-oriented technologies that you (and I) no doubt were fortunate to be around.

          Instead, a cowardly government, a confused populace, and a few bloggers and media people with integrity trying to unravel and explain it all. If nothing else, they represent the vestiges (and perhaps the ‘green shoots’) of that professionalism that was so critical in producing innovations and workable solutions.

          1. jdmckay

            ROTL… good post, good comments.

            it’s horrifying to get a sense that many in government don’t actually bother to try and understand: ‘what is a dervative?! HOW does someone make one? Show me the steps; explain this process to me…’

            Indeed. Most congessional hearings I’ve watched these recent years are embarassing in that regard… lawmaker’s statements rarely meet a remedial standard.

            Hence, IMVHO, Yves and her posters are doing yeoman’s work in explaining HOW this mess was finagled.

            Yes… but always, for some time now, these discoveries are after the fact… too late. If “the system” does not somehow reqain some equilibrium, account and put a stop on these kinds of fraud/looting in embryonic stages, then these efforts are just footnotes.

            The torture regime of BushCo, now rubberstamped and continued by Mr. “Hope and Change”… more of the same.

            Is nice to know, IMO, that nature/creation does regenerate itself… it has rules that don’t care about this stuff. Only question is whether humans will get their act together in time to allow continuation of the trip.

            Right now, the way things are going, I’d say chances less than 50/50.

    3. sgt_doom

      “.. they were many, many signposts along the way …”

      No kidding!! Beginning with anyone bothering to read the predatory legislation passed which allowed for it to happen: Private Securities Litigation Reform Act (1995), Gramm-Leach-Bliley Financial Services Modernization Act (1999), and the most blatant one of all, the Commodity Futures Modernization Act (2000).

  11. Doc Holiday

    It is estimated that approximately one percent of the general population are psychopaths. Hence we can simply deduce that the majority of anomalous individuals that are employed as financial engineers at hedge funds, or within Treasury-like departments — are people with mindsets that are extraordinarily prone to the condition of psychopathic behaviors. To a man, to a women, financial engineers will steal and kill as efficiently as any deviant that is in prison for any number of heinous crimes. The only difference between a Charles Manson or Son Of Sam example, is that financial engineers always wear expensive suits and ties, versus orange prison-wear.

    ==> “Hare states that: “Lacking in conscience and empathy, they take what they want and do as they please, violating social norms and expectations without guilt or remorse””

    1. craazyman

      and the other 79% are “good Germans.”

      That makes 80%

      19% are outraged ethicists, who won’t directly participate but won’t intervene, out of either fear or moral paralysis.

      And the final 1% are the martyrs.

      What a mathematics.

      Ecce Homo. :)

      I’m being very abstract, of course.

      1. sgt_doom

        Of course, historically in any culture, group or society, it is always the small percentage of humans at the extreme ends who actively practise good OR evil. It is invariably up to the good extremists to sway the masses for failing that, such a path leads to doom!

    2. craazyman

      Whoa! Doc, it was you who linked the Richie Havens’ Youtube video of License to Kill.

      Shit man, it’s all I’ve thought about for 3 days. Over and over and over. Those words.

      The funny thing about great writing like that is it penetrates the mind fog and cleans the gates of perception and lets you see deep reality, like a hard and real dream, the thing that IS, not just the apparitions of the things that are.

      Here it is, from Bob Dylan, and what better way to put it about the enablers, look-the-other-wayers, the cup-out-to-get-scoop-they-can-before-the-spigot-shut”ers” ha ha , the get it while the gettings gooders, the-it-must-be-OK-or-everybody-wouldn’t-be-doing-iters, the doo-doo-gooders and all the ministers and preachers of the big heaven, and all the ones who smiled at it all when every sign in the sky, every lightbeam in the air, every smell that wafted from it, every noise it made, said “Bullshit”:

      * * *

      Now, they take him and they teach him and they groom him for life
      And they set him on a path where he`s bound to get ill,
      Then they bury him with stars,
      Sell his body like they do used cars.

      Now, there`s a woman on my block,
      She just sit there facin` the hill.
      She say who gonna take away his license to kill?

      Now, he`s hell-bent for destruction, he`s afraid and confused,
      And his brain has been mismanaged with great skill.
      All he believes are his eyes
      And his eyes, they just tell him lies.

      But there`s a woman on my block,
      Sitting there in a cold chill.
      She say who gonna take away his license to kill?

      -Bob Dylan, License to Kill

  12. LeeAnne

    Thank you Tom. A first hand account by a Wall Street professional, an important piece of the How Did the Banksters Get Away With It puzzle. I feel sincere empathy for Wall Street professionals victimized by the looting –a veteran myself of the 1950s and 60s and again for a few years in the ’80s, it was a great business even when the income was just a tad more than average. A lot of young people trained in Wall Street have been out of work and like the people downsized in corporations over the last 30 years of M&A rampage over the dead bodies of US working people led by Kohlberg Kravis Roberts & Co. have ruined careers.

    NOT OFF TOPIC -we have to keep an eye on these fellas, the bosses behind the curtain except for some old cadgers eager for the limelight before the final curtain falls like Pete Peterson. With his grandfatherly (always the hustler) book cover image celebrating his retirement to do WHAT? All together now: TO GUT SOCIAL SECURITY and GAIN CONTROL OF of your LIFE, RETIREMENT SAVINGS and RETIREMENT PLANS for GLOBAL BANKERS. To remove Social Security from the safety, stewardship and guarantees of the US Government whose currency even in these difficult economic times is still considered the safest by the rest the world.

    Maybe his plan for privatized Social Security is to arbitrage currencies? Heh!

    Targeting 30-year-olds with propaganda as he is doing with his new acquisition here is like taking candy from babies since these young ‘uns have never known an economy with advisors they can trust to be independent and do the right thing for American citizens motivated by the reality that there is no them and us; that THEY are US.

    Once the current income disparities were put into place with wide gaps and class distinctions, that ethic went with it. Now, if you’re not a crony in the global power, money and influence cabal, you are a commodity.

    And, if you you are an American citizen, you are nothing but a commodity; easy prey for targeted mass marketing programs, all gamed by FIRE industries and Finance through the swiss cheese legal system designed by corporations and perpetuated by your elected government officials. A Swiss cheese system where they get the cheese and you get the holes.

    Pete Peterson, former Chairman of the Council on Foreign Relations, hand picked Geithner for the position of NY Fed President. Geithner was a Senior Fellow on the Council on Foreign Relations. Peterson was co-founder and CEO of the Blackstone Group hedge fund, which spun off BlackRock. 49% of BlackRock is owned by Merrill Lynch. Merrill Lynch is owned by Bank of America

    Pete Peterson is the guy now joined by another old crank, former Senator from Montana, Alan Simpson, determined to kill Social Security.
    for laughs, Alan Simpson on the ‘lesser people>here

    We’ve heard ‘lesser people, ‘common people,’ ‘little people,’ ‘small people.’ Quite a struggle, eh? To find the right nomenclature for ‘everybody but us.’ But I digress.

    Pete is working on his legacy ‘ … served as US Commerce Secretary, kept $2 Billion mostly tax-free and inheritance tax free acquired by doing well by doing good in non-profits and croniism and killed Social Security, the very successful 70 year old US government guaranteed pre-payer income program for the elderly.’

      1. LeeAnne

        David Walker looks like a lightweight as a financial terrorist –’we have to do something about the ticking debt time bomb by umm 2011?’ – not convincing.

        But he’s definitely in the ‘keep an eye on him’ category.

    1. sgt_doom

      Thank you, LeeAnne, and to add my humble comments to your wonderful comments, all are advised to pay close attention to the goings on of anyone and everyone affiliated with the:

      Peterson Institute (Goal: privatization of everything)
      Bretton Woods Committee ( — the number one lobbyist group for the ultra-rich
      Group of Thirty — the forum of the global central bankers

      1. LeeAnne


        Thank you for the leads and for the complement. I will look at all of them with great interest.

        I so agree with you. The bubble de jour is privatization of the commons; the players and the projects need watching; a separate web site of its own perhaps with details and something in the law for transparency and early warning to communities affected.

    2. Joyful

      Wyoming. Isn’t Simpson from Wyoming? Senator for a few thousand people and ruling the masses.

  13. DownSouth

    Tom Adams,

    You might want to beat up on yourself a little bit less and instead mark this up to a learning and growing experience.

    Here is a link to an outstanding lecture by Erin O’Hara who is Professor of Law, Associate Dean for Academic Affairs, and Director of the Law and Human Behavior Program at Vanderbilt University Law School:

    I suppose law and economics is an age-old theme, but on the cutting edge are law + neuroscience and economics + neuroscience.

    O’Hara’s lecture is on interpersonal trust and what influences it. Legal rules play an important role in the formation of interpersonal trust, as do a number of other factors which she identifies.

    I think that you might be interested to know that your gullibility, given how the human brain works and the environment you were operating within, was not at all out of the ordinary.

    Maybe if you, as a practitioner, could put your head together with that of O’Hara, who is a theorist, you might come up with some suggestions on how we might navigate ourselves out of this morass.

    1. tom

      thanks – very interesting information! I’m trying to learn as much as I can…

  14. MinnItMan

    I was an agent of a different kind of monoline insurer, one that included services on the front end, getting the papers signed that made this whole thing go (among these papers were income statements by a guy who claimed income from a bird feeder manufacturing business out of his garage to support his application – IIRC, in order for it to be accurate, required him to make 1000 hand-made bird feeders a day with no employees). 5 minutes of attention by anybody who cared would have unravelled this thing back in 2001. We weren’t paid to raise questions about this kind of thing, and because we were monoline, really shouldn’t have been expected to.

    The main reason I bring up my role, is that by late 2001 (in the months following 9-11), it was clear that my largest customer was producing loans that went bad at a rate of 30-40%. A year later, that number was easily 50%.

    I’m not going to cop to anything more than that by the time I figured out the many ways that I was likely to get screwed, I had also seen the massive upline CYA systems in place with lots of infomation systems that, while I knew my “day of screw” was ahead of me, I didn’t feel that bad for the upline. It did everything possible to avoid the obvious. Didn’t wanna know, didn’t care. Just keep the money flowing our way.

    I never got rich. I never had a second house. I never had a mansion and a yacht. I did work 15 hours a day to keep my part from imploding, and I did have a conscience that kept me from chasing the more lucrative business that more explicitly asked for my complicity in routine screw jobs, that simply asked I check my conscience at the door. I was the greater fool.

  15. Fred

    Question for Tom. Are you retired? If not, what are you posting here for? Advertising yourself as a whistleblower type is unlikely to help your employment prospects on Wall Street. Do you plan to write a book or run a blog like Yves? Why didn’t you post anonymously like the rest of the peanut gallery here, including yours truly? More i think about you, the less sense you make.

    1. emca

      That is grossly unfair, if not asinine.

      Tom doesn’t need Fred to sign-off on whether to be anonymous or not. He’s free to chose without imputing his character. He doesn’t need permission from you, me or anyone else (well maybe he does from Yves).

      Your comment is the flip-side of someone saying, “why are you posting anonymously? What do you have to hide?”

      sense or nonsense?

    2. Yves Smith Post author

      That is a simply offensive remark. Who the hell are you to attack the legitimacy or motives of someone who has the courage to call out the bad practices he saw first hand, and do so in his own name? Most people criticize anonymous reports precisely because there is no way to verify whether the person is being truthful, or fabricating from whole cloth.

      And you AlSO assume that A. Tom wants to work on Wall Street (when had not during his entire career) and B. that is the only possible source of income in the entire economy.

    3. tom

      thanks. that comment made me chuckle: how abnormal to actually speak your mind and put your name to your words!
      A fair number of people I knew and respected have left the industry and have no desire to return, speaking with their feet rather than their pens.
      I do have a book manuscript, if you are interested, though book writing seems to be an even less lucrative career than what I’m doing now.

  16. Vinny

    “ICP stole from my old company and from AIG and caused millions of dollars of losses, the loss of many jobs, the misapplication of taxpayer funds and contributed to the destruction of the economy. They did so while smiling and shaking our hands, vowing to protect our interests and then asking about our children and our families.”

    Clearly psychopathic! Years ago I worked at a federal prison, seeing the worst of the worst criminals in the country (many white collar). They were all charming, charismatic, and always lying. Fortunately, we also had their police and court records handy to refer to, which were always in stark contrast to the lies they were telling us to our face.

    I assume most ICP people you dealt with did not have a criminal history you could easily dig up. In these cases I simply advice people to dig up not-so-criminal records such as speeding tickets, unpaid taxes, and more importantly to look into the person’s life starting in childhood. Find out what kind of child they were, what kind of adolescent they were, what kind of college student they were. Look for patterns. Did they ever cheat in school? If they ever published anything, see if that was plagiarized. Look closely at parents. Were they alcoholics? There is a clear genetic correlation between psychopathy and alcoholism. Build a picture of the person’s early life. Even the color of the car somebody drives tells you something. Speeding tickets are bad. Did he cheat on his spouse? I’d look for things like that. And believe me, a psychopath is a psychopath all the way and all the time: he’ll cheat in business, he’ll cheat on his wife, and he cheated in school. He surely left a trail you should be able to track down.

    Of course, all that sounds like a lot of detective work. If that’s just too much, there is always the alternative of blindly trusting people again…LOL


    1. Pithhard

      Very interesting. I’m going to keep some of your suggestions at hand from now on. I immediately recognized what you said was true, but never really saw the pattern for myself. Given your background, you might have a book here; or a feature article for sure.

      1. Vinny

        As far as books about psychopathy go, Robert Hare’s are good ones, especially “Without Conscience: The Disturbing World of the Psychopaths Among Us” (ISBN: 1572304510). More recently he wrote another one called “Snakes in Suits: When Psychopaths Go to Work” (ISBN: 0061147893) which certainly describes the inner-workings of the average bankster.

        Hare also developed the “Hare Psychopathy Checklist (PCL-R), which is widely used by forensic psychologists. Perhaps it would not be a bad idea for anybody in business to keep a copy at the office, and, after a business meeting with a new prospect, to go through its items to see how many criteria the person they just met fits.


    2. Skippy

      MI5 trainees are encouraged to drink after the day is done, they have a lounge bar for just such purposes on site.

      Skippy…alcohol is one of the oldest mind altering tools in the behavioral control tool box.

      1. Vinny

        That’s a good point, because psychopaths almost always display an irresistible urge to brag about their past “accomplishments”, and alcohol certainly makes that easier.

        Getting criminals to brag about past crimes is an old and trusted police interrogation technique.


        1. Skippy

          A greater accomplishment is to take a individual with said pathos and re-train him/her to understand their weaknesses (aka emotions) and modify, allow them to fain as average, when they think its sacrifice for the greater good.

    3. i on the ball patriot

      Vinny, psychopathy is ‘normal’ …

      There is a whiff of righteous indignation and deflection in your post that masks the reality and leaves the most important issue — in a remedial sense — not discussed. That is; that psychopathy is not only ‘normal’ (it reflects the base cannibalistic human nature in ALL of us) but it is also manifest in GROUPS of humans as well.

      All of the negative traits Tom attributed to ICP, and all of the negative traits that you attribute to psychopathic behavior in the individual could very well be attributed to scamerica and other nation states.

      This is most important because WE ARE ALL PRODUCTS of our individual cultural conditioning, and that cultural conditioning, that once found its wellspring in a family base source, now finds its origins in a wealthy ruling elite corporate base source. The source has been hijacked and we are all being schooled to be little psychopaths.

      I too was once like Tom and very gullible in the sense that I pretty much believed all of my cultural programming. Some of that programming, like an overly strict religious dogma that is too inhibiting of spirit, the sentient individual sheds ‘naturally’ over time, in my case it was my catholicism.

      But the ‘core’ of that programming, all of the social mores, is quite ‘natural’ for us and retained. When the nation has been incrementally hijacked and the culture made more psychopathic (intentionally made to appeal to our cannibalistic nature so as to divide us and pit us one against the other in a decimating perpetual conflict) It is like being born into a DYSFUNCTIONAL family, and so we ALL exhibit psychopathic behaviors — we hate the Mexicans, the gays, the rag heads, the shiftless homeless (most recent in the demonization box), the terrorists, (our victims that resist with their justified anger re-branded as evil), etc. And we also accept as normal our position in the world pecking order. We are always the good scamericans promoting freedom and democracy around the planet and the pains of those we have deceived are always masked from us and those who resist our predatory exploits are conveniently re-branded terrorists for us so as to absolve us of any guilt. Let’s be honest Vinny, we are perfect little psychopaths.

      Hitler did this with the German people, he perfected many of the demonization techniques being used today. Instilling pshchopathy is being done today with the macro orchestration of global propaganda.

      I am not finding fault with your post so much as broadening it so that we can all realize the part WE ALL play in the ever expanding and contracting psychopathy dynamic.

      You can not solve a problem without first stating the problem

      My break with the ‘core culture’ was as the result of a catalytic event (like Tom’s in the sense that the gross betrayal caused me to question the illusions I was living in) severe enough that it caused me to question my very being. As a result of the intentionally created financial crisis, and the BP oil volcano, many people will now be having very similar catalytic epiphanies.

      It is important that we look at the big picture of how and why we become what we are and how we form alliances and why they break down. In that spirit I repeat this from a past comment …

      ‘Morality’ is a construct of humans essential for survival. It regulates alliances …

      It IS a dog eat dog cannibalistic world, with all organisms governed by the base powers of perception and deception. Perception is the decision making function, and deception is the externalization of that perception. All externalizations of all organisms are deceptions (tools of dominance) made to get the needs of the organism met. Humans are presently the big dogs on the planet due to their superior ability to externalize themselves (the externalizations are now taking on a life of their own and represent what we are evolving into — disregard that for now).

      It IS an amoral dynamic whether you like it or not, and also, again whether you like it or not, your base sustenance is dependent on consuming; carbohydrates, proteins, fats, etc., from other, once living, or live as consumed, organisms. It is the food you eat. Nothing reveals the cannibalization for sustenance dynamic more clearly than putting food in your mouth (yes, we all work real hard to erase the blood dripping from the carcass in the slaughterhouse image).

      Organisms that do adapt and survive do so because they choose to form alliances and focus their deceptions on other organisms. We have the ability of free choice to do that, within our own spheres of influence, dependent upon our perception ability. So … rather than deny our predatory behavior, or use it to rationalize extreme predatory behavior betwixt and between each other, we should embrace it, and rise above it as much as possible. In that process we imbue the amoral situation that we are thrust into with an agreed upon ‘morality’ that serves our needs.

      The best we can hope to do, to rise above the very dicey situation we are thrust into then, is to form open and transparent well regulated alliances planet wide with all other humans, alliances that control fairly our intra-cannibalizations, and at the same time, treat those other organisms that we use for our base line sustenance, as food, as humanely as possible.

      We are in the soup we are in today because the intra-cannibalization alliances of institutions and nation states have been hijacked and co-opted by the wealthy ruling elite who now turn their deceptions against all.

      Deception is the strongest political force on the planet.

  17. Ray Phenicie

    I find this all very interesting-I’ve been following this topic (opaque nature of CDO’s) for quite some time.
    Pam Martens has had much to say about the way in which CDO managers were operating what amounted to a gambling casino. She paints with a wide brush but also pulls out some interesting details here
    and here
    -same philosophy at citigroup, different products.
    Search the web site for her writings to get an eyefull

  18. MichaelC


    The only way we’re going to find out what was really going on is for people who lived it come forward to speak about it. So you suffer some abuse from a few Monday morning quarterbacks who never stepped foot inside a trading room, I think you (and the rest of us)can handle that.

    Humility sucks, but it beats sociopathy. Cynicism and contempt for your “gullibility..naivety” reflects the terror that these guys are uncontrollable. Shame on you for being a mentally healthy human who refuses to accept that fate. (Irony intended, I foolishly refuse to accept it either)

    The 2 points that are most relevent from your post are:

    Fact 1. Bad actors always exist in finance
    Fact 2. Bad actors must be constrained, always and everywhere. It’s human nature, synthetic CDOs are just a fleeting abuse.

    So reasonably healthy adults should want to know:

    What did these guys do?
    How can we shun them?

    Keep working on the “what did these guys do?” bit.

    Leave the “How can we shun them?” to the rest of the normal folk who are revolted by these guys.

  19. Greg

    Pixar teaches us that the bad guys, like SnidelyWhiplash, are obvious to any who have eyes to see.

  20. Frank Karam

    I am a lawyer who is investigating some conduct that may be related to the information you have written about. I would like to talk to you about it. Could you contact me by e-mail.

Comments are closed.