Scandals: We'll All Hang Together

We'll All Hang Together

Just as the financial community had feared, the scandal set off by Salomon Brothers' efforts to corner the market for U.S. Treasury securities spread across much of Wall Street last week. On Capitol Hill, Richard Breeden, chairman of the Securities and Exchange Commission, said that "a distressingly large" number of firms had routinely inflated orders for bonds sold by government-sponsored agencies like the Federal National Mortgage Association. The bogus orders apparently enabled firms to purchase extra bonds and resell them at a hefty profit.

In response, Fannie Mae last week launched a program to audit bond sales and expel cheaters from...

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