Audit Notes: The Shark Submerges, Flack Jobs From Hell, Trial Balloons Popped

Michael Lewis plays the “Jaws” theme in his BusinessWeek column asking why Wall Street fought tooth and nail for an exemption in financial reform, won, but now isn’t even going to take advantage of it.

To see Wall Street turn its back on money is as unsettling as watching a shark’s fin veer away, and then sink from view. It leaves you wanting to know where the shark has gone, and why.

The most likely reason he can think of is that Wall Street is just doing the same stuff on different desks with a different name:

In short, there are any number of explanations why Wall Street firms are all at once letting it be known they intend simply to walk away from what has been, until very recently, their single most lucrative line of work. The answer could be none of the above or some mixture of the three. But what’s really striking is how little ability the outside world retains to find out what is going on inside these places—even after we have learned that what we don’t know about them can kill us. Yet news of the death of the Wall Street prop trader has been greeted with hardly a peep. And I wonder: Is this the nature of our financial world going forward? Big decisions, in which the public has a clear interest, being made outside public view, with little public discussion or understanding. If so, it isn’t a future at all. It’s just the past, repeating itself.

— I like this graphic in The New York Times on how the folks on Wall Street have landed on their feet after crippling the economy.

Click to see the whole huge thing:

Check out all the revolving door at the Treasury Department, for one. But most interesting to me is a guy named Andrew Gowers, former editor of the Financial Times, who was chief flack for Lehman Brothers when it collapsed.

His next gig: chief flack for BP.

Even I sympathize for that guy.

— Finally, Bloomberg’s Jonathan Weil has some fun ripping on the Obama administration and popping its trial balloons. Two of those being floated to fill Larry Summers’ spot are Richard Parsons of Citigroup and Anne Mulcahy of Xerox.

Take it away, Jon:

There’s much we can learn about the kind of person the president is looking for by studying these two contenders’ credentials. In addition to CEO chops, it seems Obama is seeking someone who also has served on the board of directors of at least one company that either had a massive accounting scandal, blew up so spectacularly that it threatened to take down the global financial system, or both.

Parsons, the former chief at Time Warner, and Mulcahy should have a leg up on the rest of the competition by this standard. That’s because each of them has sat on the boards of multiple such companies.

Long before the government placed Fannie Mae into conservatorship, Parsons and Mulcahy both served as directors at the mortgage-finance company when it was breaking all sorts of accounting rules. For years both were directors at Citigroup, while the bank’s executives drove it to the brink of failure before its bailout.

There’s more, too. Both Xerox and Time Warner settled accounting-fraud allegations by the Securities and Exchange Commission over conduct that occurred while Mulcahy and Parsons held lesser executive posts at those respective companies.


Weil’s conclusion: Might as well give it to ol’ Dick Fuld.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.