Crikey

Macquarie chiefs, Allan Moss and Nicholas Moore, probably won’t be too unhappy with the long-awaited Bethany McLean article in Fortune about the investment bank. The article, which hit news-stands on 24 September, is entitled “Would you by a bridge from this man?” (and features a picture of Allan Moss next to the headline).

McLean is a well-known investigative business writer who gained international notoriety in March 2001 with her expose of Enron, simply titled “Is Enron Overpriced?“. That article was a key precipitator of Enron’s demise (spurring both the book and movie called Enron – The Smartest Guys in the Room).

Unlike McLean’s Enron piece, her Macquarie profile really doesn’t provide readers with any new information on the investment bank. The vast majority of the criticisms leveled by McLean are simply rehashes of short-seller Jim Chanos’ comments from earlier this year, as well as other oft-repeated criticisms regarding executive remuneration and Macquarie’s heavy use of debt (much of which is the off-balance sheet variety). The most fervent criticisms came from unnamed sources, with McLean claiming that:

The skeptics don’t merely argue that the firm’s earnings will fall - which will happen to every financial services firm in a downturn - but that something more dire could happen.

It’s not that they can lay out how events will unfold. Macquarie is too complex. Figuring out the firm is “like wrestling in the dark with a ghost,” says another skeptic. It’s just that from the outside, there’s enough that seems flammable, from the funds to the parent company’s 88% debt-to-capital ratio, to make people willing to bet that in a tough market, something, anything, will catch fire and set off a chain reaction.

McLean later noted that:

Today Australians regard Macquarie Bank with a mixture of fascination, pride, intimidation, and resentment. In its home country the firm has the mystique of a Goldman Sachs combined with the omnipresence of a Google.

Ultimately, McLean’s profile of Macquarie is significant not for what it says, but for the fact that the CEO of an Australian bank has reached the pages of Fortune, joining the likes of JP Morgan’s Jamie Dimon and Goldman Sachs’ Lloyd Blankfein. While McLean certainly doesn’t portray Macquarie in a glowing light (at one stage, noting that Macquarie was “more rapacious than your average private equity firm”), she failed to provide any new damming evidence as to the sustainability of the “Macquarie Model”.

McLean’s article doesn’t seems to have had any effect on Macquarie’s share price, which continues to rebound, closing yesterday at $80.27. Shares in the investment bank have increased by more than 25 percent since 15 August (but still 17.5 percent below its record high hit in May).