Inside the Madoff Scandal — Videos

Posted on November 19, 2013. Filed under: Blogroll, Books, Communications, Crime, Diasters, Economics, Federal Government, Fraud, government, government spending, IRS, People, Philosophy, Politics, Psychology, Rants, Raves, Regulations, Religion, Securities and Exchange Commission, Security, Taxes, Technology, Video, Wealth, Wisdom, Writing | Tags: , , , , , , , , , , |

Inside the Madoff Scandal: Chapter One

Inside the Madoff Scandal: Chapter Two

Related Posts On Pronk Palisades

Harry Markopolos — No One Would Listen: A True Financial Thriller — Videos

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The Madoff Hustle — Videos

Posted on November 19, 2013. Filed under: American History, Blogroll, Business, Communications, Computers, Computers, Crime, Diasters, Economics, Education, Federal Government, Federal Government Budget, Fiscal Policy, Fraud, government, government spending, history, Law, liberty, Life, Links, Literacy, People, Philosophy, Programming, Raves, Tax Policy, Technology, Video, Wealth, Wisdom, Writing | Tags: , , , , , , , , , , , , , |

madoff_hustle

The Madoff Hustle – Part 1

The Madoff Hustle – Part 2

The Madoff Hustle – Part 3

The Madoff Hustle – Part 4

Related Posts On Pronk Palisades

Harry Markopolos — No One Would Listen: A True Financial Thriller — Videos

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Harry Markopolos — No One Would Listen: A True Financial Thriller — Videos

Posted on November 18, 2013. Filed under: American History, Blogroll, Business, Communications, Computers, Crime, Culture, Demographics, Diasters, Economics, Education, Employment, Federal Government, government, government spending, history, Inflation, Investments, IRS, Language, Law, liberty, Life, Links, media, People, Philosophy, Photos, Politics, Programming, Rants, Raves, Regulations, Resources, Security, Strategy, Talk Radio, Taxes, Technology, Video, War, Wealth, Wisdom, Writing | Tags: , , , , , , , , , , , , |

no_one_would_listen

Bernie Madoff: Thief

BernardMadoff

No One Would Listen, by Harry Markopolos

House+Finance+Group+Holds+Hearing+Madoff+Regulatory

The Man Who Knew

Book TV: After Words: Harry Markopolos, “No One Would Listen”

Madoff Whistleblower Speaks with ABC News Radios Aaron Kate

Ackerman Scolds SEC for Not Stopping Bernie Madoff Scheme Despite Being Told About It 10yrs Ago

Markopolos: I gift wrapped and delivered the largest Ponzi scheme in history to the SEC

Rep. Maloney on Madoff Fraud

Congressman Spencer Bachus questions at Madoff Ponzi Fraud Hearing

Congressman Sherman questions Harry Markopoulos

Ron Paul – Madoff Fraud Hearing – Congress – Big Ponzi Scheme 01-05-09

DP/30: Chasing Madoff, subject Harry Markopolos (pt 1 of 2)

DP/30: Chasing Madoff, subject Harry Markopolos (pt 2 of 2)

Background Articles and Videos

Bernie Madoff on the modern stock market

Bernie Madoff Reveals to Barbara Walters He Is ‘Happier in Prison’

Bernie Madoff’s Jail Cell and His Future Life in Prison, Levine: “He’s Worse Than a Child Molester.”

The Madoff Hustle – Part 1

The Madoff Hustle – Part 2

The Madoff Hustle – Part 3

The Madoff Hustle – Part 4

Part 1: The Hunt for Madoff’s Money

Part 2: The Hunt for Madoff?s Money

Too Good to be True- The Rise and Fall of Bernie Madoff Part 1

Erin Arvedlund first wrote about Bernie Madoff for Barrons in 2001 and published her book, Too Good to be True- The Rise and Fall of Bernie Madoff in August of 2009. In this episode of The Massachusetts School of Law’s Books of our Time, Dean Velvel, himself a Madoff victim, and Arvedlund discuss the history of the brokerage industry, the possible culpability of the entire Madoff family, the difference between Madoff’s legitimate brokerage firm and his illegitimate hedge fund and the steps that lead up to the largest Ponzi scheme in American History. Arvedlund tells the story of Madoff’s infamous Ponzi scheme with the knowledge and detail of an insider, and sheds new light on the greatest financial enigma of American History.

The Massachusetts School of Law also presents information on important current affairs to the general public in television and radio broadcasts, an intellectual journal, conferences, author appearances, blogs and books. For more information visit mslawledu.

Too Good to be True- The Rise and Fall of Bernie Madoff Part 2

[youtub4e=http://www.youtube.com/watch?v=8CdqYJZfyq0]

 

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Senator McCain Takes Cheap Shot At Securities And Exchange Commission (SEC) Chairman Chris Cox

Posted on September 19, 2008. Filed under: Blogroll, Economics, Investments, Links, Politics, Quotations, Rants, Raves, Regulations, Resources, Taxes, Video | Tags: , , , , , , , , , , , , , , , , |

SEC Chairman Cox
SEC Chairman Cox

 

 

McCain says fire SEC chair

 

Bush Announces Bailing Out Wall Street


 

President George W. Bush stands with Rep. Christopher Cox, his nominee for Chairman of the Securities and Exchange Commission, Thursday, June 2, 2005, in the Oval Office. Said the President of the Congressman, "As a champion of the free enterprise system in Congress, Chris Cox knows that a free economy is built on trust." White House photo by Eric Draper

President George W. Bush stands with Rep. Christopher Cox, his nominee for Chairman of the Securities and Exchange Commission, Thursday, June 2, 2005, in the Oval Office. Said the President of the Congressman,

  “The whole history of the development of popular  institutions is a history of continuous struggle to prevent particular groups from abusing the governmental apparatus for the benefit of the collective interest of these groups.”

~Friedrick A. von Hayek, Law, Legislation, and Liberty, Volume 1, p.6.

Senator McCain owes an apology to SEC Chairman Chris Cox for saying he would fire him because he betrayed his trust to the American people.

Trying to scapegoat Chris Cox as the person responsible for the collapse of Fannie Mae, Freddie Mac, and the financial problems related to mortage securities is reprehensible.

It is the Congress that has failed the American people.

First, Congress encouraged highly questionable mortage home loans to people that would not normally qualify. 

Second, Congress compounded the problem by not adequately exercising oversight of both Fannie Mae and Freddie Mac and the agency that regulated them.

Senator McCain knows who is responsible and so do we–it is the elected representatives and Senators in Congress.

As to the financial firms that now are being bailout, let them all fail.

American taxpayers should not bailout those firms.

Heads, the American elites win if the investments are profitable and the executives get bonuses and politicians receive campaign contributions.

Tails, the American people lose if the firms are bailedout and the investment losses are “socialized” by increasing the national debt of the United States.

This is exactly the problem and it starts in Congress and crashed on Wall Street and the American people pick up the bill.

These failing firms leveraged themselves to the hilt and they must pay the price for their recklessness and lack of prudence.

Liquidate Fannie Mae and Freddie Mac in an orderly manner.

The government should not be in this business at all.

Bad loans are and were encouraged by Congress for both home mortages as well as college student loans.

Stop pandering to crowd and do your homework Senator.

Better yet call for criminal investigations of the politicians of both political parties that encouraged this nonsense and got paid off in campaign contributions.

Then go after the executives in the financical services firms including hedge funds that benefited from naked short selling.

Then run some ads on the issue.

Great ads Senator! Congratulations, you are now on target–fire away!

Advice

Jim Johnson

Crisis

Enough Is Enough

Foundation

Better yet, announce that Mitt Romney will be your Treasury Secretary and let him loose on this issue.

Regulations are not a substitute for responsible and accountable management.

Compassionate Conservatism, also known as Socialism, killed Fiscal Conservatism. 

Fiscal Conservatism RIP September 19, 2008

Fiscal Conservatism RIP September 19, 2008

The American people get Rick Rolled.

Rick Roll

http://www.youtube.com/watch?v=eBGIQ7ZuuiU&feature=related

 

Time for a Second American Revolution!

 

“The first thing we do, let’s kill all the lawyers.”

~William Shakespeare, King Henry the Sixth, Part II, (Act IV, Scene II)

 

“Although I profoundly believe in the basic principles of democracy as the only effective method which we have yet discovered of making peaceful change possible, and am therefore much alarmed by the evident growing disillusionment about it as a desirable method of government, much assisted by the increasing abuse of the word to indicate supposed aims of government-I am becoming more and more convinced that we are moving towards an impasse from which political leaders will offer to extricate us by desperate means.”

~Friedrich A. von Hayek, Law, Legislation, and Liberty

 

Background Articles and Videos 

McCain’s Scapegoat

“”The chairman of the SEC serves at the appointment of the President and has betrayed the public’s trust. If I were President today, I would fire him.”

Wow. “Betrayed the public’s trust.” Was Mr. Cox dishonest? No. He merely changed some minor rules, and didn’t change others, on short-selling. String him up! Mr. McCain clearly wants to distance himself from the Bush Administration. But this assault on Mr. Cox is both false and deeply unfair. It’s also un-Presidential.

Take “naked” shorting, in which an investor sells a stock short — betting that it will fall in price — without first borrowing the shares he is selling from an investor who owns them. The SEC has never condoned the practice, and since 2005 it has clamped down on short selling in any stock that shows evidence of naked shorting. The SEC further tightened its rules against naked shorting just hours before Mr. McCain excoriated Mr. Cox for doing nothing.

The rules announced Wednesday will increase penalties and close loopholes that exempted broker-dealers from the rules against naked shorting. They also make it clear that deliberately selling short a stock whose shares cannot be borrowed is fraud under the Securities Exchange Act. That’s all to the good, we suppose; fraud is fraud. But regular short selling is not fraud. It adds valuable information to the market about what investors believe to be the price direction of a stock. Demonizing short-sellers as a band of criminals, or barring short-selling outright in financial stocks, as regulators in the U.K. did Thursday, removes information from the market.

Then there’s Mr. McCain’s tirade against the “uptick rule,” a Depression-era chestnut that investors could only short stock after a rise in that stock’s price. The SEC staff studied the effect of the uptick rule on prices for years, in a controlled experiment involving thousands of stocks. It found the rule had no effect. Other studies, including those that examined the uptick rule’s effect on stocks disclosing bad news, also found that it “protected” no one. The SEC’s permanent staff has long supported repeal and the SEC’s commissioners voted to do so unanimously in June 2007. …”

“…In a crisis, voters want steady, calm leadership, not easy, misleading answers that will do nothing to help. Mr. McCain is sounding like a candidate searching for a political foil rather than a genuine solution. He’ll never beat Mr. Obama by running as an angry populist like Al Gore, circa 2000.”

http://online.wsj.com/article/SB122178318884054675.html?mod=todays_us_opinion

 

The Rescue Mission
By the Editors

“…With his call for the creation of such an agency, McCain is finally on the right track. His harangues against boardroom greed and vague calls for more regulation were not adequarte for the moment. We were dismayed to hear him attack short-sellers in his speech Thursday. Short-sellers were among the first to blow the whistle on firms that gambled recklessly on home prices.

For allegedly failing to crack down on short-sellers, McCain also called on Securities and Exchange Commission chairman Chris Cox to resign. We will always admire Cox for his achievements in Congress. But as SEC chairman, he granted exemptions that allowed the big five investment banks to play fast and loose with their capital requirements. As a result, three of those five banks no longer exist. If they and they alone had to deal with the consequences, this wouldn’t be a problem. But these institutions grew too big to fail, and now taxpayers are on the hook for $29 billion worth of Bear Stearns’s bad assets. McCain is right to demand that the chief regulator during a financial crisis be held accountable, even though he is wrong about the reasons why.

Compared to McCain, Obama’s speeches on the financial crisis have offered little substance. McCain seized the opportunity Thursday to point out that Obama’s planned tax hikes would come at the worst possible time for the fragile U.S. economy. So far, that economy has weathered the storm admirably thanks to relatively low tax rates. McCain’s tax plan is obviously more pro-growth than Obama’s, but it needs more middle-class relief to have real mainstream appeal.

A mortgage trust of the sort McCain has proposed looks increasingly like the least bad option for taxpayers. Congress should act on this idea before it adjourns for fall — before taxpayers become the unwitting owners of any more troubled financial firms. …”

http://article.nationalreview.com/?q=OGM2OTUyYzczNTQwNDFjNzliZTFhMjQ0NjViZjVkNTM=

 

SEC chairman rebuke distances McCain from Bush

“…”Chris Cox is the most capable person I’ve ever known,” James C. Miller III, director of the Office of Management and Budget in the second Reagan White House, told The Washington Times. “I wish Senator McCain would focus on the getting President Bush’s other appointees to the SEC confirmed by the Senate.”

“…Mr. Miller said Mr. Cox had been forced to operate without other Senate-confirmed members of his commission for some time. “Chris heads a commission, not a dictatorship, and for a time was without a quorum for a long time,” he said.

One Republican official managed to defend Mr. McCain and Mr. Cox.

 “It shows McCain is not afraid to take on fellow Republicans at any time,” said Shawn Steel, a Republican National Committee member and former California Republican Party chairman. “On the other hand, I don’t see how Chris Cox is responsible. …”  

http://www.washingtontimes.com/news/2008/sep/19/sec-chairman-rebuke-distances-mccain-from-bush/

 

Congress Lies Low To Avoid Bailout Blame

INVESTOR’S BUSINESS DAILY

Posted 9/18/2008

“…Until now, Congress has been surprisingly passive. As Sen. Majority Leader Harry Reid put it, “no one knows what to do” right now.

Funny, since it was a Democrat-led Congress that helped cause the problems in the first place.

When House Speaker Nancy Pelosi recently barked “no” at reporters for daring to ask if Democrats deserved any blame for the meltdown, you saw denial in action.

Pelosi and her followers would have you believe this all happened because of President Bush and his loyal Senate lapdog, John McCain. Or that big, bad predatory Wall Street banks deserve all the blame.

“The American people are not protected from the risk-taking and the greed of these financial institutions,” Pelosi said recently, as she vowed congressional hearings.

Only one problem: It’s untrue.

Yes, banks did overleverage and take risks they shouldn’t have.

But the fact is, President Bush in 2003 tried desperately to stop Fannie Mae and Freddie Mac from metastasizing into the problem they have since become.

Here’s the lead of a New York Times story on Sept. 11, 2003: “The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.”

Bush tried to act. Who stopped him? Congress, especially Democrats with their deep financial and patronage ties to the two government-sponsored enterprises, Fannie and Freddie. …”

“…In the name of diversity, banks began making huge numbers of loans that they previously would not have. They opened branches in poor areas to lift their CRA ratings.

Meanwhile, Congress gave Fannie and Freddie the go-ahead to finance it all by buying loans from banks, then repackaging and securitizing them for resale on the open market.

That’s how the contagion began.

With those changes, the subprime market took off. From a mere $35 billion in loans in 1994, it soared to $1 trillion by 2008.

Wall Street eagerly sold the new mortgage-backed securities. Not only were they pooled investments, mixing good and bad, but they were backed with the implicit guarantee of government.

Fannie Mae and Freddie Mac grew to become monsters, accounting for nearly half of all U.S. mortgage loans. At the time of their bailouts this month, they held $5.4 trillion in loans on their books. About $1.4 trillion of those were subprime.

As they grew, Fannie and Freddie grew heavily involved in “community development,” giving money to local housing rights groups and “empowering” the groups, such as ACORN, for whom Barack Obama once worked in Chicago.

Warning signals were everywhere. Yet at every turn, Democrats in Congress halted attempts to stop the madness. It happened in 1992, again in 2000, in 2003 and in 2005. It may happen this year, too.

Since 1989, Fannie and Freddie have spent an estimated $140 million on lobbying Washington. They contributed millions to politicians, mostly Democrats, including Senator Chris Dodd (No. 1 recipient) and Barack Obama (No. 3 recipient, despite only three years in office).

The Clinton White House used Fannie and Freddie as a patronage job bank. Former executives and board members read like a who’s who of the Clinton-era Democratic Party, including Franklin Raines, Jamie Gorelick, Jim Johnson and current Rep. Rahm Emanuel.

Collectively, they and others made well more than $100 million from Fannie and Freddie, whose books were cooked Enron-style during the late 1990s and early 2000s to ensure executives got their massive bonuses.

They got the bonuses. You get the bill.”

http://www.investors.com/editorial/IBDArticles.asp?artsec=16&artnum=1&issue=20080918

 

Analysis: Washington’s Trillion Dollar Wall Street Bailout

James Pethokoukis

“…Is a bailout necessary?
Look, the financial system probably couldn’t take another week like the one we just went through. Stocks plunging, credit markets freezing. As economist Robert Brusca puts it, “The proposed US government rescue plan comes at the end of a week of almost unprecedented turmoil on world financial markets amid a crisis of confidence in banks.”

The government had to get ahead of the curve and quit reacting on a case-by-case basis. If you look at banking crises in Japan and Sweden, for instance, all roads eventually led to a government bailout with taxpayer money at risk. The rule in these cases seems to be the sooner, the better. If you want more evidence, markets around the world and here in the United States are soaring on this news. Strategist Richard Bernstein of Merrill Lynch, in a research note, says the bailout plan is “an opportunity for the government to solve the on-going problems through one system-wide solution.” …”

“…As long as we have markets and humans there will be bubbles, whether in stocks, homes, Beanie Babies, tulips, or whatever. But as far as the housing/credit bubbles go, I think it could have been avoided. Alan Greenspan cut rates too low and left them there for too long, creating an extreme financial situation that Wall Street tried to profit from. Uncle Sam also fed into that market distortion by making greater homeownership a national goal, using both tax policy and the regulation like the Community Reinvestment Act to, essentially, push capital into homes. And were regulators as tough as they could have been? Obviously not. …”

http://www.usnews.com/blogs/capital-commerce/2008/9/19/analysis-washingtons-trillion-dollar-wall-street-bailout.html

The Mother of All Bailouts = The Death of Fiscal Conservatism

 

“…Bush Treasury Secretary Hank Paulson just wrapped up his press conference announcing the Mother of All Bailouts. He said a “bold” approach was needed to achieve “stability” in the market.

Let me translate that.

“Bold” = Massively massive, taxpayer-funded rescue.

“Stability” = Privatizing profits and socializing losses on a scale we have never seen before in our lifetimes.

I have had it with Pollyanna conservatives who continue to parrot the “fundamentals of the market are great!” line.

The fundamentals of the market suck. The fundamentals of capitalism have been sabotaged.

Yes, yes, crony Democrats are to blame for much of how we got here. You don’t need to recite all the talking points back to me. I’ve been writing about the Fannie/Freddie debacle for years.

But it is September 19, 2008. And this is a Republican White House presiding over the Mother of All Bailouts. Every step along the way since stimuluspalooza began last summer, we’ve heard that every bailout step was just a one-off. Each step was supposed to calm the markets. Each new government intervention and allocation of taxpayer dollars was supposed to achieve “stability.” Each new package of goodies rewarding irresponsible behavior and bad financial decisions was supposed to prevent new ones. …”

http://michellemalkin.com/2008/09/19/the-mother-of-all-bailouts-the-death-of-fiscal-conservatism/

McCain Misfires

“…John McCain has just demonstrated his vulnerability as a presidential candidate. Speaking from prepared remarks at an Iowa rally today, he said that he would fire Chris Cox, the chairman of the Securities and Exchange Commission. This outburst demonstrates McCain’s ignorance, his impetuousness and his vindictive streak. Not bad for one remark.

McCain blames Cox for creating open season for “short sellers,” speculators who bet that a stock may go down. It’s true that short sellers helped to sink financial institutions such as Lehman Brothers and Merrill Lynch, and that they are now attacking the stock prices of the two remaining big investment banks, Morgan Stanley and Goldman Sachs. It is also true that last year Cox made short selling easier. But McCain’s threat to fire the SEC chairman is still outrageous.

The most basic reason is that a presidential candidate should not go about publicly pressuring the chairman of a regulatory agency. Government agencies are supposed to be professional and technocratic. They are not supposed to be political footballs. The more politicians brow-beat agency bosses, the less their technocratic decisions will be respected. McCain is damaging the machinery of government, dragging it into the mire of partisan discord. This is not consistent with his image as a good-government crusader.

Next, McCain’s comment is outrageous because his view of short sellers is crass. Betting that a stock will go down is just as legitimate a way to make money as betting that it will go up. Short sellers help to deflate bubbles before they get too much air in them. They dig into the books of companies and frequently are the first to blow the whistle on fraud. In normal times, at least, short sellers help markets to price stocks as they should be priced, thereby promoting the allocation of scarce capital to the firms that use it best. When Cox abolished a roadblock in the way of short sellers last year, he was doing the right thing.

http://voices.washingtonpost.com/postpartisan/2008/09/mccains_outrageous_outrage.html

 

John McCain singles out a fellow Republican for blame in Wall Street meltdown

Don Frederick

“…McCain did note that the chairman is a presidential appointee, though he avoided mentioning the particular president who put in office the fellow he so disdains. But other omissions were more telling.

Aside from not naming the chairman — Chris Cox (above) — McCain neglected to tell his cheering audience that this benighted public servant brought a sterling, and solidly Republican, resume to his job when he assumed it in August 2005. Cox was a one-time legal aide in Ronald Reagan’s White House who, staring in 1989, represented an affluent House district in California for many years (its core was Newport Beach). In Congress, he was a major player in formulating GOP policy, including a generally hands-off regulatory approach to business that McCain also advocated.

Here’s more on Cox’s background: After whisking through the University of Southern California in three years, he earned both a master’s in business administration and a law degree from Harvard. While still in the House, the Almanac of American Politics wrote that his “intellect and range of interests are impressive.”

Cox was confirmed for the SEC post on a voice vote — with nary an objection heard — by the Senate. The chamber’s members included McCain and Barack Obama (though we do not know whether either were on the floor at this moment).

No reaction yet from Cox to McCain’s attack on him. But boy, wouldn’t we love to know who he ends up voting for later this year (maybe he’ll pass on the presidential part of his ballot). …”

http://latimesblogs.latimes.com/washington/2008/09/john-mccain-sin.html

 

Six in 10 Oppose Wall Street Bailouts

But majority of Americans support the government helping people stay in their homes

“…A new Gallup Poll, conducted March 24-27, shows that 6 in 10 Americans oppose the federal government taking steps to help prevent major Wall Street investment companies from failing.

http://www.gallup.com/poll/106114/Six-Oppose-Wall-Street-Bailouts.aspx

Never Sell America Short
We’ve been through worse, and we can fix what ails us now.

By Larry Kudlow

“…A gathering consensus also seems to be forming around a new version of the Resolution Trust Corporation, which effectively disposed of bad savings-and-loan assets in the early 1990s. A new RTC could purchase underwater assets that proliferate through the financial system and are clogging the credit and loan arteries of our banks.

We clearly are in an emergency moment. But the government should opt for smart regulatory action rather than broad-based interference that could stifle the free economy. On Thursday afternoon, as rumors spread that Paulson was talking President Bush into a new RTC, the stock market soared 400 points. That’s what I call an endorsement.

The pessimists are now talking about the end of capitalism or a permanent decline of America. I don’t believe that for one moment. Specific regulatory reforms can get us out of this fix. And most of all, policymakers must maintain the low-tax, low-inflation, open-trade formula that has propelled this nation’s economy and produced so much prosperity for so long.

I say, never sell America short.”

http://article.nationalreview.com/?q=NWNjZjZkZWQ0NzkxNDAwNzNjMWUzYmMzY2M4YWU2ODU=

 

Exposing Naked Short Sellers; Stopping Manipulative Traders

Senator Tester questioning Cox

 

Does Short-selling Need the SEC’s Oversight?

 

Ackman on Short Selling

 

SEC Chairman Cox on Naked Short Selling Anti-Fraud Rule

 

Naked Short Selling LEGAL from 2005 till this week?! P1

 

Naked Short Selling LEGAL from 2005 till this week?! P2

 

SEC Extends Short Selling Limits

 

Naked Short-Selling Ban Ends Tonight; Abusive Trading?

 

SEC Revs Up Short-Sale Crackdown – March 6

 

Jeremy Siegel on Bear Stearns, the Rate Cuts and Inflation

 

Chain of Blame: How Wall Street Caused the Mortgage Crisis.

 

Deconstructing the Subprime Crisis

 

Joseph Gyourko on Fannie, Freddie, and the Housing Bust

 

Franklin Allen on Past Crises

 

Franklin Allen on Lessons from the Subprime Crisis

 

Susan Wachter on Securitizations and Deregulation

 

Wall Street’s Day of Reckoning: The Fannie & Freddie Bailout

Housing Bailout For Deadbeats Gamblers Liars Thieves

 

Part 1 – Exposing Fannie Mae and Freddie Mac: Origins

New York Investing meetup organizer Daryl Montgomery discusses the origins of Fannie Mae and Freddie Mac in the first episode of a multi-part series. The New York Investing meetup is an organization of 1800 independent traders and investors that provides unbiased stock market education and analysis. We also have a blog,”The Helicopter Economics Investing Guide” which can be found at: http://nyinvestingmeetup.blogspot.com

 

Part 2 – Exposing Fannie Mae and Freddie Mac: Origins

 

Part 3 – Exposing Fannie Mae and Freddie Mac: Origins

 

Part 4 – Exposing Fannie Mae and Freddie Mac: Origins

 

Part 5 – Exposing Fannie Mae and Freddie Mac: Origins

 

Patrick Byrne and Don Harrold – Part One

 

Patrick Byrne and Don Harrold – Part Two

 

Patrick Byrne on Naked Short Selling

 

Bud Burrell on FSN about short selling, hedgefunds …P1

 

Bud Burrell on FSN about short selling, hedgefunds …P2

 

Bud Burrell on FSN about short selling, hedgefunds …P3

 

Bud Burrell on FSN about short selling, hedgefunds …P4

 

Bud Burrell on FSN about short selling, hedgefunds …P5

 

Bud Burrell on FSN about short selling, hedgefunds …P6

 

Rush On Franklin Raines

 

Hey Barack, Who’s Franklin Raines

 

 

U.S. Securities and Exchange Commission

“The U.S. Securities and Exchange Commission (commonly known as the SEC) is an independent agency of the United States government having primary responsibility for enforcing the federal securities laws and regulating the securities industry/stock market. The SEC was created by section 4 of the Securities Exchange Act of 1934 (now codified as 15 U.S.C. § 78d and commonly referred to as the 1934 Act). In addition to the 1934 Act that created it, the SEC enforces the Securities Act of 1933, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Sarbanes-Oxley Act of 2002 and other statutes.

The SEC is composed of five commissioners, of which no more than three can be from a single political party. Currently the SEC commissioners are; chairman Christopher Cox (R), Kathleen L. Casey (R), Troy A. Paredes (R), Luis A. Aguilar (D) and Elisse B. Walter (D).[1

http://en.wikipedia.org/wiki/United_States_Securities_and_Exchange_Commission

 

SEC Biography: Chairman Christopher Cox

“Christopher Cox is the 28th Chairman of the Securities and Exchange Commission. He was appointed by President Bush on June 2, 2005, and unanimously confirmed by the Senate on July 29, 2005. He was sworn in on August 3, 2005.

During his tenure at the SEC, Chairman Cox has made vigorous enforcement of the securities laws the agency’s top priority, bringing ground breaking cases against a variety of market abuses including hedge fund insider trading, stock options backdating, fraud aimed at senior citizens, municipal securities fraud, and securities scams on the Internet. He has assumed leadership of the international effort to more closely integrate U.S. and overseas regulation in an era of global capital markets and international securities exchanges. He has also championed transforming the SEC’s system of mandated disclosure from a static, form-based approach to one that taps the power of interactive data to give investors qualitatively better information about companies, mutual funds, and investments of all kinds. In addition, as part of an overall focus on the needs of individual investors, Chairman Cox has reinvigorated the agency’s initiative to provide important investor information in plain English.

For 10 of his 17 years in Congress, Chairman Cox served in the Majority Leadership of the U.S. House of Representatives. He was Chairman of the House Policy Committee; Chairman of the Committee on Homeland Security; Chairman of the Select Committee on U.S. National Security; Chairman of the Select Committee on Homeland Security (the predecessor to the permanent House Committee); Chairman of the Task Force on Capital Markets; and Chairman of the Task Force on Budget Process Reform.

In addition, he served in a leadership capacity as a senior Member of every committee with jurisdiction over investor protection and U.S. capital markets, including the House Energy and Commerce Committee (as Vice Chairman of the Oversight and Investigations Subcommittee); the Financial Services Committee; the Government Reform Committee (as Vice Chairman of the full Committee); the Joint Economic Committee; and the Budget Committee.

Among the significant laws he authored were the Private Securities Litigation Reform Act, which protects investors from fraudulent lawsuits, and the Internet Tax Freedom Act, which protects Internet users from multiple and discriminatory taxation. His legislative efforts to eliminate the double tax on shareholder dividends — the subject of a thesis he authored at Harvard University in 1977 — led to the enactment in May 2003 of legislation that cut the double tax by more than half.

http://www.sec.gov/about/commissioner/cox.htm

 

‘Serious Times’ For Fannie Mae, Freddie Mac’s New Regulator

By Jeffrey H. Birnbaum

“…”These are very serious times for the mortgage market,” James B. Lockhart III, director of the nascent Federal Housing Finance Agency, or FHFA, said in an interview after briefing more than 400 employees at a meeting in the Mayflower Hotel in downtown Washington. “We [will] need more people, not less.”

President Bush created FHFA this week when he signed a sweeping housing rescue bill into law. The agency merges three existing federal entities into a new, tougher regulator for Fannie Mae and Freddie Mac. The agency will also oversee the nation’s 12 Federal Home Loan Banks, which, like Fannie Mae and Freddie Mac, were chartered by Congress to improve the nation’s housing capacity.

FHFA combines the Office of Federal Housing Enterprise Oversight (OHFEO), which has been overseeing Fannie Mae and Freddie Mac, with the Federal Housing Finance Board, which regulates the home loan banks and a small unit of the Department of Housing and Urban Development.

Authority over Fannie Mae and Freddie Mac has been greatly expanded. Lockhart, the director of OHFEO, became the head of FHFA when the president signed the housing bill Tuesday morning. Bush can now nominate a new director of FHFA and ask the Senate to confirm him or her to a five-year term. But congressional observers don’t expect any change at the top until a new president takes office next year.

The existing employees of the three agencies will be formally transferred to the FHFA no later than July 30, 2009. But Lockhart said that is likely to happen much sooner, perhaps this fall. …” 

http://www.washingtonpost.com/wp-dyn/content/article/2008/08/01/AR2008080102927.html

 

Federal Housing Finance Agency

“…The Federal Housing Finance Agency is an independent federal agency created as the successor regulatory agency resulting from the statutory merger of the Federal Housing Finance Board (FHFB) and the Office of Federal Housing Enterprise Oversight (OFHEO), absorbing the powers and regulatory authority of both entities, with expanded legal and regulatory authority, including the ability to place government sponsored enterprises into receivership or conservatorship.[1][2][3]

The enabling law establishing the FHFA is the Federal Housing Finance Regulatory Reform Act of 2008, which is Division A of the larger Housing and Economic Recovery Act of 2008, Public Law 110-289, signed on July 30, 2008 by President George W. Bush. One year after the law was signed, the OFHEO and the FHFB shall go out of existence. All existing regulations, orders and decisions of OFHEO and the Finance Board remain in effect until modified or superseded. James B. Lockhart III, the director of OFHEO, is the director of the new FHFA.[4][5][6][7]

On the day of the law’s signing, James Lockhart stated:[8] …”

Conservatorship of Fannie Mae and Freddie Mac

“…On September 7, 2008, FHFA director Lockhart announced he had put Fannie Mae and Freddie Mac under the conservatorship of the FHFA.[11][3] The action is “one of the most sweeping government interventions in private financial markets in decades”.[12] U.S. Treasury Secretary Henry M. Paulson , appearing at the same press conference, stated that placing the two GSEs into conservatorship was a decision he fully supported, and said that he advised “that conservatorship was the only form in which I would commit taxpayer money to the GSEs.” He further said that “I attribute the need for today’s action primarily to the inherent conflict and flawed business model embedded in the GSE structure, and to the ongoing housing correction.”.[13]

In the announcement, Mr. Lockhart indicated the following items in the plan of action for the conservatorship:

 

  1. On September 8, 2008, the first day of the conservatorship, business will be conducted normally, with stronger backing for the holders of Mortgage Backed Securities (MBS), senior debt and subordinated debt.
  2. The Enterprises will be allowed to grow their guarantee MBS books without limits and continue to purchase replacement securities for their portfolios, about $20 billion per month, without capital constraints.
  3. As the conservator, the FHFA will assume the power of the Board and management.
  4. The present CEOs have been dismissed, but will stay on to help with the transition.
  5. Appointed as CEOs are Herb Allison, for Fannie Mae and David M. Moffett for Freddie Mac. Allison is former Vice Chairman of Merrill Lynch and for the last eight years chairman of TIAA-CREF. Moffett is the former Vice Chairman and CFO of US Bancorp. Their compensation will be significantly lower than the outgoing CEOs. They will be joined by equally strong non-executive chairmen.
  6. Other management action will be very limited. The new CEOs agreed it is important to work with the current management teams and employees to encourage them to stay and to continue to make important improvements to the Enterprises.
  7. To conserve over $2 billion annually in capital the common stock and preferred stock dividends will be eliminated, but the common and all preferred stocks will continue to remain outstanding. Subordinated debt interest and principal payments will continue to be made.
  8. All political activities, including all lobbying, will be halted immediately. Charitable activities will be reviewed.
  9. There will be financing and investing relationship with the U.S. Treasury via three different financing facilities, to provide critically needed support to Freddie Mac and Fannie Mae and the liquidity of the mortgage market. One the three facilities is a secured liquidity facility which will be not only for Fannie Mae and Freddie Mac, and also for the 12 Federal Home Loan Banks that FHFA also regulates. …” 

http://en.wikipedia.org/wiki/Federal_Housing_Finance_Agency

 

Naked short selling

Naked short selling, or naked shorting, is the practice of selling a stock short without first borrowing the shares or ensuring that the shares can be borrowed as is done in a conventional short sale. When the seller does not then obtain the shares within the required time frame, the result is known as a “fail to deliver.”

In the United States, naked short selling is covered by various SEC regulations. In 2005, “Regulation SHO” was enacted to curb the practice, requiring that broker-dealers have grounds to believe that shares will be available for a given stock transaction, and requiring that delivery take place within a limited time period.[1][2] As part of its response to the crisis in the North American markets in 2008, the SEC issued a temporary order restricting fails to deliver in the shares of 19 financial firms deemed systemically important.[3] Effective September 18, 2008, following the the largest bankruptcy filing in U.S. history by Lehman Brothers, the SEC made permanent and expanded the rules to remove exceptions and to cover all companies.[4]

Some commentators have contended that despite existing regulations, naked shorting is widespread and that the SEC regulations are poorly enforced, although the SEC has denied these claims. However, the SEC and others have also defended the practice in limited form as beneficial for market liquidity. Its critics have contended that the practice is susceptible to abuse, can be damaging to targeted companies struggling to raise capital, and has led to numerous bankruptcies.[4][citation needed] …”

 

“…Extent of naked shorting

Regulators downplay the extent of naked shorting in the US. At a North American Securities Administrators Association (NASAA) conference on naked short selling in November 2005, an official of the New York Stock Exchange stated that NYSE had found no evidence of widespread naked short selling, and alleged “fear mongering that there’s this rampant naked shorting that’s gone unregulated.”[citation needed] Cameron Funkhouser, NASD senior vice president of market regulations, noted that although companies have alleged stock manipulation through the Berlin stock exchange, the NASD has seen not one instance of naked short selling [on the Berlin stock exchange]”. An official of the SEC said that “While there may be instances of abusive short selling, 99% of all trades in dollar value settle on time without incident.”[7] Of all those that do not, 85% are resolved within 10 business days and 90% within 20.[7]

The SEC’s short selling FAQ also cites common misconceptions about the practice, such as the belief that naked shorting causes “phantom” shares to enter the market, as one source of confusion over the practice’s market effect. Naked short selling, the SEC said, would not increase a company’s shares outstanding shares nor result in “counterfeit shares.”[2] Short seller David Rocker contended that failure to deliver securities “can be done for manipulative purposes to create the impression that the stock is a tight borrow.” In such a situation, the failure to deliver would be on the part of “longs,” not “shorts.”[8]

Statistics on failures to deliver securities are sometimes used as evidence of naked short selling in specific stocks. However, the U.S. Securities and Exchange Commission stated in January 2008 that “fails-to-deliver can occur for a number of reasons on both long and short sales. Therefore, fails-to-deliver are not necessarily the result of short selling, and are not evidence of abusive short selling or ‘naked’ short selling.”[9]

However, Robert J. Shapiro, former undersecretary of commerce for economic affairs, has claimed that naked short selling has cost investors $100 billion and driven 1,000 companies into the ground.[10] Ralph Lambiase, head of the Connecticut Securities Agency and the NASAA, declared his disappointment at how the industry was handling the issue as a whole.[citation needed] …” 

 

http://en.wikipedia.org/wiki/Naked_short_selling

 

Deep Capture

http://www.deepcapture.com/

 

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