Archive for May, 2013
What really happened on May 18, 2012, with the botched IPO of Facebook Inc. (NasdaqGS:FB)?
Well, the Securities and Exchange Commission (SEC) just released its version of events under the guise of Administrative Proceeding File No. 3-15339.
And “In the Matter of THE NASDAQ STOCK MARKET, LLC and NASDAQ EXECUTION SERVICES, LLC (Respondents)” the SEC slapped wrists and fined the fools $10 million for screwing up Facebook’s IPO – the largest-ever fine imposed on an exchange.
Of course, it’s good reading. But there’s something missing.
It’s called “the truth.”
Here below in bold italics are excerpts from the actual order and my commentary (or the truth) in bold between the lines.
Nothing lasts forever, apparently not even quantitative easing.
Yesterday Fed Chairman Ben Bernanke threatened to take away the massive punch bowl that’s been spiked with easy money juice.
There’s no set timetable, but maybe there is. It’s hard to interpret Fedspeak.
So maybe they’ll start paring back their $85 billion a month buying spree, or maybe they’ll jack it up, which is what Benny said only a few sessions ago.
What the heck is he doing? What are they doing? And who are “they” anyway?
Here’s the deal…
Wall Street Insights & Indictments is proud to announce its first spinoff publication.
You’re reading it right now.
I’m calling it WII (WHY?), which stands for Washington Insights & Indictments.
It’s likely to be a single issue.
While calling out crooks and criminals on Wall Street is dangerous enough, calling out criminal behavior by the highest powers in the United States will get me: 1) audited by the IRS; 2) phone-tapped by the Justice Department; and 3) a trip to Guantanamo (if I don’t get “droned”), because obviously anybody questioning the powers-that-be is a threat to national security.
Now, don’t get me wrong. I’m not an Obama-basher. I liked him. Once upon a time…
I believed in “change” and that Obama was a good guy. I was elated when he won the first election. But I was deflated when he won a second term; deflated because my hopes and expectations for positive changes had been sucked dry.
The only real change I’ve seen in America since Obama took office is a frontal assault on the Constitution. Most politicians use the backdoor method.
Here’s why I’m really angry and afraid, for myself and you.
Here are two items to make your blood boil…
First, back in February, Attorney General Eric Holder christened the unofficial official doctrine of “Too Big to Jail.”
He told Congress, “The size of some of these institutions [TBTF banks] becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute – if we do bring a criminal charge – it will have a negative impact on the national economy, perhaps even the world economy.”
Of course, it was only the christening of another neat little name.
The actual doctrine has been official policy of America’s Congress, successive presidents and their administrations, and the alphabet soup of regulatory bodies for as long as anyone can remember.
But a funny thing happened on Tuesday.
Someone pushed back…
It all starts with the Arab oil embargo of 1973-74.
The Arab members of OPEC proclaimed an oil embargo to punish the U.S. for aiding Israel. This action quadrupled the price of oil, roiling commodity markets, equities, bonds, and foreign exchange markets.
Energy prices soared. Speculation in oil exploration and production became feverish.
There was money everywhere.
Oil exporters in the Arab states were depositing their windfall “petrodollars” into big U.S. banks, who were in turn lending the money out as fast as they could.
By far, the largest recipients of the flood of money looking to be lent out were Latin American and South American countries. Thus, the new tens of billions of dollars banks had to lend were showered on sovereign states with glaring credit quality blemishes.
In the meantime, banks were lending hand over fist to the energy patch. Small banks were getting into the oil lending game, too – sometimes in spectacular ways.
That’s how the very first “too big to fail” bank came about…
By the start of the 1960s, banking in America was in a state of flux.
Boundaries were being blurred – especially those separating “commercial banks” and “investment banks” under Depression-era Glass-Steagall parameters. The banking landscape was shifting. In fact, it was about to go volcanic.
The Truman Administration had championed the break-up of bank cartel arrangements, whereby a powerful coterie of commercial-bank bond underwriters controlled how corporations financed debt and who got to distribute bond offerings. Subsequent regulatory changes (requiring bidding for underwriting assignments) broke up the “Gentleman Bankers Code,” which had been code for cartel.
A more competitive landscape drove banks to expand. Branch banking spread through shopping malls and onto prime locations on America’s Main Streets.
The hunt for deposits was on.
And it got ugly fast…
Our last chapter was about how the U.S. Federal Reserve was created and why. But it ended with an extreme example of how the universal central banking model works today.
As another domino threatened the house of cards holding up European banks, more money had to be pumped into Cypriot banks so their doors didn’t close and rapid contagion wouldn’t implode all of Europe, and then the world.
Only this time was different.
The ECB reached straight into Cypriot bank depositors’ pockets and stole about $6 billion from them. The “how” isn’t important. It’s a simple equation, as revealed in Part V. Governments are the backstoppers of central banks; that’s where their authority ultimately comes from.
Why did the ECB steal depositors’ money? So they could turn around and lend that and more to the insolvent banks to keep them alive. It’s the latest twist in the old “extend and pretend” game.
The big question is, how did banks get so big and so dangerous in the first place?
Or, how did stodgy traditional banking morph into “casino banking” on a global scale?
Here’s how it started…
The month of April brought in more than 1,000 comments, questions, posts, shares, “likes,” and emails from you and your fellow readers. That’s an Insights & Indictments record. It shows that you’re thinking, that you’re mad as hell about what you see, and you want to do something about it.
First, please keep helping me get the word out about the crimes and lies being perpetrated by our “leaders.” Forward these emails; share my articles online. Spread the word however you can. Together, we can make our voices heard. We can make this country better for our kids and grandkids.
Second, at your request, I’m working on something big. I believe this could be the vehicle for the change you all want to see. We’re going after the “permanent political class” getting cozy in Washington in a brand-new way. And don’t think Wall Street is safe. We’re going after them, too. We’re going to shake them both up and demand reform.
I saw some brilliant comments and questions from my last two articles – about Congressional term limits and breaking up the too-big-to-fail banks. For today’s Q&A, I purposely didn’t include those. I want to address them in a different way. You’ll see what I mean.
Lots else to cover this month… so let’s get to it.
Q: I saw an article last week that I can’t find much info about. Seems Congress voted and passed by a wide margin the ability to trade in the markets again. I thought this had been stopped, members of Congress had to put their holdings in a “passive” account, they could not trade with their “inside” knowledge. What have I missed? ~ Jeff H.
A: Jeff, maybe you missed Congress’ latest change to the STOCK Act. Are you sitting down? They just, very quietly, gutted the law that was supposed to stop insider trading… seriously.
Look at this.