Business forum: 'Fiduciary duty' could stem betting culture
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When I was growing up in the shadow of the Edgar Thomson Works of U.S. Steel a half century ago, it was easy to tell the bookies from the bankers -- and it wasn't just by the clothes they were wearing. If you wanted to place a bet, you went to a bookie; if you wanted to invest, you went to a banker or stock broker.
But times change. Now, not only is Wall Street a place where you can place a dizzying array of bets, it seems more like the big guys are rigging the card decks they deal to the rest of us.
Case in point: Goldman Sachs and its role in creating and marketing something called "synthetic collateralized debt obligations" (CDOs) to favor one client against all others.
The more the media peels away at the facts surrounding this sweetheart deal between the investment bankers at Goldman Sachs and the hedge fund run by John Paulson, the more it seems a game of blackjack.
Most of us know you can't beat "the house" in blackjack. More and more people are coming to the same conclusion about Wall Street. And that is a cause for grave concern. If investors lose confidence in the integrity of our capital markets, the marvelous system of "free enterprise" that we Americans have developed over two centuries will suffer exponentially.
As one of three members of the Pennsylvania Securities Commission, it is my responsibility to promote a fair and vibrant system of capital accumulation in our state for citizens and businesses alike.
But that task is made more difficult by some of the antics happening on Wall Street.
I'm not talking simply about derivatives and CDOs and credit-default swaps which were never intended as vehicles for average investors but, rather, as the diversified and relatively conservative investment vehicles people would find suitable for retirement funds or college tuition nest eggs for their kids.
First Published May 1, 2010 12:00 am
