Here's what fueled much or maybe most of Wall Street's growth over the last few years: Investment banks (and by that I also mean the investment banking arms of giant banks like Citigroup and UBS) found ever more ways to sell gobs of risky securities while

a) telling the buyers they weren't risky, in many cases because the investment banks implicitly or explicitly committed to stand behind them if things went haywire

and

b) telling their own shareholders that these securities had been sold to others and were thus no longer a risk to the company

and

c) telling regulators more or less the same things they told shareholders.

In other words, the investment banks were booking big profits while shoving all the related risks under the rug. And now that's coming back to bite them, as it did Citigroup today when the firm agreed, under pressure from New York Attorney General Andrew Cuomo, to (in the words of a couple of Bloomberg reporters) "buy back or help clients unload $19.5 billion in auction-rate securities and pay a $100 million fine to settle U.S. regulatory claims it improperly saddled customers with untradeable bonds."

Auction-rate securities are bonds, mostly municipal bonds, with interest rates set every week or every several weeks at an auction. Because short-term interest rates are usually lower than long-term interest rates, this allowed issuers (cities, states, port authorities, etc.) to pay less in interest than they would have otherwise. But this February, investors spooked by global financial turmoil decided to stay away from a couple of regular auctions. The investment banks that arranged the auctions opted not to step in and buy bonds to keep the auctions going, and interest rates on the bonds suddenly skyrocketed--from 4.3% to 20% in the case of one set of bonds issued by the Port Authority of New York and New Jersey. After that, the auction-rate market effectively shut down. Issuers were stuck paying high interest rates--although many have since refinanced their debt into non-auction-rate bonds--and those who bought bonds before the market freeze-up were stuck with hard-to-unload securities. The bonds themselves weren't and aren't very risky. But the investment banks, after persuading both buyers and sellers that there would always be a liquid auction-rate market, failed to do their part to keep trading going.

Now Citi has been shamed into taking responsibility for the bonds it underwrote. Other investment banks will surely follow. That's a good thing--for investors, for issuers, and for the long-run credibility of Wall Street.

But one does have to worry that:

a) this will end up up costing already-reeling banks and investment banks a whole bunch of money

b) while we've now been through blowups in mortgage CDOs, auction-rate bonds and bond insurance, there may be more such risk-hiding escapades still to be fully exposed

and

c) if Wall Street firms are careful and shy away from such shenanigans in the future, they won't be able to report anything like the kind of profits they did over the past half decade.

Update: Felix Salmon makes an important point (that partly contradicts my point):

The problem with auction-rate securities was maybe this: that stockbrokers felt a huge amount of pressure to reassure a bunch of investors with, typically, six-figure sums of money to invest that their money was perfectly safe and perfectly liquid. There's no such thing, and frankly people should stop being so cavalier about money-market accounts as well. If you've got lots of money, good for you. Now go and invest it sensibly. Don't ask for zero risk. That way lies trouble.

Thanks to the falling prices of used vehicles, especially trucks and SUVs, GM and Ford are scaling back their leasing programs, and Chrysler is getting out of the game altogether. This morning I had a chat with Sergio Stiberman, the CEO of LeaseTrader.com, and he had some interesting data from the secondary market. LeaseTrader.com is a site where people who hold auto leases can sell them to other people—instead of paying a big penalty to cancel the lease.

What deals are being made on LeaseTrader.com these days? Not surprisingly, big cars are out, and smaller ones are in. Here's a list of the top ten most-transferred leases in January:

1. BMW 3 Series

2. Mercedes C Class
3. BMW X Series
4. Land Rover Sport
5. Cadillac Escalade
6. Cadillac CTS
7. BMW 5 Series
8. Mercedes SL Class
9. Mercedes E350
10. Mercedes S550

This is what the list looked like in June:

1.
BMW 
3 
Series



2.
Mini
 Cooper

3.
Mercedes 
C
 Class


4.
Toyota
 Camry



5.
Cadillac 
CTS


6.
Mercedes
 SL 
Class


7.
Land
 Rover 
LR3


8.
Lexus
 IS 
250


9.
BMW 
X
 Series


10.
Mercedes 
GL 
Class



Good-bye, Escalade—and don't let the door hit you on the way out, Land Rover. Hello, Mini Cooper and Camry.

Barbara!

I've tried to make the case before that the horrible times afflicting the nation's metropolitan daily newspapers have far more to do with the collapse of a monopoly distribution model than with the quality of reporting in those newspapers. But now Paul Davis, publisher of the weekly Tuskegee News in Alabama, is making me do it again (via Romenesko). He writes:

Community newspapers are doing quite nicely, thank you, because they have not forgotten their mission, their responsibility to their readers, the service they must provide to their advertisers, their duty to report the good and the bad; to expose corrupt public servants who betray the public trust and seek to serve themselves first at the expense of the taxpayers.

I'm willing to grant that small-town papers have been less likely to get bloated and arrogant and out-of-touch than their big-city brethren. The rest is a load of hooey, though. A few community newspapers do a great job of serving their readers and exposing corrupt public servants. Many more do a great job of publishing photos of their readers, but generally shy away from any exposing of corruption. And some are complete crap. But all of them benefit from the reality that
*their communities are too small for Craigslist to have gotten to (yet)
*in most cases they serve populations less transient and less Internet-addicted than those of big metropolitan areas
*nobody ever looked to them for national or international news, so the fact that you can get all that on the Internet now is irrelevant
*the real estate bust (and real-estate-advertising bust) hammering many newspapers now has been mostly a big-metro-area phenomenon.

Update: I figure I should add commenter Richard Karpel's two excellent additions to my list:
* The median age of residents in small markets is much higher than the median age of residents in metro areas. And people who are older are much more likely to read newspapers than the under-35 set.
• The level of PRINT competition in major markets dwarfs that which exists in smaller communities. Every top-25 market has dozens of mostly free, niche publications.