They're Conspiring to Conspire

It comes as no surprise today that Bernie Madoff's auditor is facing charges of securities and investment advisor fraud.

Today's New York Times states the obvious when talking about the "red flags":

Some of Mr. Madoff’s critics have said that the tiny accounting firm was a red flag, given the size of Mr. Madoff’s legitimate operations. The fact that Mr. Friehling also appeared to be the agent for dozens of accounts with Mr. Madoff’s investment advisory firm, according to a list of customers assembled by the trustee overseeing the firm’s bankruptcy, should have raised more red flags, they said.

Look, I know that many people that invested w/ the Bernster aren't even remotely intelligent about financial matters but c'mon... BILLIONS of dollars audited by Friehling and Horowitz?

It seems reasonable to me that there are some complicit BM (ha!) investors out there that saw that this thing was now what it seemed and said nothing. Or I could be wildly speculating...I'm sure the crack-squad at the SEC will get to the bottom of it. To be continued....

Madoff’s Accountant Is Charged With Securities Fraud [New York Times] Sphere: Related Content

Links 3/17/2009

Soap box, Chuck Grassley edition [Dealbreaker]

They have banks like this in Nebraska [Dealbreaker]

AIG. Bad news, all the time [Zero Hedge] Sphere: Related Content

Where I Attempt to Liken the Final Big 4 Accounting Firms to Wiseguys

A compelling case for likening the FB4 to the Mafia is made by Francine McKenna over at the Huffington Post.

I won't rehash the details for you all, Francine writes a great post. What I will do is speculate on which firm would be which wiseguy? Disclosure: For this particular post, all families are fair game and I won't regulate myself to one particular family, crew, TV show, or movie (but as you might expect, the Sopranos are easiest to choose from).

KPMG - Fredo Corleone - Weakest and most annoying of its particular kind. Obedient and clumsy.

Deloitte - Paulie Walnuts - Again, obedient but has a psychotic side. All in all not too bright though.

Ernst & Young - "Lefty" Ruggiero - past its prime but loyal to the family. Ultimately, not smart enough to realize when being duped.

PricewaterhouseCoopers - Johnny Sack - Hungry for power and is ultimately the boss. In the end something internal will kill it.

Ridiculous? Bad examples? Unfair? One-sided? OF COURSE.

The Button-Down Mafia: How the Public Accounting Firms Run a Racket on Investors and Thrive While Their Clients Fail [The Huffington Post via re: The Auditors] Sphere: Related Content

Above All, We Act with Complete Arrogance

KPMG, being the bastion of integrity that it is, just hired the most recent Chief Auditor and Director of Professional Standards for the PCAOB, per re: The Auditors.

Turns out he was with the Radio Station prior to the PCAOB and is now returning to his firm in glory. This type of story doesn't get much press outside of the CPA media (CFO, Journal of Accountancy, etc.), which is say, a crappy point of view anyway, since they are all in the tank for the "profession".

Looking Out For Me, Myself, And I [re: The Auditors] Sphere: Related Content

I'll Have a Cheeseburger with Coke and OH, a Credit Default Derivative on Lehman Brothers Bonds

I didn't do much reading over the weekend so when I read this morning that AIG put out the list of its counterparties for its Credit Default Swaps, I thought (being a former auditor), "Oh, that seems reasonable."

What I didn't expect was that people (including some in the Obama Administration) are upset that many of the recipients of the funds are, gasp, other banks!

Now wait a tick, I'm not the smartest guy in the world but I don't think the likes of Joe the Plumber and the local pipe-fitters union are sophisticated enough to be in the market for CDS's. Just sayin... Sphere: Related Content

Links 3/16/2009

Strategy? [Dealbreaker]

This is a little wonky but still important regarding the "heads we win, tails you lose" approach to the toxic asset problem. [naked capitalism]

Credit card defaults. I wouldn't get too excited about this rally...[Reuters] Sphere: Related Content

Links 3/13/2009

Not even amusement parks are safe. [Zero Hedge]

Famous last words. Just ask John Thain. [Reuters]

The audacity of a former subsidiary of Dick Cheney's former employer shouldn't really surprise anyone. [footnoted.org]

Floyd Norris's follow-up to his blog post yesterday [NYT] Sphere: Related Content