You might be interested, dear readers, in the interview in the current issue of Stanford Lawyer with the eclectic Charles T. Munger, Warren Buffett’s longtime partner in Berkshire Hathaway. A few snippets for your enjoyment follow.
On the SEC:
The SEC is pretty good at going after some little scumbag whom everybody regards as a scumbag. But once a person becomes respectable and has a high position in life, there’s a great reticence to act. And Madoff was such a person.
Some of the most admired people in finance—including Alan Greenspan— argued that derivatives trading, substituting for the old bucket shop, was a great contribution to modern economic civilization. There’s another word for this: bonkers. It is not a credit to academic economics that Greenspan’s view was so common.
On the accounting profession:
They are way too liberal in providing the kind of accounting the financial promoters want. They’ve sold out, and they do not even realize that they’ve sold out.
They say it’s not economics if you think about the consequences of good and evil, and good and bad business accounting. I think what we’re learning is that when you don’t understand these consequences, you don’t have an adequately skilled profession.
On Lehman Brothers:
You can’t save everybody. That would have created unlimited revulsion in the body politic. I probably would have let Lehman go, too.
On Goldman Sachs:
The culture of Goldman Sachs as a partnership was morally superior and better for the surrounding civilization than the culture that came after it went public.
On investment bankers:
I have lived in my own life with responsible investment banking. When I was young, First Boston Company was an honorable and constructive firm and very much served the surrounding civilization. Investment banking at the height of this last folly was a disgrace to the surrounding civilization.