Category: regulation

Stating the Obvious

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Eliot Spitzer notes that Barack Obama was on Wall Street’s side from Day One:

That being said, I think that Spitzer is wrong on the finer points here. He thinks that the tepid (largely phony) moves toward regulation have turned Wall Street against Obama, not his occasional speeches about “fat cat bankers.”

I think that it is these words. These are very rich men, who spend their lives surrounded by toadies and sycophants who validate their self worth, because of they have a pathetic need for affirmation.

People simply don’t tell them that they might not be the most valuable people in the world in their world, so when Obama offers the most tepid of critiques, while doing their bidding, they freak out.

I just wonder how small these guy’s penises are.

WhyEeveryone at the ECB Should be Fired and Replaced With Kitchen Appliances, Part CLXVII

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The banksters at the ECB, those self-appointed protectors against the ravages of inflation, are demanding an inflation adjustment for their pensions:

Since the start of the Eurosystem our brave inflation warriors at the ECB regularly praise themselves what a heck of the job they are doing about their primary objective the maintenance of price stability. But yesterday the German Daily Frankfurter Allgemeine Zeitung (FAZ) published an article (German), that our guardians of price stability fight another good fight. The employees of the ECB want their own pensions to be inflation protected.

So the same folks who lecture member states of the Eurozone about the danger of private sector labor and pension contracts being inflation-indexed because of moral hazard want their own pension contracts inflation-indexed. For this fight to be successful ECB employees deploy a very evil institution: the central banker union IPSO. According to the FAZ article a former employee sued the ECB with the help of IPSO at European Court of Justice.

Seriously, I cannot think of of a better illustration of the moral and intellectual bankruptcy of the so-called experts who want to tell us how we are supposed to run our economy.

Their rules only apply to us, not to them.

And We Are Supposed to Trust the Cable Companies Because?

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Yes, they are moving to the gated garden, where favored vendors receive priority bandwidth:

It looks as if Comcast is preparing to move from a limited beta test to a wide release for its long-promised Xbox Live streaming video app, with some details appearing on the company’s support pages. Probably the biggest revelation about the service is that streaming Comcast’s On Demand videos through the Xbox 360 will not count towards customers’ 250GB monthly data limit.

Comcast says the Xbox app gets special treatment because the video is “being delivered over our private IP network and not the public Internet.” This gives the service a potentially large advantage over not just other video streaming apps like Netflix and Hulu Plus, but also over Comcast On Demand content streamed through the company’s website and mobile apps, both of which count against the data limits.

Enjoy your 3rd party streaming while you can, because it is not going to work reliably much longer.

I expect them to start f%$#ing with 3rd party IP telephony in the next few years as well, so buh-bye Skype.

H/t Harold Feld.

FCC Takes a Bite Out of Clear Channel and Its Ilk

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It looks like the FCC is finally moving on low power local radio, and in so doing, they are going to be kneecapping crappy mass market radio, which includes a lot of the right wing talkers:

A Federal Communications Commission (FCC) decision issued Monday (PDF) will clear the runway for hundreds of new community radio stations that broadcast on low-power FM signals, bringing progressive, community voices to urban areas that have for decades only known what’s being broadcast by major corporations and America’s political right.

In other words, the dismantling of Rush Limbaugh was just the beginning, and the whole FM dial is next.

The FCC’s decision on Monday wipes away a massive backlog of applications for FM repeater stations, which are transmitters that repeat signals broadcast by corporate and religious radio operators — many of which rake in big listening audiences for right-wing syndicated talk shows.

“So, what a lot of right-wing, conservative radio stations have been able to do is expand their reach out in communities by just having these translators out in the wild, which is why Rush Limbaugh gets the type of audience that he has — because the networks take one signal and repeat it over and over and over across the dial all over the country,” Steven Renderos, national organizer with the Center for Media Justice, told Raw Story on Tuesday. “They’re constantly looking for opportunities to expand that, so there were a slew of these applications pending at the FCC.”

…………

Instead of slowly grinding down thousands of repeater station applications that leave no room for community radio, the FCC essentially threw most of those applications away by limiting who can apply, how many filings a single entity can make, and which markets can consider new repeaters — all of which frees up the regulatory body to examine applications for new community stations. The regulatory agency still gave some deference to corporate broadcasters, however, by allowing them one shot at revising their applications to fit the new guidelines.

…………

The FCC’s move Monday was the first step on a path laid out by the Local Community Radio Act, signed by President Barack Obama at the start of 2011, which represented the first real victory in activists’ long fight against the National Association of Broadcasters (NAB) the radio industry’s biggest lobbying group. The bill freed up portions of the radio spectrum that had otherwise been kept empty by the larger broadcasters, who had long insisted upon four clicks of blank space on the FM dial to prevent interference. It also stipulated that new space on the dial must be reserved for community stations in urban areas where there might otherwise be none.

The radio stations that they are clearing the deck are limited to non profits, and each one has to be independently owned.

So, we’ll see more diversity on radio, and we’ll have better radio.

Not Enough Bullets…

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And Louis Freeh is at again, trying to make sure that the money stolen by the banks from MF Global customers stays stolen.

In this case, he is attempting to pay hush money large bonuses to MF global executives:

Three top executives at MF Global Holdings Ltd kept on since the commodities firm’s collapse could receive performance-based bonuses under a retention plan being prepared by a court-appointed trustee, people close to the trustee said.

Trustee Louis Freeh plans to ask a bankruptcy judge to approve the employment agreements, said these people, who spoke on condition of anonymity because the plan is still being crafted.

The plan will include bonus payouts for Chief Operating Officer Bradley Abelow, General Counsel Laurie Ferber and Chief Financial Officer Henri Steenkamp if they meet certain targets.

The formation of a plan does not necessarily mean bonuses will ultimately be paid or that the executives will earn as much total compensation as they have in the past.

Still, it has garnered attention from at least one key politician. Sen. Chuck Grassley, the highest-ranking Republican on the Senate Judiciary Committee, said in a statement it was “hard to believe that Mr. Freeh would consider bonuses to these select few while customers and investors are still trying to recoup their losses.”

Because, of course the people who stole the money in the first place.

Seriously, the casual corruption of Loius Freeh and His Evil Minions™, which are in tern a reflection of the endemic levels of corruption of our financial system, just boggle the mind.

It’s got me agreeing with a Republican Congressman, Timothy Johnson, wants blood:

I would wager the combined assets of these executives, along with those of Mr. Jon Corzine, would go a long way towards paying back their customers. That’s what would happen in the world I grew up in.

And on the other end, where we have another trustee allegedly trying to recover money for account holders, we have the other end of the bankster protection racket:

MF Global Inc.’s trustee asked futures customers to release claims on the defunct brokerage in return for money they are owed, demanding an “unwarranted” transfer of legal rights, a group of customers said.

The customers, including William Fleckenstein, Thomas Wacker and Summit Trust Co., said in a court filing yesterday that they were notifying the judge supervising the firm’s liquidation of their “concern” in case he wasn’t aware that trustee James Giddens had mailed his demands to some customers along with his determination of their claims. One of Giddens’s demands may require customers to release claims made in class- action lawsuits, they said.

“It may be interpreted to release claims being asserted in the numerous class action lawsuits filed by aggrieved customers,” the customers said in the filing. “It could also potentially be asserted as a bar to recovery by some or all of the defendants joined in these lawsuits, including claims in the suits against parties alleged to be responsible for the misappropriation of customer funds.”

I’m not sure which is worse, the level of corruption, or the brazenness with which they operate.

H/t Atrios.

Because He is Wrong on EVERYTHING?

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Larry “I’m wrong about everything” Summers is a leading candidate for the next head of the World Bank.

Seriously.

Larry Summers wanted to export toxic waste to Africa, helped personal friends loot Russia during its “market reforms”, and has been wrong about everything he’s ever done in real world policy, and so he fails up to head the World Bank.

Well, it is a prime position for someone who thinks that countries in Africa are vastly UNDER-polluted.  (Yeah, he claims that it was all a joke ……… now)

Seriously: the is a class of people in the United States, and they fail over, and over again, but they keep falling up.

And people say that the Ivy League schools are over rated.

I can’t speak to the quality of the education, but the value of the connections are priceless.

It’s Bank Failure Friday!!!!

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It’s a two week update, because of my mother-in-law entering hospital last week (she’s doing a lot better now).

And here they are, ordered, and numbered for the year so far.

  1. Charter National Bank and Trust, Hoffman Estates, IL
  2. SCB Bank, Shelbyville, IN
  3. Central Bank of Georgia, Ellaville, GA <== Last week
  4. Home Savings of America, Little Falls, MN <== Last week
  5. Global Commerce Bank, Doraville, GA

Full FDIC list

And here are the credit union closings:

  1. A M Community Credit Union, Kenosha, WI

Additionally, the People for People CDCU​, in Philadelphia, which had been put under conservatorship in January, has been liquidated.

Full NCUA list

So, here is the graph pr0n with last years numbers for comparison (FDIC only):

And here is the detail, since it is early in the year:

Dallas Fed President calls for Big Bank Breakup

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I’m stunned that someone at this high a level in the financial establishment would suggest breaking up the mega-banks. I don’t know what is leading to this, but he’s off Tim Geithner’s Christmas list:

The five biggest banks in the United States are too powerful and should be broken up, Dallas Fed President Richard Fisher said on Wednesday.

The financial crisis has left the five biggest banks even more powerful than before, he said at an event in Mexico City.

The five biggest U.S. banks are: JPMorgan , Goldman Sachs , Morgan Stanley , Bank of America , and Citigroup .

“After the crisis, the five largest banks had a higher concentration of deposits than they did before the crisis,” he said. “I am of the belief personally that the power of the five largest banks is too concentrated.”

The U.S. Dodd-Frank reform and consumer protection act includes mechanisms for regulators to break up large financial companies, but imposes high hurdles for such action.

“The purpose of Dodd-Frank was to reduce the concentration of power and we have a term called ‘too big to fail’… perversely, these banks are now even bigger, they are too ‘bigger’ to fail than before.”

Last month a group of consumer advocates, academics and economists said they wanted to end “too-big-to-fail” banks, starting with Bank of America.

Fisher continued his U.S. assessment by focussing on consumer demand, which he said is driving a pick-up in the economy although risks remain.

A welcome, if unexpected, development.

My guess, and I could be talking out of my ass, is that this is an artifact of the fact that he’s one of the most extreme inflation hawks at the Fed. 

Basically, I think that he thinks that Bernanke is keeping rates at the zero bound in order to allow the too big to fail banks to dig themselves out of their holes, and he is concerned that this will set the stage for inflation.

If I am right in my analysis, his statement is actually less shocking than it appears at first glance.

H/t Chris in Paris.

HFT, SEC, EE-I-EE-I-O

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SEC Chairman Mary Schapiro is now saying that there may be some real problems with high frequency trading:

Chairman Mary Schapiro of the Securities and Exchange Commission (SEC) is worried about the rise of high-frequency trading, but two years after the agency flagged the phenomenon as a potential problem, she says regulators still don’t know enough to do much more about it.

High-frequency trading, which is practiced by hedge funds and other technologically turbocharged investors, involves the purchase and sale of large volumes of shares in tiny fractions of a second, often to exploit fleeting inconsistencies in the markets.

At a wide-ranging question-and-answer session with reporters Wednesday, Schapiro said that major regulators from various countries gathered in the fall to confidentially compare notes about high-frequency trading.

“And we all concluded that we have concerns but we don’t have enough data yet to really be able to justify significant additional steps at this point,” Schapiro said. “We need to have a much deeper understanding of the impact of high-frequency trading on our markets.”

This is why financial “innovations” should be treated the same way that the FDA treats drugs: You don’t get to use them until they are proven safe and effective.

But beyond this, it’s clear that HFT is a form of front-running, where computers see incoming orders, and get to the queue ahead of those orders in order to profit from the market move.

A financial transaction tax of 10 (I’d actually favor 50) basis points would solve this, and a lot of the other problems of our financial system.

Least Shocking News of the Day

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San Francisco County has conducted an audit of 400 foreclosures, and found a morass of fraud and corruption:

An audit by San Francisco county officials of about 400 recent foreclosures there determined that almost all involved either legal violations or suspicious documentation, according to a report released Wednesday.

Anecdotal evidence indicating foreclosure abuse has been plentiful since the mortgage boom turned to bust in 2008. But the detailed and comprehensive nature of the San Francisco findings suggest how pervasive foreclosure irregularities may be across the nation.

The improprieties range from the basic — a failure to warn borrowers that they were in default on their loans as required by law — to the arcane. For example, transfers of many loans in the foreclosure files were made by entities that had no right to assign them and institutions took back properties in auctions even though they had not proved ownership.

Commissioned by Phil Ting, the San Francisco assessor-recorder, the report examined files of properties subject to foreclosure sales in the county from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities.

Kathleen Engel, a professor at Suffolk University Law School in Boston said: “If there were any lingering doubts about whether the problems with loan documents in foreclosures were isolated, this study puts the question to rest.”

The report comes just days after the $26 billion settlement over foreclosure improprieties between five major banks and 49 state attorneys general, including California’s. Among other things, that settlement requires participating banks to reduce mortgage amounts outstanding on a wide array of loans and provide $1.5 billion in reparations for borrowers who were improperly removed from their homes.

(Emphasis mine)

And the settlement is going to let these guys off for about 2 grand a pop.

It’s a Start

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But only a start.

The FCC has placed further restrictions on robo-calling:

Those aggravating automated telemarketing calls will be interrupting your dinner a lot less often.

After receiving thousands of complaints from consumers, the Federal Communications Commission clamped down Wednesday on unwanted robo-calling by approving sweeping changes to its telemarketing rules for wireline and mobile phones.

Even with the national Do Not Call Registry in effect — the initial effort to block those pesky calls — telemarketers have found ways around the rules. But the FCC’s latest effort is “closing a loophole,” said Marc Rotenberg, executive director of the nonprofit Electronic Privacy Information Center.

“This is an important step forward to make it easier for consumers to take advantage of the Do Not Call list,” Rotenberg said about the FCC’s changes. “These are additional safeguards to provide consumers greater protection.”

Telemarketing calls have a bigger effect on mobile phones, he noted, because those calls can eat up the minutes in consumers’ wireless plans.

Under the new FCC rules, telemarketers are required to obtain written consent, which can be in the form of an online approval, before placing autodialed or prerecorded calls to a consumer.

Telemarketers also must provide an automated opt-out mechanism during each robo-call so that consumers can immediately tell the telemarketer to stop calling.

The FCC also eliminated the “established business relationship” exception, which had allowed robo-calls to be placed to the land-line home phones of consumers with “prior or existing” associations with companies represented by telemarketers.

And the agency strictly limited the number of abandoned or so-called dead-air calls — in which consumers answer their phones and hear nothing — that telemarketers can make within each calling campaign.

The exemptions are still more than I would like to see, the exemption for non-oprofits, allows them to contract out to for-profit telemarketing firms, for example, but it’s a positive development.

Two Banks Get Eated

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And here they are, ordered, and numbered for the year so far.

  1. Charter National Bank and Trust, Hoffman Estates, IL
  2. SCB Bank, Shelbyville, IN

An average week, and this Shelbyville is nowhere near Springfield (about 200 miles), so it’s not the real (Simpsons)  Springfield.

    Full FDIC list

    So, here is the graph pr0n with last years numbers for comparison (FDIC only):

    And here is the detail, since it is early in the year:

    More on the Catholic Church and Sh%$

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    Amanda Marcotte has a great example of just what “public accommodation” means, and it is both illustrative of just how hypocritical the Catholic Church is being over the requirement that they follow the law in insuring their employess.

    It has the additional advantage of goring my own ethnic ox, albeit that I am not at a black hat Jew:

    There was an interesting story a few months ago here in Brooklyn about a privately owned company that serves the public that was engaging in discrimination against women.

    Women who ride the B110 bus in Brooklyn can’t sit where they want unless they’re okay with being berated by Orthodox Jewish men, even though technically the B110 is a public bus.

    The B110, which travels between Williamsburg and Borough Park is open to anyone, has a route number, and goes to city bus stops. However, the line is run by a private company under a decades-old agreement with the city, and since the bus is designed to serve the Hasidic community in the area, a board of rabbis sets the rules. They’ve decreed that women should sit in the back and men should sit in the front to avoid contact betwen members of the opposite sex.

    When it was exposed that a bunch of religious fanatics were doing this, the city came down on them and said, “God or no god, you can’t discriminate against women if you’re serving the public.”

    She’s right.  Hospitals and universities  serve the public provide public accomodation.

    The Catholic Church has no more right to make its employees sit at the back of the bus for their insurance than do those Jews running that bus line.

    If You Choose to Invest in a Criminal Enterprise, You are Supposed to Lose Money

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    So, the SEC is giving the banksters a free pass when they defraud investors, but the SEC gives them a pass. Why? To protect the investors.

    You know, for most people, letting the banksters steal with impunity is not protecting investor:

    Even as the Securities and Exchange Commission has stepped up its investigations of Wall Street in the last decade, the agency has repeatedly allowed the biggest firms to avoid punishments specifically meant to apply to fraud cases.
    By granting exemptions to laws and regulations that act as a deterrent to securities fraud, the S.E.C. has let financial giants like JPMorganChase, Goldman Sachs and Bank of America continue to have advantages reserved for the most dependable companies, making it easier for them to raise money from investors, for example, and to avoid liability from lawsuits if their financial forecasts turn out to be wrong.
    An analysis by The New York Times of S.E.C. investigations over the last decade found nearly 350 instances where the agency has given big Wall Street institutions and other financial companies a pass on those or other sanctions. Those instances also include waivers permitting firms to underwrite certain stock and bond sales and manage mutual fund portfolios.
    JPMorganChase, for example, has settled six fraud cases in the last 13 years, including one with a $228 million settlement last summer, but it has obtained at least 22 waivers, in part by arguing that it has “a strong record of compliance with securities laws.” Bank of America and Merrill Lynch, which merged in 2009, have settled 15 fraud cases and received at least 39 waivers.
    Only about a dozen companies — Dell, General Electric and United Rentals among them — have felt the full force of the law after issuing misleading information about their businesses. Citigroup was the only major Wall Street bank among them. In 11 years, it settled six fraud cases and received 25 waivers before it lost most of its privileges in 2010.

    By granting those waivers, the S.E.C. allowed Wall Street firms to have powerful advantages, securities experts and former regulators say. The institutions remained protected under the Private Securities Litigation Reform Act of 1995, which makes it easier to avoid class-action shareholder lawsuits.

    And why are they doing this?

    “The ramifications of losing those exemptions are enormous to these firms,” David S. Ruder, a former S.E.C. chairman, said in an interview. Without the waivers, agreeing to settle charges of securities fraud “might have vast repercussions affecting the ability of a firm to continue to stay in business,” he said.

    S.E.C. officials say that they grant the waivers to keep stock and bond markets open to companies with legitimate capital-raising needs. Ensuring such access is as important to its mission as protecting investors, regulators said.

    …………

    Thomas Lee Hazen, a securities law professor at the University of North Carolina at Chapel Hill, said that it is understandable that the S.E.C. might relax some potential sanctions on Wall Street firms — where it appears that lessons have been learned, or when a fine is thought to be sufficient punishment.

    “The ripple effect of having a sanction that could shut them down or could seriously impede a company’s operations would seriously affect a lot of innocent customers,” he said. “It’s a very fine balance. That’s not to say that the S.E.C. is striking the balance properly. That is in the eye of the beholder.”

    Let’s be clear here. The SEC is using regulatory forbearance to subsidize fraud.

    If people stopped investing in firms that committed fraud, the firms would be less inclined to defraud investors.

    That’ll Teach Him

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    The British are finally cracking down on the Banksters.

    What are they doing? They are rescinding knighthoods:

    The former chief executive of the Royal Bank of Scotland, Fred Goodwin, has been stripped of his knighthood by the Queen for his role in the creation of the biggest recession since the second world war.

    With unceremonial haste, a committee of five senior civil servants took away the knighthood given to Goodwin by the last Labour government in 2004 for services to banking.

    The chancellor, George Osborne, welcoming the move, said: “RBS came to symbolise everything that went wrong in the British economy over the past decade.”

    The move provoked a cacophony of calls for honours to be stripped from other miscreant bankers, politicians and regulators. The campaign to humble Goodwin was reignited by the Daily Mail a fortnight ago and then hastily backed in a highly political move by David Cameron as he sought to show he will side with the public against crony capitalists and bonus-seeking bankers.

    You know, I thought that Geithner’s charades about supporting ordinary homeowners were lame, but the Brits have taken lame to a while new level.

    Europe is F%$#ed

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    Because the Germans have been allowed to force their self delusions on the rest of Europe:

    Chancellor Angela Merkel cemented her political ascendancy in Europe on Monday when 25 out of 27 EU states agreed to a German-inspired pact for stricter budget discipline, even as they struggled to rekindle growth from the ashes of austerity.

    Only Britain and the Czech Republic refused to sign a fiscal compact in March that will impose quasi-automatic sanctions on countries that breach European Union budget deficit limits and will enshrine balanced budget rules in national law.

    The accord was eagerly greeted by the European Central Bank which has long pressed euro zone governments to put their houses in order.

    The solution to problems caused austerity and overly aggressive efforts at European integration will be more austerity and overly aggressive efforts at European integration.