The ice is cracking: Be prepared for a new morality. But this one works

[The Backlash Cometh]

I just wish that we didn't have to find justice in the civil courts for something that would have been deterred if the criminal justice system had better enforcement powers:

"A New Morality Makes Old Deceptions Expensive for Wall Street"

LYING may be a sin, but on Wall Street there has always been a spirit of understanding for those who merely help others to deceive - particularly because the fees for aiding in deception have often been far higher than those for simply arranging a straightforward financing.

But that is changing, and this is a case of today's new morality being applied to yesterday's conduct.

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Parmalat contended one $80 million loan from Bank of America was not really a loan at all because the company had to deposit $81.6 million in the bank. And, Parmalat said, a secret side agreement obligated it to pay a far higher interest rate than was disclosed. In another deal, the bank is said to have misrepresented a real loan as an equity investment in a Parmalat subsidiary.

<snip>

It is not only more lenient tax laws that have led corporate income tax receipts, as a percentage of gross domestic product, to fall by more than two-thirds since 1966 while proceeds from individual income taxes are roughly the same as they were then. Now with deficits growing, corporate shelter designers are feeling the heat.

There is a risk that the real perpetrators - the Parmalats and Enrons - may try to get off the hook by blaming those who facilitated the crimes. But Parmalat may be right when it argues that without help from some financial institutions, which surely knew they were helping to deceive even if they had no inkling of the extent of the fraud, the fraud would have ended sooner with smaller losses.

http://www.nytimes.com/2004/10/08/business/08norris.html?hp&ex=1097208000&en=1f55e86eb654f15c&ei=5094&partner=homepage