Opinion: Wall Street shock wave in rear-view mirror


On the day after his op-ed piece appeared in The New York Times of March 14, 2012, Greg Smith, a midlevel executive in the London office of Goldman Sachs had generated 19 million entries on Google.  By three days later, that number had risen to 134 million.

Smith’s announcement of his departure from the storied firm whose culture he describes as “toxic and destructive” set off a shock wave heard round the world.  It was brutally criticized as naïve, but far more frequently praised as courageous, an “unprecedented revelation” of the distortions that have come to characterize Wall Street’s behavior.  There’s been much discussion of greed, which appears to be the principle lubricant of the financial industry, and debate between those who think greed is inherent in the market system and those who believe it can and should be expunged — or, at least, somehow contained.  My own view is that what we are talking about here is not greed; it is avarice, in which all sense of proper proportion is lost. 

But relax: I am not about to launch into a disquisition on derivatives and credit swaps and the other arcane arrangements that led to the world financial crisis of 2008 and that have yet to be adequately addressed.  Truth is, my own interest in the Smith saga is quirkily more parochial, particularly piqued by Smith’s inclusion among the proudest moments in his life his having won a bronze medal (in table tennis, aka pingpong) in the Maccabiah Games in Israel.  (Full disclosure: I am an undefeated pingpong champion of Eilat, having defeated the army corporal who’d been the local champion back before Eilat was a city, when it was just a lonely army base.  I retired immediately.) 

The Maccabiah Games, together with the fact that Smith hails from South Africa, set me searching — and, sure enough, Smith graduated from the famous King David Schools in Johannesburg, schools whose mission statement says they aim to deliver “an excellent general education together with the study of Hebrew, Jewish Studies and the living of the Jewish calendar” and to produce “graduates who are menschen, confident and equipped to pursue any opportunity they wish to, who are proud of their Jewish heritage and its traditions, who have a love for learning, and a determination to contribute to their society.” 

One for our team, I thought.  A noteworthy one, since the number of insiders who have volubly called public attention to the endless excesses that characterize the financial industry is tiny.  Award-winning journalist Michael Hirsh, author of the much-praised “Capital Offense: How Washington’s Wise Men Turned America’s Future Over to Wall Street,” writes of the “very small group — an absurdly small group — of truth-tellers” who have come forward to bear personal witness to these excesses. He names just two others: Frank Partnoy, who, says Hirsh, described the Morgan Stanley of the 1990s as a “furious profit machine . . . mainly involved in speculation and scamming, using arcane derivatives and complex new packages of debt obligations and interest-rate payments that Morgan foisted on customers who barely understood them,” and one other,  “a former Moody’s managing director [who] revealed in congressional hearings in late 2009 that even into the year after the financial crisis, the firm continued to deceive investors by inflating ratings on dubious securities.”

The Internet is so handy.  I tracked down Partnoy, now George E. Barrett Professor of Law and Finance and co-director of the Center on Corporate and Securities Law at the University of San Diego and widely recognized as one of the world’s leading experts on the complexities of modern finance and financial market regulation.  He worked in derivatives at Morgan Stanley and CS First Boston during the mid-1990s and wrote “F.I.A.S.C.O.: Blood in the Water on Wall Street,” a best-selling book about his experiences there.  (His more recent books include “Infectious Greed: How Deceit and Risk Corrupted the Financial Markets” and “The Match King: Ivar Kreuger, The Financial Genius Behind a Century of Wall Street Scandals.”)  And yes, he grew up in a Conservative synagogue in Kansas City. 

I’ve not yet managed to communicate with the Moody man Hirsh mentions, but I did watch a Chris Hayes show on MSNBC devoted to the Smith affair and its larger context, in which all the panelists compellingly called for tougher regulation of Wall Street — and when I say “all the panelists,” I include Ezra Klein, Noam Scheiber, William Cohan, Alexis Goldstein, Jared Bernstein and Dan Dicker.  It is hard to avoid the conclusion that a responsible social ethic is in our DNA.

Hard to avoid, that is, until we are reminded of Wall Street titans such as Richard Fuld (Lehman Brothers),  and Bob Rubin and Lloyd Blankfein (Goldman), whose DNA seem quite differently composed.  Jews are, in other words, a mixed multitude — saints and sinners, Nobel laureates and fraudsters, wise sons and wicked sons.  Some day, perhaps, once sequencing of the individual human genome becomes routine, we may be able to map such differences.  In the meantime, the work of bending the arc toward justice — and truth, its handmaiden — awaits.  So, too, real regulation. 

Thank you, Greg Smith et al.


Leonard Fein has written and advocated for progressive Jewish causes since the 1960s. In 1974 he founded Moment magazine, the journal of Jewish ideas, and in 1985 he founded MAZON: A Jewish Response to Hunger.

Understanding Shariah finance and Islamic banking in American finance


The Middle East, with its exotic tropical sirocco winds, is also now the haven and leader of a new form of finance that is enticing the world with the alluring scent of its petrodollars. Substantial profits are to be made, and gold plated Bentleys, mansions on the Palm Jumerah Island, and golf courses designed by Tiger Woods only add to the mystique behind the veils. However, more than Dubailand and dreams of riches lurk behind the Islamic ideologues who invented the concept of Islamic Finance, and they are ones who are promoting this form of “interest-free, Muslim friendly, ethical investment” worldwide.

From behind the walls of opulent palaces and banks, there are many people with militant backgrounds who are seeking to promote this new type of religious finance to spread a form of militant Islam throughout western civilization. That militancy, they believe, can be financed by co-opting American financial institutions. Many in this movement wish to replace traditional western capital systems with Islamic economic values.

Islamic Finance was conceived by the Muslim Brotherhood in Egypt in the 1920s. Decades later, it is a viable modality for spreading the Islamist movement of Jihad against the West.

To understand the concepts of Shariah one needs to understand and the doctrines that Shariah compliancy commands. Strict Shariah adherence is the sole criterion of whether a financial institution can be deemed “Islamic.” When HSBC, Citibank, or Deutsche Bank open “Islamic Windows” those are not just another place to deposit money. The banking operation must adhere to constants common to all Islamic banking institutions.

One is that the operation must adhere to the tenets of Shariah Law. However, when perusing the brochures or prospectuses sent out by the institutions, there is very little that explains the real meaning to the layperson. The advertisements usually gloss over the objectionable religious details and just refer to “ethical investment, interest-free, and an obligation to the alms giving, or zakat.” This seems innocent enough, but like the hidden face behind the veil, more information is needed for the investor, both Muslim and non-Muslim.

The lack of full disclosure and due diligence in presenting this new form of banking is no coincidence. It is being done to lure investors from all walks of life who want to share in the glow of banking and borrowing “interest free and ethically.” It is meant to draw not only from the Muslims who adhere to the laws of the Koran and Shariah, but to everyday people who think that banks are thieves, and this is a way to “beat the system.”

Western institutions that offer Islamic finance are in a conundrum, especially in America, often failing to disclose what Shariah really is. The question is, why? One reason is ignorance, or being politically correct in a post 9/11 world. The other answers are still unknown. That is why monitoring and following the growth of Shariah-compliant investments and banking is so important. For critics of Shariah Finance, it is a bit like being a “Paul Revere,” trying to ring the bell of freedom to warn investors.

The true agenda of Shariah and Islamic Finance is really just a means to bring this type of movement of Islam into the West, and especially, the “great Satan” America. As this economic system creeps into the threads of capitalism, it may eventually change the way we live. Not a few see it as part of the international campaign to legitimize Shariah Law among those who would never adopt it.

Banking compliant with Shariah law is more than just abiding by ethical rules and regulations, combined with interest-free loans. It supposedly resonates with how life is lived in Saudi Arabia and Iran. Understanding the objectives of Islamic banking by the words of the Shariah Scholars themselves suddenly brings our own financial institutions into compliance with a lifestyle anathema to the west.

Quoting from Nassar M. Suleiman, Corporate Governance in Islamic Banking, the law states: “Shariah Law must develop a distinctive corporate culture, the main purpose of which is to create a collective morality and spirituality which, when combined with the production of goods and services sustains the growth and advancement of the Islamic way of life.”

The authoritative Shariah compendium of the Shafii School of Jurisprudence, which is a cornerstone for understanding Shariah, is the “The Reliance of the Traveler: The Classic Manual of Sacred Law.” For example, this book states on family law:

1. A woman is eligible for only half of the inheritance of a man
2. A virgin may be married against her will by her father or her grandfather
3. An Arab woman may not marry a non-Arab man
4. A woman may not leave the house with her husband’s permission
5. A Muslim man may marry four women, including Christians and Jews, a Muslim woman can only marry a Muslim
6. Beating an insubordinate wife is permissible

The book states on jihad:

1. Offensive Military jihad against non-Muslims is a religious obligation
2. Apostasy from Islam is punishable by death without trial
3. Non-Muslim subjects of a Muslim state are subject to discriminatory (dhimmi) laws.
4. It is permissible to bribe (Da’wah) non-Muslims to convert them to Islam
5. Lying (Taqiyya) to infidels in time of Jihad is permissible.

The book states on human rights:

1. Homosexuals and lesbians must be killed
2. Slavery is permitted and legitimate, as in Darfur
3. A Muslim man has unlimited sexual rights over slave women, whether they are married or not
4. Female sexual mutilation (cliterectomy) is obligatory
5. Adultery is punished by death by stoning
6. A woman’s testimony in court is worth only half that of a man, and only in cases involving property.

Shariah plays a huge part in Islamic Finance and according to Islamic scholars, Shariah is simply “God-ordained sacred Islamic Law that rules each and every aspect of a Muslim’s life.” The tenets of Shariah are immutable, not subject to any change or interpretation, and valid for all times and places. This ideology is entering our financial system.

Many people think that Shariah Finance in America is a runaway train that cannot be stopped. However, with our own due diligence we can require banks to become compliant to the American way and not the Shariah way.

Allyson Rowen Taylor writes for Shariahfinancewatch.org. She speaks nationally on the influence of Shariah on the banking and financial systems.

Baron Rothschild, banking royalty, dies at 98


Baron Rothschild, banking dynasty patriarch, dies at 98

Baron Guy de Rothschild, the patriarch of the French branch of the famed Rothschild banking empire, was a secular Jew but well understood the needs of the Jewish community. Rothschild died June 14 in Paris at 98. The cause of death was not given.

He founded the UJF, a federation of some 200 social, educational and cultural associations, in 1950 and guided it until 1982.

“The baron played a major leadership role in the French Jewish community even though he did not have any official role in the past 30 years,” said David Saada, the fund’s general director.

Saada noted that Baron Rothschild valued a role for religion in the field of education, especially among Sephardim.

“He signed a very important accord with the Jewish Agency in the 1970s that reoriented and boosted Jewish education in France,” Saada said. ” He was not at all religious, but his force was that he understood the needs of the community in that area.”

The UJF helped to restructure the community after the deportation of 75,000 French Jews by the collaborationist French government during World War II. The fund also played a major role integrating the Sephardim who came from Morocco, Tunisia and Algeria in the 1950s and 1960s, and now account for at least 70 percent of the approximately 700,000 Jews in France.

During the Nazi occupation the French government seized the Rothschilds’ financial empire because the family was Jewish. Rothschild fled to the United States and then London, where he joined the resistance led by Gen. Charles de Gaulle.

Rothschild rebuilt the empire following World War II and guided de Rothschild Freres bank from 1967 to 1979. In 1981, the bank was again taken away, this time nationalized by the French government under Socialist President Francois Mitterrand.

A few years later, his son David once more began to piece together the family-banking network, which in 1987 became the Rothschild and Company Bank.

In his later years, Baron Rothschild’s main interest was horse racing.

Rothschild is survived by his sons, David and Edouard. A funeral service was planned for June 21 in Paris’ main synagogue.

— Brett Kline, Jewish Telgraphic Agency

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Susan Bonoff died May 25 at 58. She is survived by her husband, Frank; daughters, Stephanie Pohl and Nicole; and brother, Leonard (Debbie) Gaby. Mount Sinai

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Leonard Edward Grollnek died May 26 at 84. He is survived by his wife; children; and grandchildren. Hillside

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