The Five Dumbest Things on Wall Street: May 11

TIE: 1. Yahoo's Resume Riot

Thank you Yahoo! (YHOO). Nobody, but nobody, does dumb like you.

On Tuesday, the Internet company's board announced the formation of a "special committee to conduct a thorough review of CEO Scott Thompson's academic credentials." This high-profile commission, which will include both independent directors and a bunch of high-priced attorneys, is the company's response to shareholder activist Dan Loeb's revelation that Yahoo's chief lied on his resume when he listed a bachelor's degree in computer science from Stonehill College, a credential that wasn't offered until four years after he graduated.

Of course, that's not enough for Third Point's Loeb, who says the internal investigation must not be conducted "behind a veil of secrecy". Actually, anything short of Thompson facing a public firing squad would be insufficient to soothe Loeb, whose Pyrrhic proxy war has already claimed the scalps of Yahoo board members Roy Bostock and Jerry Yang.

And speaking of firings, apparently it was decided that Yahoo! director Patti Hart will be the first to take the fall for Thompson's resume fudging. On Tuesday it was reported and later confirmed that Hart, who led the search committee that hired Thompson from PayPal in January, will not seek re-election to Yahoo's board.

We can only imagine that's probably a relief for Hart, whose day job is running International Game Technology (IGT). Although, who knows, she may miss the fun and games at Yahoo where every day seems like a corporate crap shoot.

And as for Thompson, well, we don't have to imagine how he feels, because he made his emotions quite clear this week in a letter to employees.

"I want you to know how deeply I regret how this issue has affected the company and all of you," wrote Thompson to his troops. "We have all been working very hard to move the company forward and this has had the opposite effect. For that, I take full responsibility, and I want to apologize to you."

As for us, we just can't wait to see what happens when Loeb challenges the real question marks in Thompson's curriculum vitae: His love of travel, rock guitar and Indian food.

Oh man, if he fabricated those things, this battle could really get bloody.

--Written by Gregg Greenberg in New York.

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TIE: 1. Dimon's Dumbness

It was like listening to Darth Vader apologize for embracing the dark side.

JPMorgan Chase (JPM) Chairman and CEO Jamie Dimon said during the company's April 13 first quarter conference call a series of news articles about massive risk-taking in its Chief Investment Office was a "tempest in a teapot."

Oopsy.

Less than a month later, that same unit just posted a $2 billion loss on existing trading positions as JPMorgan was forced to revise the trading unit's Value at Risk--a measure of risk-taking-- by nearly 100%, raising it from 67 to 129.

Dimon has been the most vociferous, credible critic of proposed tough new rules aimed at reducing risk in the banking system... until Thursday.

In one fell swoop, that credibility went out the window as he admitted a "hedging strategy" executed by the bank was "flawed, complex, poorly reviewed, poorly executed and poorly monitored. The portfolio has proven to be riskier more volatile and less effective as an economic hedge than we thought," he said.

Needless to say the Volcker Rule -- a regulatory dagger aimed at the heart of this type of risk-taking and which Wall Street lobbyists have been striving to delay and water down -- is about to get a lot stronger.

Anyone who had any doubt that giant global securities firms are highly risky and impossible to understand is going to have a difficult time arguing that point for some time to come.

That lesson should have been clear enough during the 2008 crisis, when highly-respected and successful institutions such as Bear Stearns, Lehman Brothers and Merrill Lynch collapsed virtually overnight.

But the "heroes" of the crisis--the JPMorgan and Goldman Sachs (GS). They enabled defenders of the status quo to make the case that, despite a few--okay, lots--of bad apples, the core was more or less intact.

If any single person could be said to embody that core, it was Jamie Dimon.

But Dimon's credibility--and with it, an entire era of Wall Street risk taking and world domination--just proved more hollow than even its staunchest critics could have imagined.

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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