Financial News

[southsider2k5]

I can't tell if this is a giant over-reaction, if it's some variant of "what we should expect", or if it means that they have reason to expect that MF's behavior was not abnormal.

 

They are supposed to be doing this anyway. It means the CFTC isn't doing their jobs to begin with if they have to go back and do it again.

[southsider2k5]

Sounds like all of MF's employees just got laid off today.

[southsider2k5]

Sounds like all of MF's employees just got laid off today.

 

http://dealbook.nytimes.com/2011/11/11/mf-...aler-employees/

 

MF Global Lays Off Vast Majority of Broker-Dealer Employees

By MICHAEL J. DE LA MERCED

 

The court-appointed trustee overseeing the liquidation of MF Global’s broker-dealer unit laid off 1,066 employees on Friday, keeping only a skeleton staff to assist in the dissolution of the business.

 

The trustee, James W. Giddens, will hire between 150 and 200 employees to help wind down the broker-dealer and process bankruptcy claims.

 

MF Global’s laid-off staff will be paid through Tuesday, Nov. 15. They will not be paid severance, but will receive health benefits through the end of the month, according to a person briefed on the matter.

 

Employees were notified in town hall meetings at MF Global’s offices in midtown Manhattan and in Chicago.

 

Mr. Giddens, meanwhile, plans to move what remains of MF Global’s broker-dealer staff in New York City into smaller and less expensive work space. The division’s employees in Chicago will remain in their current offices for “an undetermined but limited” amount of time.

 

The news is unsurprising. Since MF Global filed for bankruptcy on Oct. 31, its core broker-dealer unit has begun the slow process of liquidating itself under the rules laid out in the Securities Investor Protection Act, or SIPA. Mr. Giddens and the various exchanges where MF Global did business have already returned some customer money, and will soon turn to the work of processing claims for the remainder of client money.

 

“The termination of employees and closure of operations is a necessary part of the court-ordered liquidation of MF Global Inc. and is consistent with the trustee’s obligations under SIPA to preserve assets and identify and marshal other property to maximize the estate in a manner that is fair to all customers and other creditors,” a spokesman for the trustee said in a statement.

 

A spokesman for MF Global said: “We are saddened by the trustee’s actions today to terminate so many of our colleagues.”

[Balta1701]

The government is basically re-stress-testing the financial industry over what will happen when Europe starts to go.

A senior U.S. Treasury official said regulators are contacting big U.S. financial institutions to make sure they are scaling back exposure to Europe and are ready for a potential worsening of the crisis.

 

The Financial Stability Oversight Council, an inter-agency group set up after the 2007-2009 financial crisis, was trying to identify specific firms that could be hit by financial turbulence and then sort out ways that each one can fortify its balance sheet, the Treasury official said.

 

While the Treasury has been at pains to say that direct U.S. bank exposure to European countries now receiving bailout aid -- Greece, Ireland and Portugal -- is moderate, once the debt of Italy and Spain, plus credit default swaps, and U.S. bank indirect exposure through European banks are added, the potential sum could exceed $4 trillion.

 

"As such, the potential for contagion to the U.S. financial system is not small," the Institute of International Finance, the lobby group for major international banks, said last week.

 

Hedging and netting would limit the true size of any losses, so the $4 trillion figure would be the outer edge of U.S. total exposure.

 

U.S. banks had about $180.9 billion of debt from Greece, Ireland, Italy, Portugal and Spain on their books at the end of June, based on Bank for International Settlements data. Italy accounted for the largest chunk, more than $250 billion. Guarantees and credit derivatives added another $586.6 billion, bringing the total to $767.5 billion, the IIF said.

 

There is a secondary level of exposure that is potentially more worrying -- through international banks lending to each other. Here the greatest risk stems from Italy and France. International bank claims on Italy total $939 billion, and French banks account for well over one-third of that, BIS data show. French banks also rely heavily on short-term loans from other international banks for their daily operations. If Italian debt slumps even further, causing deeper losses for French banks, international banks could stop lending to France. The losses would ripple through the whole global financial system.

 

The United States learned the hard way how these indirect financial linkages work when imploding credit default swaps forced it into a $180 billion bailout of insurance giant American International Group in 2008 to prevent further contagion in the banking sector.

 

The danger is that a steep drop in sovereign bond prices prompts similar margin calls at banks that could snowball into a seizing up of credit, the lifeblood of an economy.

 

European banks hold some $3.5 trillion of euro-zone sovereign bonds and U.S. banks have significant direct exposure to their European peers, the IIF said in a report.

 

Federal Reserve Chairman Ben Bernanke was frank last week about the risks: "It is not something that we would be insulated from ... I don't think we would be able to escape the consequences of a blow-up in Europe."

 

JPMorgan Chase, the largest U.S. bank, holds about $44 billion in debt of troubled euro-zone nations -- Greece, Ireland, Portugal, Spain and Italy -- and Citigroup, the third largest, has $24.3 billion, said Dick Bove, a banking analyst at Rochdale Securities in September.

[NorthSideSox72]

You can argue 3% vs 4% inflation currently, what's in the basket, include or exclude energy and food commodities, whatever. The point is, real inflation including energy is something like 4%, without it maybe its 3%... while we are still nowhere near fast recovery mode. So, with that level of inflation now, and all the money in the system, what do you think will happen when the economy does start to pick up steam?

 

[southsider2k5]

How Congress gets to trade on insider info...

 

http://www.cbsnews.com/video/watch/?id=738...n%3BcbsCarousel

[Balta1701]

It's the NY Post, so either assume it's all obtained by hacking people's phones/has the credibility of Fox, but it sure sounds like JPM is working hard to make sure other people take the losses on MF, and they were the place where the supposedly lost money was "Found" adn then declared to not be the missing money.

Smaller customers of MF Global believe bank giant JPMorgan Chase, run by CEO Jamie Dimon, is angling to cut ahead of them in MF’s long line of creditors.

 

Some MF clients are planning to file a motion in Manhattan bankruptcy court today, led by James Koutoulas, chief executive of a Chicago commodities trading firm, in a bid to boost their chances of recovery from the eighth-largest bankruptcy in US history.

 

At issue is a lien and other protections given to JPMorgan, MF’s largest lender, in exchange for an $8 million loan the bank gave to MF on its first day of bankruptcy.

 

In short, the lien appears to give JPMorgan the right to some assets that creditors might otherwise try to claw back through lawsuits.

 

The bankruptcy judge in the case, Martin Glenn, acknowledged he doesn’t normally grant such special rights for a lone lender and said he would re-evaluate the matter at a hearing today.

 

In an interview, Koutoulas called the loan “a farce” and “a cheap ploy for them to jump the line.”

 

Stanley Haar, owner of a small commodities trading firm in Boca Raton, Fla., who is part of Koutoulas’ group, said if the bankruptcy judge confirms JPMorgan’s lien, “We would automatically be stepped on by the bank.”

 

A person close to JP Morgan, which declined to officially comment, said the bank is entitled to be lead creditor because it was MF’s biggest lender as the result of a revolving $1.2 billion credit line given to MF before the broker-dealer imploded. “Everyone’s interests are aligned among creditors,” the source said.

 

MF -- run by former NJ governor and ex-Goldman Sachs chief Jon Corzine until Nov. 4 -- filed for bankruptcy last month after making big bets on dicey European debt. The details of the messy bankruptcy are still being hammered out, and it’s not clear yet whether any customers will be left standing behind corporate creditors like JPMorgan.

 

What is known is that $600 million of MF customer funds that were supposed to be segregated from the firm’s dough -- and therefore safe from a bankruptcy -- have gone missing, throwing the normal order of things out of whack and opening the door to customers fighting with lenders for the remaining assets.

 

The latter option will devastate customers like Foti Georgiadis, a day trader who had close to $1 million in one of MF’s plain-vanilla brokerage accounts for stock and bond holders.

 

The Malibu, Calif., investor said he’s been unable to access his account since the bankruptcy and has gotten no word about when or whether his assets will ever be released to him.

 

“I can’t get out of my positions. I can’t pay my bills. I can’t feed my family,” he said. “Why don’t you just kill me?”

 

Today’s filing by Koutoulas will request that MF’s customers be given priority over any assets recovered if customer accounts were, in fact, wrongfully co-mingled with the company’s assets.

 

Koutoulas is also agitating to get a seat on the creditors’ committee, which is currently being led by JPMorgan.

 

Another subject of some customers’ ire is James Giddens, the trustee put in charge of cleaning up the mess and returning money to customers and creditors.

 

Several trading clients have asked that Giddens be removed as trustee given his track record with collapsed Lehman Bros.

[Balta1701]

You can argue 3% vs 4% inflation currently, what's in the basket, include or exclude energy and food commodities, whatever. The point is, real inflation including energy is something like 4%, without it maybe its 3%... while we are still nowhere near fast recovery mode. So, with that level of inflation now, and all the money in the system, what do you think will happen when the economy does start to pick up steam?

The Federal Reserve will take advantage of the enormous room it has to fight inflation, by slowly raising rates and selling off some of the trillions of dollars worth of assets it has accumulated. More than likely, the Fed will actually be too cautious about inflation because of the sheer number of inflation hawks on the Fed, and will keep the inflation rate low enough by dragging out the unemployment crisis for a longer time.

 

Meanwhile, Ben Bernanke will hold the largest party in the history of mankind to celebrate the fact that the fed has gone from begging congress to do something about jobs to actually doing what it is really good at.

[NorthSideSox72]

The Federal Reserve will take advantage of the enormous room it has to fight inflation, by slowly raising rates and selling off some of the trillions of dollars worth of assets it has accumulated. More than likely, the Fed will actually be too cautious about inflation because of the sheer number of inflation hawks on the Fed, and will keep the inflation rate low enough by dragging out the unemployment crisis for a longer time.

 

Meanwhile, Ben Bernanke will hold the largest party in the history of mankind to celebrate the fact that the fed has gone from begging congress to do something about jobs to actually doing what it is really good at.

Slowly raising them to levels not seen since Carter and Reagan? How do you think 12% or 14% mortgage and corporate loan rates are going to go over?

 

[Balta1701]

Due to Europe, the Sanfran Fed. now estimates there is a 50% chance of a recession in the U.S. in the first part of 2012.

[Balta1701]

I can safely say this is the first time I've ever linked to "Athens News".

Greece's conservative party leader on Monday vowed to reject any toughening of austerity measures in return for a multi-billion euro bailout, signalling the new coalition government may not enjoy the kind of cross-party support demanded by lenders.

 

New Democracy leader Antonis Samaras said he would not vote for any new austerity measures and added that the policy mix of spending cuts and tax rises agreed with international lenders should be changed in favour of economic growth.

 

"I agree with the goals to cut government spending ... to reduce debt, to erase the deficit, to make structural changes. I do not agree with whatever stunts growth," he told party MPs ahead of a three-day confidence debate, starting on Monday.

 

Although Samaras' party are part of the new administration of former ECB vice president Lucas Papademos, its support for the three-day old government has so far been lukewarm and his backing is crucial for passing legislation needed to satisfy international lenders' demands.

 

Crucially, Samaras said he would not sign any letter pledging support for conditions on a 130bn euro bailout as EU Economic and Monetary Affairs Commissioner Olli Rehn has demanded.

 

"I don't sign such statements," he said, adding that his word should be sufficient.

 

His refusal to sign could imperil an 8bn euro loan Greece needs by mid-December to avoid default.

 

Sarmaras' hardline stance suggests the continuation of wrangling that pushed Greece to the brink and prompted EU peers to contemplate a euro zone without Greece.

[kapkomet]

How Congress gets to trade on insider info...

 

http://www.cbsnews.com/video/watch/?id=738...n%3BcbsCarousel

 

 

This should be the single biggest scandal ever. EVER. But notice, no one is even talking about it.

[Balta1701]

Slowly raising them to levels not seen since Carter and Reagan? How do you think 12% or 14% mortgage and corporate loan rates are going to go over?

As long as employment is back down to 6%, which it had better be if the fed decides to fight inflation that hard, I'll stand by the "largest party in the history of mankind."

 

Worrying about inflation at 9% unemployment is worrying about flu season after being shot. And Europe is reloading.

[southsider2k5]

This should be the single biggest scandal ever. EVER. But notice, no one is even talking about it.

 

It should be. But the meat of this story has been floating around for about a month now inside the industry.

[Balta1701]

This should be the single biggest scandal ever. EVER. But notice, no one is even talking about it.

The hits on Pelosi and Boehner were pretty weak sauce, they had a much stronger case against Spencer Bachus, but they wanted to hit on the big names more.

 

Personally I think the abramoff story last week of lobbying is still the worse scandal, but it's long past admitted that congress is corrupt, so yeah.

[southsider2k5]

I'd love to see Congress have to operate on the system that the SEC requires employees of financial firms to operate on.

[Balta1701]

I'd love to see Congress have to operate on the system that the SEC requires employees of financial firms to operate on.

You remember how the reaction to the banks dropping the fee on debit cards was "they'll get theirs anyway"?

[StrangeSox]

It should be. But the meat of this story has been floating around for about a month now inside the industry.

 

I'm pretty sure I've read very similar stories several times over the years. congress's "inside trading" isn't new.

[Rex Kickass]

This should be the single biggest scandal ever. EVER. But notice, no one is even talking about it.

 

I'm skeptical considering the story broke chez Breitbart initially. But even a blind squirrel finds a nut once in a while.

[Balta1701]

I like the detailed, explicit "Somehow."

MF Global Holdings Ltd (MFGLQ.PK) may have faced a shortfall in customer funds even as far back as October 27, four days before the U.S. futures brokerage filed for bankruptcy protection, the Wall Street Journal said, citing people familiar with the situation.

 

Just hours before the bankruptcy filing, MF Global executives told regulators they believed a shortfall had somehow occurred, possibly starting on October 27 or October 28, the people told the paper.

[StrangeSox]

I love all these passive terms, "a shortfall somehow occurred" or "mistakes were made," hiding the actual agency behind actions.

[southsider2k5]

I love all these passive terms, "a shortfall somehow occurred" or "mistakes were made," hiding the actual agency behind actions.

 

It was fraud. Period.

[StrangeSox]

It was fraud. Period.

 

That is sure what it seems like. But the language will never be "Person X committed fraud," it will be "fraud was committed." It's pervasive.

[Balta1701]

Italy is back up over the evil 7% mark.

[NorthSideSox72]

That is sure what it seems like. But the language will never be "Person X committed fraud," it will be "fraud was committed." It's pervasive.

That just isn't true. A significant firm went down, people will end up being prosecuted, count on it.