Disclosure and Judgment: 'We Have Met Madoff and He is Ours'

13 Pages Posted: 19 Mar 2009 Last revised: 20 Apr 2009

Date Written: March 17, 2009


This short essay addresses the role of securities regulation of mortgage-backed in the present financial crisis. While there is certainly a role for securities regulators to play in curing systemic flaws that contributed to the present situation (for example, the regulation of credit rating agencies), the federal system is primarily based on disclosure, not the merit of the underlying security. My view is that the problem here is not the availability of information in the markets for these securities, now or in the past, but judgments made with respect to that information. To paraphrase Kant, judgment without information is empty; information without judgment is blind. Information without judgment gives us bubbles; judgment without information leaves us at the mercy of Madoffs.

This is an essay prepared for the "Fallout from the Bailout" symposium at the University of Dayton on March 20, 2009.

Keywords: mortgage-backed securities, disclosure, judgment, SEC, Kant, Berkshire Hathaway, Buffett, induction, rule-following

JEL Classification: K22

Suggested Citation

Lipshaw, Jeffrey M., Disclosure and Judgment: 'We Have Met Madoff and He is Ours' (March 17, 2009). University of Dayton Law Review, Forthcoming, Suffolk University Law School Research Paper No. 09-18, Available at SSRN: https://ssrn.com/abstract=1361932

Jeffrey M. Lipshaw (Contact Author)

Suffolk University Law School ( email )

120 Tremont Street
Boston, MA 02108-4977
United States

HOME PAGE: http://ssrn.com/author=381790

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