Who made this global financial mess?

John W. Schoen Senior producer • Profile • E-mail

As the global financial turmoil shifts from full-blown panic to widespread anxiety, a lot of readers are getting angry. And they're taking names. In hundreds of e-mails they asked: “Who’s responsible for this mess?” We’ve rounded up some suspects of our own. Readers offered their own opinions. Here’s just a sampling.

It seems that some of this mess is here because the rocket scientists, in addition to creating these arcane instruments, found ways to skirt the existing regulatory framework.  What's needed is a single regulatory body for all financial institutions.  Only in this way can the overall regulatory czar be sure that insurance regulators, bank regulators and others compare notes on what they find. 
— Tom S., Address withheld

That is one of the ideas getting serious consideration in Washington — and around the world. A complex, global financial system requires a global regulatory approach. But sorting out the details will take months — if not years.

In the meantime, the man tapped as the first “czar” of the Treasury’s $700 billion is, in fact, a former rocket scientist. Here’s his bio (see last line).

(Regarding those) complex financial derivatives which nobody understands and which exist in reality only as computer models. If you were to design a new product such as an airliner, a drug, a genetically modified plant, factory process control software, or any number of critical products, wouldn't you have a legal and moral obligation to thoroughly test them to verify that they work as intended? These people have harmed our nation as (badly as) or worse than any deliberate terrorist act because they bypassed any reasonable standard of product verification. Don't they have significant legal risk for criminal negligence?
— G.A., Denver, Colo.

There is an ongoing investigation by the FBI into 24 companies (at least) looking into mortgage and securities fraud. As of June, there were hundreds of agents on the case.

So stay tuned.

Why could stockholders not file class-action lawsuits against the company executives for not exercising their fiduciary responsibility?  No fraud need be shown, and, in effect, you will find them guilty of stupidity.
— John P., Kentucky

I don’t think you need to go to court to get that stupidity verdict. In the meantime, there are a number of civil suits under way at all levels of the mess, and there will almost certainly be more.

Some of these cases will be easier to make than others. The problem with “breach of fiduciary duty” is that can be tough to prove. If a CEO simply blunders badly, or a stock broker gives advice “in good faith” that turns out to be wrong, that’s not fraud.

For that, you’ve got have get photos of them stuffing wads of shareholder cash into duffel bags after hours. Some CEO pay packages may fall into that category.

MORE FROM ANSWER DESK

Answer Desk Section Front

Answer Desk: Adding up bank bailout losses Repairing consumer credit  Jobless benefit bedlam Who needs overpaid bankers? Who gets extended jobless benefits Easing job losses point to wobbly recovery Long-term jobless face frayed safety net GDP growth overstates case Recession over? Readers don't believe it Breaking down the cost of health care Answer Desk Section Front   Add Answer Desk headlines to your news reader: