By DAVID MOON, Moon Capital Management, LLC
January 26, 2014
Seattle Seahawks defensive back Richard Sherman was headline news this past week, as journalists and anonymous web comments were shocked at his almost barbaric, incoherent rant following the NFC Championship game. He appeared like a wild man, even seeming to terrify reporter Erin Andrews.
I just chuckled; I’ve seen inside the sausage factory.
Sherman reminded me of New Jersey governor Chris Christie, former Treasury Secretary Tim Geithner, President Obama and global banking giant JPMorgan.
Did the Port Authority of New York and New Jersey shut down two of the three lanes leading to the George Washington Bridge as some sort of political ploy? Of course it did. Chris Christie may or may not have been specifically aware of those details, but that’s how politics works.
It’s no less ugly at the IRS. Does anyone believe that the IRS wasn’t intentionally targeting proposed charitable groups—or even individuals—that appeared to be potential political foes of the President? I’m sure that President Obama didn’t instruct the IRS to harass some little Tea Party group in Alabama, but I bet he wasn’t surprised or displeased, either.
In a recent court filing, McGraw Hill Financial Chairman Howard claims that in 2011 then-Treasury Secretary Timothy Geithner issued what amounted to a threat if Standard & Poor’s downgraded the US government debt from its longstanding AAA-status.
Standard & Poor’s is a subsidiary of McGraw Hill.
After S&P downgraded the debt, the Justice Department appeared to follow through on the Secretary’s threat, accusing S&P of lying about conflicts of interest related to its ratings on mortgage-backed securities prior to the 2008 credit crisis.
The other two rating agencies, Moody’s and Fitch, have the same business structure and processes as S&P. They have not, however, lowered their ratings on US federal debt.
Ironically (?) neither company has been accused of wrongdoing by the government. Clearly, Moody’s and Fitch know how to stay in the government’s good graces.
JPMorgan is generally considered to be one of the good guys of banking and investments. But not only did JPMorgan once offer its clients structured notes linked to the performance of Bernie Madoff’s fund’s performance, JPM later liquidated its own investment in the Madoff fund when the bank suspected trouble—without telling its own clients.
And JPM is one of the good guys.
The NCAA has gone to great lengths to keep players’ helmets on their heads, even penalizing a player whose helmet comes off by making him sit out play.
The rule was not entirely inspired by a paternal concern for player safety. A member of the NCAA Board of Directors once told me that rule was designed to keep fans from seeing what was inside the helmet.
It wouldn’t shock me to see the NFL extend the rule all the way to the locker room.
Much of life is this way. Who knows what demons might secretly possess that apparently all-American family next door, or how much debt that lawyer has taken on to buy that fancy boat?
Whether it’s politics, banking, athletics—or some financial services providers—it can be messy, ugly and disgusting inside the sausage factory.
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).