Wall Street icons fall from pedestal
Accused Of Using Illicit Accounting Tricks To Smooth Profits, Hike Exec Pays

Investors are in for further shocks. In a recent article The Economist comments on the manner the Wall Street icons are again being disgraced. Warren Buffett, the investment icon whose name is typically preceded by accolades, is being dragged off his pedestal by a dodgy insurance deal between General Re, a unit of his firm Berkshire Hathaway, and AIG, the world's largest insurer.
With regulators poring over his accounts, Maurice Greenberg, who led AIG for four decades, has been forced to quit the firm he built into a financial giant.
Insurance is not the only financial business under siege. Al Morgan Stanley, an unusually public knuckle-dusting pits CEO Philip Purcell against a group of former executives, who blame him for its lacklustre showing over the past five years. Power has also shifted at JP Morgan.
In December, Fannie Mae, the housing-finance giant, pushed out its long-serving CEO, following the earlier forced departure of his counterpart at Fannie's sister company Freddie Mac.
At Citigroup, three senior executives were shown the door in October 2004. And last June. CSFB. an investment bank, disposed of its boss.
Though each case has its own drama, there seem to be two broad causes for these upheavals: incompetence and regulatory failure, with one often
contributing to the other Freddie. Fannie and AIG are all accused of using illicit accounting tricks to smooth profits and perhaps to boost executive pay inappropriately.
Citigroup has put its foot into it with regulators on three continents. JP Morgan, Morgan Stanley, and CSFB have all had regulatory problems as well, but their main defect has been the inability to make sufficient profits with sufficient frequency. Those who rail against Wall Street's pitiless insistence on success in other firms should be pleased to know it is now taking an equally harsh view of its own performance.
What links all these companies is that their credibility has been damaged. There is doubt about their earnings, their products, the way they sell and whether they are correctly structured.
All are large and complex organisations serving different sorts of clients.