If this is a crime...

Federal prosecutors, capping a yearlong investigation, are preparing to file criminal charges against managers of two Bear Stearns Cos. hedge funds whose collapse helped mark the start of the credit crisis.
.....
At issue is whether the managers intentionally misled investors by presenting a rosy picture of the funds at a time when they were privately communicating with colleagues about their worries over how the investment vehicles would ride out weakness in the mortgage market. Any indictments would be the first criminal charges against Wall Street executives arising from the credit crisis that swept the financial world last year. WSJ

If we're going to criminalize panglossian efforts to paint a rosy scenario they better start building a bunch of new jails. We in the US have a long history of "putting lipstick on a pig."

Last night I watched a History Channel documentary on Franklin Delano Roosevelt which detailed, inter alia, the hiding of his ill health from the public, particularly during the 1944 election, when he was clearly near death. I guess misleading voters isn't as criminal as misleading investors.

This might bring a sigh of relief to certain past and current members of the Bush administration whose forecasts and descriptions of events in Iraq were at least as far off the mark as the offensive statements from the 2 fund mangers noted above.

Has it been 5 years since we saw that Mission Accomplished banner on the USS Abraham Lincoln?

But, as already noted, misleading voters is not the issue. Misleading investors is.

Then again, maybe misleading investors is not such a big deal. Consider Treasury Secretary Mellon's gem from the last Great Depression: I see nothing in the present situation that is either menacing or warrants pessimism... I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.

Here's a whole page of misleading statements.

Of course, one needn't go back so far in time to find senior financial officials putting a nice spin on a dicey situation. We may have to wait a few months for the truth of this statement by current Treasury Secretary Paulson to be tested (I have, it seems worth noting, been reading this refrain for months): the worst is likely to be behind us.

The only difference I can see between Paulson's and Bernanke's happy talk and that of the Bear Stearns Hedge Fund Managers is that the US Treasury hasn't gone bust......yet.