A Financial Parable

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During the past 5 days in Toronto I have been working in the big beautiful Metro library on a special web study. And I have seen a whole slew of people pounding the EliteBooks for the upcoming CFA 2009 exams in June. CFA is the Certified Financial Analyst designation that is vital to getting a job in the Financial industry – it seems the huge layoffs at US banks and Wall Street have not deterred CFA  candidates northpof the border.

So being curious as to how tough the exams were I decided to take a look at Elite Books. You see the home screen shot  above. It turns out that Elite Books is a Chinese  knock off shop in Shanghai which copies  $300-1500 exam preparation materials (books and CDs) and sells them for $100 or so.  So those who are training to be financial advisers are learning first hand how to game the system – vital in their future jobs…. Oh and when I snuck a peek and looked up fiduciary trust in the index – you guessed it, nowhere to be found.

So are we to be surprised when it is revealed that Larry Summers, chief economic and financial adviser to President Obama, is found to have collected  close to $6 million from the banks and hedge funds last year (and as late as November 8th)? I have wondered why there has been  the following succession of financial decisions coming from the Obama team:

1)No immediate repeal of the Bush tax cuts for the wealthiest Americans;
2)No  attempt to prosecute the financial misdeeds from Anthony Mozilo at Country Wide Financial to bond agencies Moody’s, Standard and Poors, Fitch for delinquent derivative and other rating evaluations;
3)Allowing the AIG and Fannie Mae/Freddy Mac bonuses to go through;
4)No limitations on the the short trading and other market transactions that have so wracked financial markets;
5)So tough on the auto industry bailout which is  a pittance compared to the billions that are being handed out to the 
6)A toxic acid buy back plan of hundreds of millions of dollars that has the government shoulder 95% of the risk but only get 50% of the return. Reason – “we are buying private market expertise”. The government is providng some of the very same  private equity and hedge funds that got the economy into this mess with leverage ratios that got us into this mess.
7)Constant delays and putting off of financial regulation and limits to executive compensation that stoked the greed and ever wilder risk taking that nearly brought on a global financial collapse and just unimagined social/economic disorder.

So when I see our future financial experts learning “gaming the system” ropes … are the major cracks in the Obama Team Integrity Facade a surprise ?

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