Archive for Goldman Sachs

MF Global, Flatfooted Regulators & Chesapeake Energy, 401(k)s

Posted in Uncategorized with tags , , , , , , , , , , on November 3, 2011 by economicwarrior

It appears that all of the regulators, the SEC, the New York Fed, Finra, the CME and the Commodities Future Trading Commission (CFTC) were all asleep at the wheel when Jon Corzine’s $6.3 billion trade in European bonds sank the trading powerhouse. It appears at least $600 million, maybe $700 million is missing and nobody has a clue where the money is, its customers money.

But the reason, regulators who theoretically oversea the securities markets are all part of the revolving door between Wall Street, the government, the banking industry, and often Ivy League academia. The William Dudley, who runs the New York FED, is a former Goldman Sachs Banker. Mary Shapiro, who runs the SEC, used to be the CEO of Finra. The Commodities Future Trading Commission Gary Gensler, is a former Goldman Sachs banker and an aide-de-camp of Larry Summers when he was the go-to economic guy for U.S President William Jefferson Clinton. Richard Ketchum, the head of Finra, used to be chief counsel for Citigroup’s investment bank, a bank which would not exist without bailouts from the taxpayer. Don’t know much about Craig Donohue of the CME Group, but reckon he was making a Pirates pay of around $3.6 million in 2006. It is all just one big incestuous revolving door. Woe is us.

Chesapeake Energy’s CEO Aubrey McClendon, shows that outrageous pay is not just confined to The Pirates of Manhattan. It appears shareholders–who at the end of the day most likely to be funded with your 401(k), are thrown under the bus on a routine basis. As usual, CEOs extract monstrous paydays while rank and file employees get thrown under the bus. As I document in my upcoming book, The Pirates of Manhattan II: Highway to Serfdom, Chesapeake Energy has thrown rank and file folks into target-date mutual funds, while CEO Aubrey McClendon robs the store. In 2008, McClendon extracted $112 million in compensation, and sold 500 antique maps to his company for an eye-popping $12.1 million.

It does not appear that much will change in this corporate American culture. But more will be revealed in the next book as how your 401(k) actually fuels this mess. As Don Corleone from the Godfather once said, “A man with a briefcase can steal more money than a hundred men with guns.”

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MF Global, Jon Corzine, HMS Deregulation

Posted in Uncategorized with tags , , , , , , , , on November 2, 2011 by economicwarrior

“The fault dear Brutus lies not in the stars, but within ourselves” Shakespeare

Strange times these days are.  We want to point a finger at everybody instead of our own role in the problems we have today. I am probably just as guilty as anybody of blaming everyone else, but God willing, I am willing to own up more to the fires I have ignited. At least I am better than I used to be.

What has that got to do with today? Plenty. The Centers for Disease Control and Prevention released some very dreadful news the other day. It appears that we are losing a battle with ourselves more than terrorism. The truth is, Americans insatiable need for prescription drugs is a bigger problem than the War on Terror, the Karl Rove-George W. Bush creation. The Center for Disease Control announced that 14,800 people died in 2008 from over doses in painkillers, up from 4,000 in 1999. Annual deaths from painkiller prescription drugs now surpass those from heroin and cocaine combined. Then when you look at the war zone in Mexico–the root of the problem is not the Mexican drug cartels, it is Americans insatiable appetite for drugs.

My free market friends claim there is too much regulation in America and to large extent I agree, but not when it comes to finance, not when it comes to Wall Street. On Wall Street, HMS Deregulation is alive and well, and it is not just an American problem, but a global one. Think global warming is bad, global deregulation of the financial markets is a frigging nightmare. Regrettably, when we see the financial crisis in Greece today, and which  will inevitably migrate further into Europe and into the U.S., finance, Wall Street is always lurking in the shadows. Banks have their fingerprints over the mess. Does not matter whether it is Goldman Sachs, Barclay’s, BNP Paribas, Deutsche Bank or Banco Santander or Nomura or Lehman. Exploding banks are a world problem.

So the fall of MF Global and Jon Corzine is a warning shot of more to come, I think. Only in America, Corzine,  a Goldman Sachs banker extraordinaire, adversary of Hurricane Hank Paulson and buddy of J. Christopher Flowers, one day a predatory banker, another, became both a U.S. Senator and governor of New Jersey using his pile of cash he made at Goldman. On another day, Corzine would captain MF Global, now another reckless plunge not only to bet the company’s capital but apparently its customers. Now bankrupt, MF Global pulled down some name brands with it, Fidelity’s Pyramus funds, RS Investments, TIAA-Cref, JP Morgan , Deutsche Bank and CNBC. The truth is there is no real regulation on Wall Street. Jon Corzine may not get his $12 million severance

What is worse MF Global, which was a commodity trading powerhouse is a canary in the coal mine. The asset management industrial complex, which makes MF Global a midget in a land of leviathans such as Fidelity, Pimco, Goldman Sachs, BlackRock and JPMorgan, is an industry which dodged the regulation oversight bullet when it comes to managing your assets in your 401(k). If only folks at Occupy Wall Street could figure this one out, then they would have something to protest about.  As usual, regulators are Keystone Kops in the MFGlobal/Jon Corzine case a kind of what happened moment involving Masters of the Universe. It appears MF Global also stuck J. Christopher Flowers for $48 million, the same guy who owned one of The Pirates of Manhattan biggest private residences.

News Corp. continues its woes. Apparently the hacking culture of the media giant has quite the history. James Murdoch, heir apparent, is pulled into the mess. Heres the link. News Corp Lawyer Noted ‘Hacking’ in 2008.http://online.wsj.com/article/SB10001424052970204528204577012153254681664.html?mod=googlenews_wsj

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Keystone Kops: Watchdog Bites Watchdog

Posted in Uncategorized with tags , , , , , on October 31, 2011 by economicwarrior

As the financial-self regulator Finra tries to expand its regulatory empire, the Securities & Exchange Commission last week slapped Finra with a settlement for its role in doctoring documents and violating securities laws. Watchdog bites watchdog.

Current SEC chairman Mary Shapiro was the chief executive of Finra in 2008 when the violatioin allegedly occurred. The 2008 incident was the third time, which included its predecessor the National Association of Securities Dealers (NASD), where the regulator provided altered or misleading documents to the SEC, who Finra is supposed to answer to.

The Keystone Kops nature of financial regulation continues. The SEC has allegedly mishandled roughly 19 referrals it received from Finra of suspicious trading activities of SAC Capital Advisors LP, one of the country’s largest unregulated hedge funds run by billionaire Steve Cohen.

The dysfunctional nature of securities oversight came into Technicolor last week when U.S. District Judge Jed Rakoff questioned the $285 million settlement Citigroup made with the SEC over fraud charges for its failed mortgage bond deal. Rakoff was questioning why Citigroup was being let off the hook so lightly, when Goldman Sachs paid a $535 million fine for a similar exploding  mortgage bond deal known as Abacus in 2007. Rakoff has been a frequent critic of Wall Street violations, perhaps best known for questioning the purchase of Merrill Lynch by Bank of America for a similar $33 million, a slap on the wrist in 2009 when Merrill Lynch executives helped themselves to $3.6 billion in bonuses after $27 billion in losses–all backed by the taxpayer. In 2010, Rakoff approved a $150 million settlement, calling it “half-baked justice at best.”

Even after all of these bailouts, the cozy relationships between Wall Street and their regulators endure, and no one goes to jail. As the usual case, the companies avoid going to trial by neither admitting nor denying any wrongdoing.  Your eyes will open up even more inThe Pirates of Manhattan II: Highway to Serfdom. www.thepiratesofmanhattan.com

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