Wall Street Tries to Buy Peace in Auction-Rate Securities Mess

While I was traveling for business the past few days the entire bond industry had a change of heart and admitted that it was staffed almost entirely by greedy and dimwitted people who have misled investors and brought the economy to its knees.

Well, that's sort of what happened.

On Friday, Wachovia said it would buy back $9 billion in auction-rate securities as part of settlement with the Securities and Exchange Commission. The SEC and some state regulators had accused Wachovia of misleading investors by claiming that the securities were safe. Wachovia's settlement comes in the wake of similar deals "mea culpas" from UBS, Citigroup, Morgan Stanley and JP Morgan Chase.

But that hardly puts an end to the scandal. New York State Attorney General Andrew M. Cuomo is now turning the screws on Merrill Lynch and Goldman Sachs to reimburse clients who lost money in the collapse of the auction-rate market.

Now I'm all for what Cuomo is doing. I wish he'd do more of it. If there's one thing we've learned in the past couple of years is that the nation absolutely cannot trust Wall Street to behave ethically, professionally or sensibly.

However, as long as Cuomo and the rest of the regulatory establishment has decided that the giant banks misled wealthy investors in the auction-rate securities market. And as long as these regulators think that misleading a customer requires the bank to make things whole, wouldn't make sense to stop those exact same banks from doing the exact same thing to non-wealthy customers? In other words, isn't it about time that someone cleaned up the credit-card business?