There is a growing misperception in the marketplace that new regulations such as Sarbanes-Oxley and more stringent accounting standards have lowered risks for investors. The hard reality is that risk-related blow-ups continue to cost investors dearly.
The latest unraveling is the now Fed-assisted bailout sale of beleaguered Bear Stearns, one of the leading players in subprime originations and repackaging. This shocking news of intervention comes just mere days after the firm dismissively announced it had no liquidity problems (Stearns’ Alan Greenberg even referring to such talk as “ridiculous”).
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