- 04 Oct 2007 at 1:03 PM
In the last week, Citigroup, Deutsche Bank, and UBS announced that they wrote down $1.4 billion, $3.11 billion and $3.4 billion in the third quarter, respectively. In the land of reality, where sane human beings live, these numbers would be considered bad news. Rational people would perhaps take the opportunity to tell the banks, “Hey, you fucked up,” as a way of motivating them to do better. Instead, not only were the banks not given the smack in the face they so desperately need, but they were praised for being honest. “You screwed up big time, but we’re just so happy you’re telling us the truth for once!” has been the gist of it. Obviously those in charge of the truth-telling mission jumped on the back-patting bandwagon, and praised themselves, too. “It was about transparency,” said DB Chief Executive Josef Ackermann. “We did it, and several others — UBS, Citibank — did it as well. It was important to re-establish people’s trust in the products and in the markets.”
The best part is that, as the conspiracy theorists at the Journal point out, this whole coming clean shtick is more or less an elaborate lie. The banks have provided “clarity,” in so far as they admitted to BILLIONS in losses, but the clarity is only packaging in which to ship a box full of lies that will later help the people who “can’t tell a lie” tell more lies. And if you think about it, that’s just good business:
“If you’re a smart CEO, you’re going to write off everything and then some, maybe even to below-market prices, because you’re going to be hidden in the woodshed with everybody else,” says Daniel Genter, chief executive and chief investment officer of RNC Genter Capital Management, a Los Angeles-based investment firm that manages about $3 billion in bonds and stocks, mostly for high-net-worth individuals. “They’ll make it look a lot worse than it is, but that’s the smart move, because you’ve got little to lose and you might get some of it back in a quarter or two.”
But maybe we’re just being cynical assholes? Deutsche Bank promises that it “continues to apply accounting and valuation principles consistently with prior periods” and a UBS spokesman told the Journal that the bank’s writedowns are “appropriate and follow established accounting principles and industry standards.” Citigroup has “taken impairments in the third quarter based on a rigorous process applying appropriate accounting principles.” Goldman, which hasn’t even written anything down but is just so bursting with honesty that it had to tell someone about it, was in “constant contact over the summer with the Securities and Exchange Commission to discuss the way it was pricing tough-to-value securities.”
All this chest-bumping for telling the truth really gets in our craw because, to be honest (heh), we could care less about these mystical abilities in the sport of candor. Great—you’ve succeeded at being honest (though not really). How about now, you sharpen your skills at not losing billions upon billions of fucking dollars, which, not sure if anyone ever made this clear, is actually your main goal. Do that and your reward will be that you can tell as many lies as you want. Like this one: “Bear Stearns Seeing the Start Of a Rebound,” Executives Say. Yeah, that felt good.
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