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To: robbie who wrote (1350)	7/16/2002 12:27:16 AM
From: Night Writer	Read Replies (1) \| Respond to of 4345

Whisper Commentary: What Can Be Done To Reform the Market System? One of the New Deal reforms in the aftermath of the Great Depression was the Glass-Steagull Act of 1933. This reform barred banks from engaging in the stock brokerage business. Bankers and Wall Street fat cats hated it. While no serious effort was ever made to repeal it (even under Republican Presidencies) an unlikely backer of a repeal was President Bill Clinton. He, along with Robert Rubin, then Treasury Secretary of the United States, eagerly supported its elimination and it was repealed during their term in office. Pending the appeal, hoards of banks bought brokerages. One of the largest deals resulted when Citibank (now Citigroup) bought Salomon Smith Barney. Prior to becoming the Treasury Secretary, Mr. Rubin, you might recall, was the Chairman and CEO of Goldman Sachs, the worlds most powerful brokerage firm. Not surprisingly, today he is a Director of Citigroup and sits on their Board. At that time the media seemed to ignore the repeal of one of the most prominent business reforms in US history from one of America's most popular former Presidents, FDR. But at the time nothing was going to stand in the way of more fuel for the bull market. As we are now learning, the Glass-Steagull repeal played a significant role in the massive fraud and retirement funds losses that Enron's employees suffered. It is now widely known that one of the requirements from Enron management was that that they would demand from banks with which it did business that their brokerage analysts (like Salomon Smith Barney) issued 'Buy' recommendations for Enron's stock. This is clearly one of the major reasons why Enron stock soared to over $90 a share, before crashing to the earth. To make matters worse several of the key players in the WorldCom mess are bank-lending groups, such as Citigroup's lending division. Also caught up in the scandal is a gentleman named Jack Grubman. As you now probably know Jack Grubman is the telecom analyst for Salomon Smith Barney, a Citigroup company who maintained a buy rating on WorldCom until just days before the massive fraud was uncovered. So what can be done and who can help? Most of the so-called experts called in to provide analysis and to suggest fixes for this mess are all 'insiders'. Sandy Weill, the CEO of Citigroup leads the pack. Dick Grasso who runs the NYSE is another. Pete Peterson of the BlackStone Group, heck I'll even throw Jim Cramer's name into the bunch. The list goes on. The problem is, they are all Wall Street insiders. Where is the unbiased opinion? Where is the company, firm, or individual the represents an unbiased voice? The answer is there is none. All the folks mentioned above would tell you that this is an isolated incident and stiffer penalties should be enforced to deal with the small percentage of crooks. So committees and regulatory bodies will be formed with nothing more then a group of insiders who, in the case of several of these individuals, run and lead companies where the problems started. Sure, somebody, maybe one or two guys, three tops will go to the big house but real reform that is worth its weight in gold will start with reformation of the Glass Steagull Act of 1933. And if they have to break up the cozy bank and broker relationships that stretched this reform so thin, then so be it.