By Al Lewis
And now, the week's financial news:
-- Russ Wasendorf, founder of Peregrine Financial Group in Cedar Falls, Iowa, ran an exhaust hose into his Chevy Cavalier. Regulators allege he'd been cooking his books; millions are reportedly missing from client accounts. His company has filed to liquidate in bankruptcy court, and Mr. Wasendorf, 64 years old, is reportedly in a coma.
-- Montgomery Bank & Trust is missing a director and $17 million. Aubrey "Lee" Price, 46, left a suicide note, saying he planned to jump off a ferryboat. Law-enforcement officials suspect he isn't on the bottom of a bay, but on the run.
-- San Bernardino became the third California city to file for bankruptcy. City Attorney James Penman informed City Council that for the past 13 years, they'd been looking at falsified financial documents.
-- City workers in Scranton, Pa., boyhood home of Vice President Joe Biden, filed a federal lawsuit complaining that their mayor slashed their pay down to minimum wage to meet a budget shortfall. Imagine a cop risking a bullet, or a firefighter running into a burning house, for $7.25 an hour.
-- Around the world, regulators continue investigating how many major banks may have been manipulating interest rates. The probe follows the resignation of Barclays honcho Robert Diamond and the international bank's agreement to pay $450 million to settle claims that it put the fix on interest rates. These rates -- called Libor -- help determine what businesses and consumers pay on loans across the entire planet.
-- The Justice Department announced Wells Fargo has agreed to pay $175 million to settle claims that it discriminated against blacks and Hispanics, illegally sticking them with higher fees and the kind of subprime mortgages that led to our financial crisis.
-- J.P. Morgan Chase said its trading losses ballooned to $5.8 billion, nearly three times the initial estimate. It also said traders may have masked losses. The bank employed a character nicknamed the London Whale who apparently spouted cash out his blowhole.
-- Five physicians agreed to pay $1.9 million to settle insider-trading charges from the Securities and Exchange Commission. They allegedly traded on inside information from a medical-liability insurer. They are small-time players compared with Rajat Gupta, who sat on the board at Goldman Sachs and Procter & Gamble. Mr. Gupta awaits sentencing in October on criminal insider-trading convictions. If a guy at his level gets caught doing it, a lot of other people are doing it, too.
-- New York law firm Labaton Sucharow released a survey of 500 financial professionals in the U.S. and the U.K. Of those surveyed, 24% said being successful requires unethical or illegal deeds. "It is shocking that four years after the global economic crisis began there continues to be a fundamental lack of integrity," said Chris Keller, a partner at the law firm.
Yes, shocking. And this is just the stuff reported last week. I don't have space to hash over the past decade, except to note that years ago our political and corporate elites promised that Enron's collapse, while shocking, was an isolated event. Even relatively trustworthy business leaders agreed, including broker for the people, Charles Schwab.
"It is amazing to see this Enron thing unfold," Mr. Schwab told the Austin American-Statesman in 2002. "It's sort of ghastly. And you wonder what were they thinking about. You wonder how far along, how long ago did they cross over the line. My own view is that it is highly isolated; it's not rampant. . . . One bad apple."
Al Lewis is a columnist for Dow Jones Newswires in Denver. He blogs at tellittoal.com; his email address is firstname.lastname@example.org