The Godfather on Wall Street
The Godfather has gathered the family together for their annual meeting and business report.
The meeting opens:
The Godfather: “Hey boys, was I right or what?! I told you we should get into Asset Backed Company Paper (ABCP) and we did. You cannot beat an honest day’s work. We made big bucks selling this stuff and our profits were enormous. We got out at the top of the market. Now the business has tanked. But not to worry; we are still okay. I told you the last time we spoke that this ABCP business was a win-win situation for us—a legitimate business and no heavy lifting, just moving paper around and getting big fees for doing so. Of course, as I said earlier, the financial paper we were selling is now toilet paper, but at least we didn’t get wiped. This paper-moving business was a great success while it lasted. Fees for fees and fees for selling. Fees for buying and fees for trying. It was great stuff. Now there is sadness on the street and the ABCP market is a hard sell. But hey, let us not complain since we made big money and the government is now bailing out other important financial wizards with taxpayers’ dollars, due to an illiquidity crisis.”
Big Tony: “Hey boss, what’s this illiquidity B.S.?”
The Godfather: “Tony, have you learned nothing since we moved to Wall Street? It means there is a cash flow problem.”
Big Tony: “Do you mean some of these guys have been robbing, pillaging and looting the financial system?”
The Godfather: “Tony, I wish you would show some decorum. Nobody robs, pillages or loots anyone on Wall Street. Everything is legitimate.”
Big Tony: “Well it sounds to me that there was some kind of malfeasance.”
The Godfather: “Where did you learn that word?”
Big Tony: “I heard a cop accuse us of it one time. And I liked the sound of it.”
The Godfather: “Okay, Tony, that’s enough. Now you know a big word. Let’s get back to my report. I love the free enterprise system. Where else can you make big bucks, and then, when your business goes in the dumpster, the government bails you out. And some of you guys in this family were critical when I took us legitimate! We have made money; nobody is in jail; and we are respectable businessmen. You cannot beat that. Still, I know some of you long for the old days and all its excitement. But hey, who wants to go back to illegal activities when we can make an honest buck in the financial markets?! This business venture of ours has taught us a good lesson, and that is, that ‘honesty is the best policy’ as the saying goes. And, of course, hard work pays off. Hell, we can sleep easy at night not worrying whether the cops are going to raid us. Instead, we are financial entrepreneurs with credentials and business cards as well. Now I’ll throw the floor open to questions. Big Tony, I see your hand up, what’s your question?”
Big Tony: “Now that this ABCP paper stuff is in the toilet, will we get a tax rebate if we show a loss on some of it?”
The Godfather: “Tony, you are getting brighter all the time. I see exposure to Wall Street has been good for you. The answer is yes, Tony, according to our accountant we should be able to claim some losses and expenses associated with the business.”
Big Tony: “Will we get taxed on the profits?”
The Godfather. “Tony, don’t ask silly questions about profits, you know everybody is talking about their big losses on this financial toilet paper. Nobody—nobody—is asking who made money or profited from it, and I emphasize that. Anyway, Tony, for your information our profits went offshore some time ago. This is good business practice; salt it away for a rainy day. I see there are no more questions, so let us adjourn and head for our tax-free haven in the sun and enjoy our hard earned money, along with the other businessmen who are taking a vacation from the stress and strain of Wall Street.
Stephen J. Gray
September 22, 2008.