July 17, 2008
After Henry Kissinger received the Nobel Prize in 1973, a famous satirist remarked that "it was at that moment that satire died." Whatever life satire might have had left was finally extinguished yesterday, when the government announced plans to crack down on improper short-selling.
And who are the delicate flowers in need of government protection? Why, shrinking violets like Goldman Sachs (NYSE: GS ) , Bank of America (NYSE: BAC ) , Citigroup (NYSE: C ) , Lehman Brothers (NYSE: LEH ) , and UBS (NYSE: UBS ) ! Are things really so bad that the wolves need protection from ... the other wolves?
To be fair, Fannie Mae (NYSE: FNM ) and Freddie Mac (NYSE: FRE ) are also covered by the SEC order. Fannie and Freddie are both government-sponsored institutions, so it's perhaps understandable that the SEC would want to take some action to support those companies during the current crisis. And SEC Chairman Christopher Cox has said that he doesn't oppose legitimate short selling, only "unlawful manipulation through 'naked' short selling that threatens the stability of financial institutions."
So Cox seems to be saying that he is taking action to outlaw something that is, um, already outlawed. Do the likes of Goldman Sachs and Bank of America really need extraordinary protections provided by the federal government? No wonder a blogger for The Wall Street Journal referred to this as "Operation Stocks Go Up Always."
The story of the Feds lending a helping hand to some of Wall Street's most powerful firms is something the Motley Fool might run on April Fool's Day. Of course, such a story would have only been possible in the days before satire died.
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