Opinion

Felix Salmon

Trusted Institutions

By Reuters Staff
March 5, 2009

.cc_box a:hover .cc_home{background:url(‘http://www.comedycentral.com/comedycentral/video/assets/syndicated-logo-over.png’) !important;}.cc_links a{color:#b9b9b9;text-decoration:none;}.cc_show a{color:#707070;text-decoration:none;}.cc_title a{color:#868686;text-decoration:none;}.cc_links a:hover{color:#67bee2;text-decoration:underline;}

John Stewart unloaded on CNBC last night, with 8 minutes of what Ryan Tate calls an "extended, heroic evisceration" of the meretricious financial channel. It’s worth watching through to the end, where our old friend Sir Allen Stanford makes a cameo appearance.

On which subject Matthew Goldstein is still coming up with some fantastic new reporting: he’s discovered that Stanford didn’t only lie about money, he also lied about the history of his own bank. You thought it was 70 years old, and founded by Stanford’s grandfather? You thought wrong: it was founded, in the Caribbean, by Allen Stanford, in 1986, just two years after Stanford declared bankruptcy in Texas, listing $13.6 million in debts against just $229,735 in assets.

One nasty consequence of the financial crisis is that there’s pretty much no thing as a trusted institution any more. Financial markets run on trust, and when that trust evaporates — as it has done of late — the whole system just grinds to a halt.

But if there’s a silver lining to the removal of trust from the system, it’s that formerly-trusted institutions like CNBC and Allen Stanford will find it much harder, in future, to take advantage of the public in the way they did over the past 15 years or so. Trust will have to be earned, which means that while honest brokers like Berkshire Hathaway might regain it, and see their CDS come down from their current improbably-wide levels, companies such as GE, which have been less than transparent in the past, are going to have to change their ways more profoundly.

Reprinted from Portfolio.com

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •