The Top 5 Wall Street Conspiracies

At this point there have been so many questionable acts of Wall Street and government finagling in the economy that it’s hard to keep track of them all. It’s about time someone rounded up these conspiracies and took a look at how believable each one is.

Gary Weiss makes this assessment and presents his plausibility grading “on a sliding scale from 1 to 5, with 1 being ‘fugetaboutit’ and 5 being ‘damn right.'” Not everyone will agree with his assessments, but they are unique and interesting. What follows below are the five conspiracies he reviews, with a highlight comment from his discussion of each.

1. The Plunge Protection Team Manipulates the Markets

Plausibility: 1

Highlight: “‘Plunge Protection Team’ was coined by the [Washington] Post, and it stuck. The article spawned a spasm of conspiracy theories that grind on to the current day, holding that the government actually does secretly intervene in the markets, buying equity index futures or, as Ron Paul recently asserted, has sought to depress the price of gold.”

2. Wall Street Screws Consumers at the Gas Pumps

Plausibility: 5

Highlight: “Wall Street speculation that drives up prices rarely gets the public too exercised—if the prices belong to stocks they’ve bought. But speculation that drives up the price of gasoline, heating oil, broiler chickens, and other commodities has consumers ready to march down from Trinity Church carrying pitchforks.”

3. Goldman Sachs as Giant Vampire Squid

Plausibility: 4

Highlight: “Goldman Sachs, as described by Taibbi, was a ‘giant vampire squid wrapped around the face of humanity.’ Not the most precise metaphor (vampire squids are tiny deep-sea creatures that rarely encounter human faces), but the general thrust of his piece was correct. Goldman does have a way of coming out on top in every bad situation.”

4. Tim Geithner is in the Pocket of the Big Bankers

Plausibility: 5

Highlight: “There’s no question that Tim Geithner likes to talk to people who run major financial institutions, and this was long before e-mails were released showing that as treasury secretary his telephone buddies included all the major CEOs of the big banks. That was the case as well when Geithner was president of the New York Fed. No secret about it.”

5. Naked Short-Selling Killed Bear Stearns and Lehman Bros.

Plausibility: 1

Highlight: “You can believe that the CEOs of the two banks were responsible, or you can believe their excuse, which is remarkably similar. Alan Schwartz of Bear Stearns and Dick Fuld of Lehman Bros. both blamed speculators, rumormongers, and naked short-sellers for torpedoing their companies, in their respective appearances before congressional committees.”

In addition to longer descriptions of each, Weiss categorizes the conspiracies by type and grades each on scope, durability, and crowd appeal. See the full details in The Big Money coverage of the biggest Wall Street conspiracies.