Nov. 9 (Bloomberg) -- Call it outrage fatigue.

As the vultures pick over the carrion of Refco Inc., nobody seems particularly indignant about the collapse of what was the fourth-largest U.S. futures broker before its bankruptcy. The 14th-biggest failure in U.S. history doesn't seem to be arousing the kind of anger that accompanied previous scandals.

Just as donor fatigue saps people's charitable giving after what feels like one famine, one tsunami or one hurricane too many, maybe the surplus of corporate scandals in recent years has deadened our sensitivity to financial shenanigans.

I've been wondering. If you're former Refco Chief Executive Officer Phillip Bennett or Parmalat SpA founder Calisto Tanzi or former Enron Corp. Chairman Kenneth Lay, how do you break the news to your spouse that you're likely to be spending more time at home, so long as you make bail? How does that conversation go?

``You're home early, honey. Did you have a good day at the office?'' asks the spouse. ``Not my best,'' answers the executive, shucking off an expensive overcoat. ``I got hammered hiding hundreds of millions of dollars of losses, torched the stock price, and I'll probably spend the rest of my days sharing a cell with a bodybuilder called Bubba who says I'm his special friend. Oh, and go easy on the credit card this weekend.''

Cooking the Books

It takes a lot to compete with the likes of Parmalat, the Italian dairy company that falsely claimed to have $4.9 billion tucked away in a rainy-day bank account; or Enron, which had a market value of more than $68 billion before its December 2001 bankruptcy; or Freddie Mac, which had to restate three years of income for a margin of error of $5 billion.

Even so, the story of Refco is a doozy. It's not so much the allegation that CEO Bennett was slithering $430 million of debt between a series of different accounts to keep it off Refco's books. That kind of sleight-of-hand is so common these days they're probably planning to add it to the Master of Business Administration syllabus at Harvard Business School.

It's not even that most of the losses that dragged the firm down were accumulated as long ago as 1997, during the currency crisis that gripped Southeast Asia. No one expects audit reports to unearth accounting malfeasance anymore, even when the books have been cooked for years.

Or that Refco's bankers -- Credit Suisse First Boston, Goldman Sachs Group Inc. and Bank of America Corp. -- raised $670 million in August by selling shares in the broker without uncovering the financial cavity. Whatever due diligence means these days, it's not your father's due diligence.

Smoke and Mirrors

The really interesting wrinkle in the whole Refco debacle is the allegation that Bennett, a 57-year-old graduate of Cambridge University in the U.K., tried to keep the balls in the air for as long as possible. He had the chutzpah to borrow 350 million euros ($413 million) from an Austrian bank to fill the hole, pledging his soon-to-be-almost-worthless 34 percent stake in the brokerage firm as collateral.

There's something almost heroic in Bennett's efforts to keep the smoke from clearing and the mirrors from cracking, with the Austrian bank's money arriving just hours before the jig was up.

Again, I keep trying to picture the scene at Bawag P.S.K. Bank in Vienna on the evening of Oct. 10 as CEO Johann Zwettler and Supervisory Board Chairman Guenter Weninger tried to unravel the tale of the missing millions. ``Well, our pal Phil called last week, said he needed a loan, so we wired 350 million euros to his account this morning. He said he was good for the money.''

What, Me Worry?

Some of Refco's clients pulled money out of the broker, diminishing its client accounts to $3.4 billion as of Oct. 24, down from $6.5 billion on Sept. 30. That still leaves $3.1 billion that customers were content to leave sitting at the firm even after it filed for bankruptcy. It takes more than a $430 million fraud probe to ignite concern these days.

Bennett, who was arrested on Oct. 11, was released on home detention after posting $5 million in cash with the courts. He wasn't able to find six people to guarantee the $50 million bond demanded by U.S. District Judge Denny Chin.

One reason why Refco's expiration hasn't attracted more disapprobation might be the lack of direct repercussions in the global financial markets. Unlike the near demise of Long-Term Capital Management LP in 1998, Refco's expiry hasn't threatened the fabric of the capitalist system. So far at least, we've seen no failed transactions, no settlement blow-ups, no trades that had to be unwound.

Nevertheless, the absence of angst over the rapid disappearance of a major financial firm is puzzling. It suggests our moral compasses are now too warped to register disturbances in the ethical forces that should, however weakly, provide boundaries to corporate behavior.

To contact the writer of this column: Mark Gilbert in London at magilbert@bloomberg.net.

Last Updated: November 8, 2005 19:05 EST