This morning, Teri Buhl provided an explosive piece of reporting on a newly unsealed lawsuit that accuses Bear Stearns of flagrantly cheating its clients through mortgage securities. The alleged behavior described is disgusting. If you haven't read the post yet, you should -- the shenanigans its describes are incredible. The suit may be the closest thing we've seen yet to a smoking gun related to Wall Street misdeeds leading up to the financial crisis.
By now, there's little doubt that much of the public has become numb to these kinds of stories. Many Americans already consider Wall Street bankers crooks anyway. That's a shame, because these allegations are very different from anything else we've seen thus far.
Take, for example, the infamous Securities and Exchange suit against Goldman Sachs from last spring that was ultimately settled. Like the Bear lawsuit, SEC v Goldman included e-mails where bankers gloated about all the money they were making thanks to the suffering of their clients and even suggested an intent to sell toxic securities to their customers. But none of that was clearly fraudulent -- just questionable ethically. Stupidity is legal, and if investors have complete and accurate information to make their own decisions, but buy a stinker anyway, then that's their fault.