Intent or just plain hubris?

A news from the WSJ is reporting that the UK Serious Fraud Office will begin investigating on banks who sold structured products and see if there was not just mis-selling of the product, but also if there was fraud.

An excerpt:

The U.K.’s Serious Fraud Office is investigating sales of structured products such as credit-default swaps and collateralized debt obligations, amid concern some bankers may have knowingly sold complex assets based on flawed valuations before the global financial crisis struck two years ago.

Read the story HERE.

This is a bit puzzling, because as is always the case with investigations that hope to find intent, it might be one of the toughest things to accomplish.  And there is a credible and formidable alternative to intent – hubris, just when the markets have been dancing, adrenaline high and investors were euphoric of the significant bull market that was in their midst before everything crashed.  Irrational exuberance, some call it. From a CNBC documentary (I apologize for not remembering which – or if  it was even from CNBC), an interviewee told of the exploding confidence that emanated from the bankers – one even going as far as telling his colleague that things are not going to crash, after being asked about the potential of failing bets.

So if bankers were to be blamed, it is of a sin that was committed not only by them but by the bigger majority – yes, including the investors.  It’s probably my faulty memory but investigations in the US, I reckon, have not progressed much since news broke out of intentions to crucify those who sold these “faulty” products.  However, news came out recently that some institutions have been subpoenaed with regard to the matter and so for progress, we wait.

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