Hedge Fund Folly

Having traded and sold derivatives myself, I picked up a copy of the December/January issue on my way to
a new job. I read Jesse Eisinger’s article, “The Hedge Fund Collapse,” with some nostalgia for my first job in New York, which was in the managed-futures arena. This is where commodity-trading advisers laid the framework for the boom in hedge funds—as well as charlatanism, unscrupulous leveraging, and the infamous 2-and-20 fee arrangement.

Martin Johnstone
Birmingham, England

Madoff’s Mess

In regard to the Commentary about Bernie Madoff [February], it’s quite obvious that the staff at the Securities and Exchange Commission does not possess the appropriate skill set to do its job as mandated in its charter. The SEC requires the industry to license certain workers but seems to have no similar requirement for itself. Bernie Madoff, Peter Madoff, and Peter’s niece Shana are all lawyers. Bernie knew precisely how to play the SEC because he understood how it hires, the details of its examinations, and how to avoid setting off its alarm bells.

R.L. McMahon
Pennington, New Jersey

Madoff got away with his Ponzi scheme for so long through the groupthink that led people to assume that someone in a position of financial leadership must know what he is doing. This tendency has deleterious effects on boards whose members each come from the boards of similar companies. Having boards include an independent member who can raise hard questions is a needed corrective.

Edith Neimark
Princeton, New Jersey

Haven’t I Seen That Before?
The third residence featured in “ Pimp Your House” [December/January] has been an integral part of several films by the legendary director Andrew Blake, the Truffaut of the adult-film industry. Among aficionados of Blake’s work, the banquettes and crisscross ceiling pattern are immediately recognizable!

Keith C. Schip
Denver, Colorado

The Conversation Michael Lewis struck a nerve with his article on the collapse of the investment banks.

Among the hosannas on our website for Michael Lewis’ “The End”—and the diatribes against hedgies and investment bankers—were notes from a number of young readers who claim to have changed career paths because of the piece. Never before has one of our stories added so significantly to the pool of American nursing students.

Lewis’ article generated a ­tremendous response from readers, and the online fights were bitter between Wall Streeters and, well, shall we call them victims’-rights advocates? “Be prepared to suffer the consequences,” someone calling himself Youroldfriend wrote. “Investors always want the return but cry foul when the risk bites them in the behind.”

“LOL, Oldfriend,” SJ chimed in. “It is the kind of blame-the-victims, eschewing-responsibility attitude we have come to expect from Wall Street apologists who go on defending these people and blaming the awful, greedy members of the general public. That will make me laugh...a little.”

“I loved this article,” coun­tered StevePluvia, “but to those who suggest that this is the ‘end’ of Wall Street or that greed is ‘bad’: Pleeease, wake up. Capitalism is driven by greed, and the great thing is that smart money always wins and dumb money always gets kicked in the balls.”