The best way to understand what is going on is to think like a criminal. Paulson, Summers, Emanuel are very bright criminals. Geithner is their dull-witted whipping post.

I also have to say that Mr. Chase’s accounting of what goes on at the SEC sounds much more realistic than the Disney-esque fairy tale presented by Mr. Coffman…

Having been a player in the junk bond market during the 1990′s, I know how simple and easy it is to conjure up absurd OTC derivatives deals in order to hide crappy positions from the people in charge internally of risk management, and therefore to hide them from the dullards at the SEC. We did this all the time with Harvard Asset Management. It’s no coincident that Harvard Asset is in such bad shape – it was looted by the likes of Larry Summers and his cronies.

Back then the fraud was for 10′s of millions and saved bonus pools on the desk. Now, the fraud is in the trillions and ensures the huge rewards being paid to the larcenous scumbags like Blankfein and Dimon.

While Obama fiddles with his pecker, USA burns…

We tried and the industry closed ranks. Knowing and proving are very different things. We had the unfortunate obligation of presenting evidence when we tried to shut down one of the most financially powerful gigs on the street. We brought the case when we had the evidence necessary to prove the case despite the fact that the industry and many of his victims/clients circled the wagons to prevent the SEC from doing so. If you only knew and if I had the freedom to tell you! I’m a lot of things but I’m no hack and I am aware of no evidence that anyone quashed prior inquiries.

Do you folks check under your beds at night for goblins before you go to sleep? “Paranoia strikes deep….”

But the only way things are going to change is through responsible action. Attacking government employees– as distinguished from appointees and their ilk–isn’t going to feed the bulldog. We need to find practical solutions to this mess and use all the resources available, including smart and well meaning government employees, to implement the next steps. Howling at the moon isn’t going to change the galaxy.

The post following this one raises a point I’ve advocated for years: split investment banking from commercial banking. It will alleviate the TBTF syndrome, reduce the power and incomes (and thus, the influence) of the corrupting agents and likely end the practice of oversized compensation and unreasonable risk. To enhance the cure, inhabitants of these two institutions should have their own money at risk, not primarily other peoples’. Will this weaken the county’s competitiveness on the stage of global finance? Despite what are sure to be outcries to the contrary, I seriously doubt it. But will it help neuter those who believe the world is their sex object? You bet.

Look, we all agree the system is corrupt. Are we going to use the blogosphere to vent or are we going to do something about it? Attacking government employees (easy targets to be sure) will only undermine the confidence of the public in the ability of government to solve problems. And if the government doesn’t do it, it’ll be up to you and your mobs with pitchforks at midnight. Good luck.

Published: October 20 2009 20:15 | Last updated: October 20 2009 20:15

Mervyn King, governor of the Bank of England, called on Tuesday night for banks to be split into separate utility companies and risky ventures, saying it was “a delusion” to think tougher regulation would prevent future financial crises.

Mr King’s call for a break-up of banks to prevent them becoming “too important to fail” puts him sharply at odds with the direction of domestic and international banking reform.

[...]

The Bank governor wants to see the utility aspects of banking – payment systems and deposit taking – hived off from more speculative ventures such as proprietary trading. “There are those who claim that such proposals are impractical. It is hard to see why,” he said.

[...]

See story: http://www.ft.com/cms/s/0/7056b56a-bda8-11de-9f6a-00144feab49a.html?nclick_check=1

Hail the King!!!

Sorry if you feel attacked. My point is that to suggest the regulatory system works only helps those who continue manipulating it. Putting Milken in prison for ‘parking’ violations, imprisoning Kosloski for buying a $6000 shower curtain, sending Jeff Skilling to jail for 25 years while allowing Ken Lay to fake a heart attack on presentencing furlough and escape to a new face overseas. The whole cops and robbers charade makes good evening television but has no effect upon the debt peonage scam run through the Federal Reserve and the derivative scams run on Duluth money managers. If the SEC isn’t going to regulate derivatives it isn’t going to regulate anything that matters in the 21st century. Do you realize that equity swaps now make it unnecessary for corporate insiders to ever pay capital gains taxes on their stock option swindles? Being retired, you might enjoy Frank Portnoy’s book, FIASCO, which lays the whole game out. It was written in 1997. Too bad Barney Frank didn’t read it. I am retired too.

You can berate government and regulators until the cows come home, it won’t change anything or move us an inch toward a better system.

Should anyone invest with any company that carries off-book positions in any financial instrument? Hell no they shouldn’t. But don’t blame government for that situation. The accounting profession blessed the practice despite Enron, etc. and then ran to Congress whenever regulators tried to crack down on accounting practices. I remember when Congress threatened the SEC’s budget over something as fundamental as auditor independence.

Look, the institutions are far from perfect, but their policies and regulations merely reflect the larger society and to political context in which laws are passed by folks dependent on the moneyed interests. But folks have to wake up and do something about the larger political situation to change the finance industry. While I won’t go so far as to say it is all corrupt, corruption and avarice are widespread and control the game. But attacking career regulators, many of whom are fighting the good fight, ain’t gonna change a thing, Jake.

By the way, the SEC doesn’t regulate derivatives and never did. If money managers in Duluth are a problem, pass it along. I can’t help. I’m retired.

For our markets to thrive, investors must believe in market integrity. If regulators can’t do their jobs because of lack of information, investors will lose faith and markets cannot exist without investors.

True or false, Mr. Coffman: Today, there is no way any investor can make an informed decision about whether or not to buy stock or securities of any company which books off balance sheet derivative bets, because any change in interest or currency rates can generate a huge loss without any prior disclosure that the company was even at risk.