Too Big To Miss

A corporation is, as is implied in the name, an embodied entity that is legally distinct from its owners and employees. This is what enables a corporation to keep its accounts and interests in its own silo, to be reported on separately for purposes of taxation and other matters. However this is not a license for the owners, directors or employees to commit crimes under the cover of an artificial legal entity. At least that is the intent.

Directors and officers of a corporation have specific legal obligations if they are to limit their liability in cases of corporate malfeasance. This is the essence of a limited liability company. Go outside those legally-proscribed boundaries and that liability limitation can be reduced or lost entirely. That is, of course, only if you're caught. Corporate law is itself a nearly-impenetrable labyrinth for even experts in the field, and there are many people who make it their business to use the law to the advantage of themselves and their clients or employers.

This is a field where government regulation is critical, to prevent those with the levers of corporate power from gaming the system to their own benefit. The losers are the individual shareholders, customers and, ultimately, all taxpayers. The ongoing financial crisis is a dreadful example of just how wrong things can go. Not only were directors, officers and employees of many of these firms deliberately gaming the system to their own personal benefit, they knew that their corporations would take the hit, passing on the losses to the company's shareholders. In the US, the SEC, the supposed regulator of these corporations, were either powerless or disinterested, probably in part for political reasons. More will certainly come out over time.

I am no expert in these matters, so I won't say more about it. I can only say that while I am far from naive, I am still astounded at just how wide and deep the corruption has gone. What I want to leave you with is a link to an article. If you are interested in how approximately $62 trillion of bad assets were created out of almost thin air, give it a read. I would judge it to be among the clearest and most accessible descriptions of how financial instruments were created and abused.

It's something we should all understand, since if we do not it could happen again. Try to imagine the thousands upon thousands of individuals involved, and that they knew full well what they were doing, and then ponder at the wonder of it all.