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Tom Armistead
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I am a retired accountant, having spent the early years of my career in the insurance industry and the later part in the field of accounting. My insurance experience has given me the willingness to accept investment risk if I feel the return justifies it; also, an interest in applying risk... More
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Tom Armistead's Instablog
  • Warren Buffett's Folksy Analogy For Financial Malfeasance 7 comments
    Oct 16, 2013 8:03 AM | about stocks: JPM, C, GS, MS, BAC

    Uncle Warren was on TV this morning, "chatting" with Becky Quick. Among the gems of wisdom offered by the Oracle was a folksy analogy in defense of Jamie Dimon. From CNBC:

    He ... defended JPMorgan Chase CEO Jamie DImon amid the bank's many legal problems, some of which are the result of its acquisition of Washington Mutual at the height of the financial crisis in 2008. "If a cop follows you for 500 miles, you're going to get a ticket. And believe me, you've had a lot of cops" following JPMorgan, he said.

    It almost works. You could chuckle and go on to the next item. But if you extend the analogy far enough, it looks a little different, and loses its humorous aspect.

    In the runup to the financial crisis, various financiers motored up and down the throughways at speeds well in excess of 100 MPH, going the wrong way, for the most part, and disregarding traffic signals and other rules of the road. Eventually a horrendous pileup ensued, from which the offending parties walked away unscathed. Meanwhile the streets were ankle deep in blood.

    Investigation after the fact reveals that all the operators responsible were intoxicated, some with alcohol, some with drugs, and some with a mixture of both, amplified and exacerbated by pathological levels of greed and arrogance.

    Now they appear before the judge and ask "What will be my fine?"

    99 years as far as I'm concerned. 99 years underneath that ground. I just can't forget the day they drove the market down.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: JPM, C, GS, MS, BAC
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Comments (7)
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  • drcarl
    , contributor
    Comments (359) | Send Message
    Thank you Tom, well said. I hope they put cops every mile on the road in the future. Maybe some of the "smart people" who created those unintelligible financial products will find work elsewhere - outside a sector where the public interest is too large to let the institutions fail.
    16 Oct 2013, 08:34 AM Reply Like
  • Tom Armistead
    , contributor
    Comments (6300) | Send Message
    Author’s reply » I'm thinking along the lines of traffic cameras, where the camera catches you and you get your ticket in the mail, automatic and efficient as hell. There are over 4,000 of them in France, motorists are up in arms.


    We could increase the SEC's budget, automate their surveillance, and just fine these people until they give it up and go do something that creates economic value rather than taxing and destroying it.
    16 Oct 2013, 08:40 AM Reply Like
  • The_Hammer
    , contributor
    Comments (5161) | Send Message
    sec is nothing more than a TBTF bank subsidiary. They do absolutely nothing to stop country busting activity and major frauds but fail to lift a finger to address the HFT trading schemes and naked short selling.
    16 Oct 2013, 09:25 AM Reply Like
  • flash9
    , contributor
    Comments (3752) | Send Message
    Thx for the good article. It's too bad Warren isn' as avuncular as he seems. It's worse that Dimon hasn't had a perp walk.
    16 Oct 2013, 09:30 AM Reply Like
  • drcarl
    , contributor
    Comments (359) | Send Message
    Automate SEC surveillance! That's rich! Let's include bank exams.
    17 Oct 2013, 05:50 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (6300) | Send Message
    Author’s reply » Don't laugh. Claimants in cases where banks issued a lot of low quality mortgages and sold them into securitizations were able to do some amazing things with databases.


    Bank audits leading up to thecrisis were a joke. They didn't look at enough cases, then WaMu or Countrywide would make excuses for the 5 out of 10 that were NG.
    17 Oct 2013, 06:42 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3552) | Send Message
    It is a pretty bizarre apologetic comment from Buffett Tom.


    Your counter analogy puts it back into the right perspective.
    17 Oct 2013, 08:16 PM Reply Like
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