mcnetgb commented on the blog post Standard and Poor’s Report Strengthens Wall Street’s Hand in Fight Over Volcker Rule
Ouch: Unfortunate headline here.
S&P confirms Volcker Rule will eliminate taxpayer backed traders bonuses by $4-5 billion – Morgan Stanley/Goldman Sachs traders to feel the most pain. US taxpayers to feel the most relief.
(Traders bonuses are 40-50% of revenues)
S&P confirms the taxpayers will feel relief, and banks will retain healthier ratings, via reduced earnings volatility.
MS and GS are the least deserving of the government protection they were gifted as a result of their 11th hour conversion to Bank Holding Company status. They are also the loudest and best funded voices opposing strict enforcement of the rule on themselves and their large, but lesser affected peers. S&P confirms they will bear the lions share of the revenue reductions resulting from the Volcker Rule. This is as it should be.
An S&P downgrade resulting from strict Volcker regs is one of the best results taxpayers and even free-marketers could hope for. Downgrades would lead to better pricing of risk, at a minimum, and MS and Goldman might be forced to face some competition from their own traders who are jumping the mother ship to set up their own shops.
Suggestion for tomorrow’s links
David Dayen posed the challenge here: http://news.firedoglake.com/2012/08/08/volcker-rule-deadline-comes-and-goes/:
“… Bachus put up an email address, email@example.com. Maybe Occupy the SEC will have some thoughts for him.”
We’re happy to let David and other Firedoglake fans know that Occupy the Sec did have many thoughts. Please read them here and lend your support:
I may be too jaded but I still chuckle (or sigh) that it was a SAR that triggered former Gov/Former AG Spitzer’s downfall.
Double chuckle (sigh), if I recall correctly, it was HSBC’s SAR reporting that brought his sorry-ass sex life to light.
Spitzer’s personal seediness pales in comparison to HSBCs awfulness after all, so there may be some justice if HSBC pays a higher price for their violations than Spitzer paid for his flawed humanity.
mcnetgb commented on the blog post JPMorgan Ignored Risks in Pursuing Fail Whale Trade
Thomas Curry is the key man in regulatory reform efforts at the moment.
His predecessor(s) were shameless in their support and service to their banker clients. They inserted and advocated for the loophole in the Volcker rule that JPM so ineptly exploited. Obama finally appointed him recently ,and kicked that fool Walsh to the curb.
Curry comes from the FDIC. If he has Sheila Bair’s endorsement I will retain a shred of hope that he (as the lead investigator in the JPM debacle) is a serious regulator and not another Obama stooge.
Absent her endorsement, I will assume the OCC (which is a Treasury dept) will continue to do Geithner’s (and by extension Obama’s) bidding with the full complicity of its new head.
Indications are that the OCC is sticking to Walsh’s script, by reinforcing the (JPM) message that the version of the Volcer rule the OCC supported (under Walsh) would have permitted this kind of activity. Since there is a new sheriff in town (Curry), this is a disheartening signal.
At this point ,it looks like Obama has succeeded in coopting Curry as effectively as he coopted Schneiderman.
I want to be wrong about this, but I think a Curry coopting is more newsworthy than the Schneiderman fade.
We’re totally f*&% if O replaces Walsh with his own tool.
mcnetgb commented on the blog post MF Global CFO Learned of Shortfall in Customer Funds During Firm’s Collapse
Actually I felt kind of sorry for Serwinski. She quit in July, but stayed on till her replacement arrived on 11/1. If I were in her lame duck state I’m not sure I would have run back into that burning house.
Having said that, she made a terrible choice by not alerting the regulators on Wed that there was an unprecedented accounting error at the firm, despite her disbelief that it could be real. Waiting until Sunday 10/30 for confirmation before alerting the regulators is indefensible. Her superiors should have taken responsibility from her on Wed and alerted the regulators immediately. The fact that the senior officers did not assume responsibility is damning. The CFO is directly responsible here. Serwinski was literally and effectively on vacation at a critical time. Someone else must have been delegated responsibility to act in her absence. If not, responsibility rests with her boss, the CFO. If no one was available to cover for her then there was a profound breakdown in internal controls.
The theater to catch Corzine in the $200m transfer authorization trap may backfire. Or it may expose that he really did overrule everyone under him. PWC did raise the issue that a significant control deficiency existed, management override of other controls, (read Corzine makes the rules) was a problem at the firm. It’s not clear this deficiency was ever cured, so the transfer inquiry may shed more light on the SOX violation issue.
But, the real theft of customer accounts seems to have occurred as a result of the Broker Dealer’s failure to return the $1b in FCM customer funds it borrowed on Wed 10/26. In retrospect the FCM customers fate was sealed by that event, which Serwinski, or her superiors failed to acknowledge and disclose. It seems the B/D never recovered the ability to return funds to the FCM. That suggests that the missing FCM funds were stranded at the B/D and the resulting bankruptcy doomed the FCM customers to losses.
Since this inter-company settlement was a daily event that was normally settled when the various settlement activities at the various entities were completed at end of day, this alarm could not possibly have been ignored or left unresolved for more than a few hours, let alone for 3 business days at a firm facing imminent bankruptcy.
Additionally, these events were all anticipated in the ‘break the glass’ memo. The events that actually did occur seem to have followed that script. That script was in the forefront of every responsible executives mind for the 3 preceding months (from 8/11, when it was commissioned, till 10/11, when it was executed), so Serwinski’s astonishment notwithstanding, the events should not have astonished anyone in a position of authority at the firm.
My hunch is that the 200 transfer was the least critical issue. That transaction may have resulted in some customer money disappearing from the FCM, but the amount of customer funds involved in that transaction may prove to be a fraction of the 200. They transferred the 200 based on a potentially faulty estimate of how much of the 200 was actually MFGs own money.
The rest of the customers funds were long gone, or at least stranded at the B/D.
The choice of bankruptcy was the final nail in the FCM customers coffin and the SEC and the CFTC have a lot of explaining to do to justify their choice. The SIPC decision favored the wrong party (the B/D) over the wronged parties (the FCM customers).
Gensler should be summarily fired, retroactively actually, were that possible. Schapiro needs to explain why a broker dealer favorable bankruptcy was justified.
Don’t worry about your Mom. Her sadness is more about her own understanding of the reality of the limits of intimacy, rather than her genetic dominance over your ability to deal with your own reality.
My conclusion so far (I’m 54) is that we each live a series of lives.
I’ve had the good fortune to be a loving parent of children in a horrible marriage.
Living in a parallel universe (in your prime 30s-40S), as equally loving parents in a loveless marriage, is a reality that many people can relate to, if they are honest. Friends who exist in similar circumstances, yet deny, fall by the wayside when the child rearing phase passes.
‘Estrangement’ seems (to me, at least) like simple denial. These ‘estranged friends”(or family members) simply never got who you are. Making peace with, and discarding,those friends who were important to you during your previous life is healthy. Brooding about past friendships that could only exist in those past lives is destructive and sad. (IMHO)
At the end of the day you are not left friendless, if you are a normal human being. You’re left with different friends, (and if you’ve lived well, plenty of enemies who will hate you.)
mcnetgb commented on the blog post Shift in Tactics Marks New Phase of Occupy Movement
There’s a game changing quality about this ‘movement’ that the MSM hasn’t really caught up with yet.
I’m a pretty square guy. I went to Zucotti to see what was what about a month ago.
What I found was a peaceful mix of folks advocating for a varied set of issues.
The symbolic tell for me that this was seriously different than anything I’ve seen in past protest movements in NYC were the women of a certain age, proudly (and enthusiastically welcomed) walking with signs hung around their necks calling for an audit of the FED and soliciting for members to Compliance.org!
OWS is not the 60s-70s burn down the ghettos, the police are pigs movement NYers reflexively presume when there is a large protest movement going on in the city.
Yet the police are responding as if OWS is a 60s-70s NYS + al-quauda threat.
I am impressed that NYC cops are equipped to deal with a terrorist threat, but OWS is so not terrorist. I resent the MSM meme that they( OWS) are ‘terrorists’ rather than rational people with legitimate gripes looking for like mined friends at the park.
The NYC police response to OWS as an excercise in anti-terrorism practice might be defensible if it didn’t involve trampling on reasonable dissent by folks genuinely interested in focusing attention on the 1%’s abuses.
Perhaps Bloomberg has conflated home-grown opposition to Wall st.abuse with al-q hatred of Wall St and is overeacting. If so, he’s wrong.
OWS in NYC is a sober, quiet, long simmering call to action protest by average folk who don’t normally take to the streets.
Re the Florida AG’s settlement
If the foreclosure abuses are concentrated in states with (R) Atty’s general, what’s the incentive for the other non(R) AGs to sign on to a national “settlement” to give their political foes cover?
And why in the world would a D from Iowa be heading this effort?
This has been bizarre from day one.
Better to let one state’s abuses go unpunished (but not unnoted) than to let all state’s abuses be forgiven via a national AG settlement.
mcnetgb commented on the blog post OCC Going Rogue, Pursuing Own Foreclosure Settlement With Banks
I haven’t been able to shake the chill from my spine since the word “settlement” first came up, so I see this splintering as a positive.
As you nicely summed it up in your last post, an agreed setlement means Timmy wins. That’s not good news for anyone, even the banks, long or short term, so the OCC defection restores the ability of all parties in the talks (the AGS. the nascent CFPB,and the courts(FEd &state) to go home and devise a better way to craft a more equitable solution that forces the banks, investors and homeowners to gather around a more even keeled table.
Excellent reporting on this. Thanks
mcnetgb commented on the diary post Stunning Video of Unemployed Workers: Meet Obama’s Human Shields by Michael Whitney.
I have a simplistic view about this that makes grovelling before Congress especially galling. Like SS, we pay unemployment insurance premiums each time we get paid. That money we contribute when we are employed (which for me is 30 years worth of contribution)is ours. The whole point is self funding a small safety net for [...]