I suppose when you’re 75 years old you realize your best days are behind you. You find it hard to keep up with the fast pace of the modern world. All these new things that are happening! You stick with what you know. The easy stuff.
Well, the SEC is 75 years old, and it's investigating Wachovia's Robert Steel. The agency must be frustrated by all these massive frauds it had no clue about until hearing from some newspaper or blogger or the fraudster himself. But even a dog can catch a parked car.
So we see the SEC investigating whether Steel lied when, just before his bank started exploring merger possibilities and then unraveled, he said that Wachovia had a
great future as an independent company, but we're a public company, so we're going to do what's right for shareholders, I can promise you that. But we're also focused on the very exciting prospects when we get things right going forward.
The only arguable misstatement here is “great future as an independent company.” If Steel knew or had strong reason to know that the bank was going to go bust or merge, then maybe there’s a problem here. Conceivably the SEC could prove something, after considerable discovery and sorting through exactly the details of the actual facts and what Steel knew and didn’t know at that moment (which, remember, was when the market was melting down in mid-September 2008).
And if the SEC does prove something, what exactly will it have accomplished? Punished an executive who was trying hard to save his company when everything was crumbling? No potential merger partner would be fooled by this statement. Possibly some traders plunged into the stock on the basis of this statement.
Do we want to make sure that investors of the future bet their farms on this kind of puffery? Or should we be devoting our resources to understanding how Wachovia and the rest of the banking and financial industry so suddenly got to the point that it found itself in in 2008?
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