Law enforcement says a local man is so proficient at predicting the outcome of sporting events that he's gained nationwide traction. He assesses a sporting event, forms an opinion, makes a prediction as to the outcome, and sets the betting line.
So long as that line is reasonably accurate, and he has plenty of bettors, it matters not to this bookie which team wins or loses. His compensation, or vig, consists of fees paid by bettors. They might win and lose real money. But this businessman succeeds based on handling multiples of conflicting wagers.
This so-called gentleman gambler has been back in the news as the subject of a bookmaking and money-laundering investigation by local and federal law enforcement. For decades, his family business has been the suburbs' worst-kept secret. He is known to run his business free of violence, and with no mob connections. Those who don't honor their obligations get their credit cut, not their Achilles tendon. Supposedly the feds dug up almost a million dollars in his yard.
I have been thinking about the guy they call Joe Vito since the Securities and Exchange Commission accused Goldman Sachs of civil fraud, wondering how what he does in khakis differs from what investment bankers do in pinstripes. Based on what occurred at the Senate hearing last Tuesday, I am not the only one seeing parallels.
The word of the day wasn't the invocation by Sen. Carl Levin, D-Mich., of something that rhymes with "itty" and "bitty." It was the use of an occupation by Sen. Claire McCaskill, D-Mo.: "bookie."
"You all are the house. You're the bookie," she said to Goldman executives. She even asked them to reveal their "vig" on the transactions that warranted the charges.
Sen. John McCain, R-Ariz., meanwhile, asked Goldman CEO Lloyd Blankfein how his company's actions differ "from going out to Caesar's Palace, the sports book, and making a wager on the outcome of an athletic contest." At the betting parlor to which McCain refers, you can wager on not only the final outcome of events like the Super Bowl, but the outcome at the end of every quarter and the time it will take to sing the national anthem.
What's that got to do with Goldman Sachs? The SEC alleges that hedge fund manager John Paulson correctly foresaw the impending explosion of the housing market in particular states. So Paulson, who has been accused of no wrongdoing, approached Goldman with the proposition that they assemble and sell a complex financial instrument - collateralized debt obligations, or CDOs - stocked with the risky mortgage-based securities that he predicted would fail.
It is alleged that Paulson purposely included the lowest-rated mortgage-based securities. Why? Because he was personally betting on the collapse of the housing market. And he was right. As a result, he made a fortune. Goldman denies any wrongdoing. The investment banking firm points out that its clients were sophisticated investors to whom necessary disclosures were made. It would seem the case will rise or fall based upon whether a duty existed on the part of Goldman to reveal how the hedge fund was assembled, and if so, whether the company exercised that duty.
Think of the CDO as Super Bowl XLIV. Each event yielded winners and losers. Some predicted the housing market would rise and some thought it a bubble about to burst, just as there was a difference of opinion as to whether the Indianapolis Colts would cover the four- or five-point line that favored them over the New Orleans Saints. So bets were placed.
In both cases, fees were paid to the house - Goldman and those who take action on sports, legally and otherwise. Each derived income based on the transaction they created. The housing market tanked. Millions defaulted on their mortgages. Paulson made billions. Meanwhile, in the Super Bowl, the Colts not only failed to cover the spread, they outright lost. In both cases, the winners collected. The losers paid.
Jack Bogle also buys into the casino analogy, and sees a big-picture danger for our economy. Bogle is the legendary founder of the Vanguard Group, the world's largest mutual fund manager, with about $1.3 trillion in assets.
He told me last week's congressional hearing represented "a failure to focus really on what's going on here, which is, in many respects, that Wall Street has become a casino, a place for gamblers to meet. And that's not all Wall Street does, but it's come to dominate."
No need for those buses carrying patrons with cups full of quarters to head down the Shore. They might just as well head for Wall Street.
Contact Smerconish, a columnist for The Phil adelphia Inquirer, via www.mastalk.com.