Time- Last October, I stood in the back of a packed Manhattan ballroom listening to hedge-fund manager David Einhorn explain to an audience what had gone wrong with Wall Street. Packaging home loans into securities was a "mediocre idea," he said. Repackaging those securities into yet other securities was a downright bad one. Credit ratings were a joke. Investment banks–he mentioned Bear Stearns and Lehman Bros. by name–took too many risks and disclosed too little.
To be honest, I didn’t think much of the speech at the time. One could hear similar critiques every day from finance professors, regulators and even some Wall Street executives. Yet there turned out to be a crucial difference: Einhorn was actually doing something about it, betting that the gig would soon be up at Bear and Lehman by selling their shares short.
