Financial News

[southsider2k5]

Well what do you expect when you regulatory system is based on 1929?

[Balta1701]

Well what do you expect when you regulatory system is based on 1929?

To avoid repeating 1929 in 2008 would be nice, but we failed at that pretty miserably.

[southsider2k5]

To avoid repeating 1929 in 2008 would be nice, but we failed at that pretty miserably.

 

Not really, but OK.

[caulfield12]

http://www.nytimes.com/2011/12/13/business...wanted=2&hp

 

Balta will enjoy this one.

[Balta1701]

Lowest 1 week seasonally adjusted jobless claim number since May, 2008. Golfclap.

[VictoryMC98]

1 in 2 people are in poverty...

 

 

So much for the 01/03 tax cuts helping the everyday American...

[NorthSideSox72]

1 in 2 people are in poverty...

 

 

So much for the 01/03 tax cuts helping the everyday American...

Read the article more carefully. What you typed is not true. 1 in 2 are in poverty OR low income above poverty. Still not a good thing, but, let's get the facts straight before discussing.

 

[StrangeSox]

Besides, they have microwaves and ceiling fans, so they're not really poor anyway.

[VictoryMC98]

Besides, they have microwaves and ceiling fans, so they're not really poor anyway.

 

Green?

[NorthSideSox72]

Besides, they have microwaves and ceiling fans, so they're not really poor anyway.

Oh come on, when have you ever seen me post anything even remotely like that?

 

[VictoryMC98]

Read the article more carefully. What you typed is not true. 1 in 2 are in poverty OR low income above poverty. Still not a good thing, but, let's get the facts straight before discussing.

 

You're right.. The tax cuts worked out great... Not everyone is in Poverty.. they move up to Low income above Poverty! Pretty soon they can be 1%ers in what 150-200 years?

[NorthSideSox72]

You're right.. The tax cuts worked out great... Not everyone is in Poverty.. they move up to Low income above Poverty! Pretty soon they can be 1%ers in what 150-200 years?

Why bother posting? Seems in your world, either you have to delude yourself into believing something manifestly false (as stated in the very article you cited), or else that means you think poor people have it great. Most sane people are in between.

 

You will trigger some real, actual discussion if you don't twist the words of other posters, and defend it by outright lying about the words from a published article.

 

[StrangeSox]

Oh come on, when have you ever seen me post anything even remotely like that?

 

Sorry, that wasn't a shot at you, but someone else did post Heritage's annual "the 'poor' have cooking appliances, I guess they're not so poor!" earlier this year. It was a shot at that.

[StrangeSox]

Why bother posting? Seems in your world, either you have to delude yourself into believing something manifestly false (as stated in the very article you cited), or else that means you think poor people have it great. Most sane people are in between.

 

You will trigger some real, actual discussion if you don't twist the words of other posters, and defend it by outright lying about the words from a published article.

 

iawtp, btw.

[southsider2k5]

The fun part is that all of the knowledge that the CFTC had with MF couldn't be shared with the Fed and SEC under today's FINREG set up.

 

http://money.cnn.com/2011/12/15/news/compa...?source=igoogle

 

Regulators are back on Capitol Hill to defend their oversight of the bankrupt brokerage MF Global.

 

Lawmakers want to know how, in an era following the global economic meltdown, regulators could allow another big financial institution to fail, and lose more than $1 billion of its customers money.

 

Thomas Baxter, general counsel of the Federal Reserve Bank of New York, testified on Thursday that his agency had scrutinized MF Global for more than two years before giving it the green light to trade U.S. securities.

 

But there were some major compliance issues along the way which the brokerage eventually fixed, he said.

 

Baxter said the U.S. Commodity Futures Trading Commission found that the company failed to supervise traders, neglected to transmit accurate prices of its natural gas options and didn't maintain written records of at least one of its clients.

 

Furthermore, MF Global's parent company was based in Bermuda, he said, noting that the Fed requires its primary dealers to be domiciled in the U.S.

 

But MF Global fixed all of these issues, said Baxter, and that's why the Fed finally approved the now-bankrupt brokerage to trade in U.S. securities.

 

"The New York Fed designated MF Global as a primary dealer to meet our highly specialized needs, and we followed our primary dealer policy to the letter without fear or favor," said Baxter, in prepared testimony to a Congressional subcommittee.

 

The Fed designated MF Global as a primary dealer in February and conducted due diligence on the company through October, "when its financial condition deteriorated abruptly and quickly," said Baxter.

 

Moody's downgraded MF Global on Oct. 24 and the following day the brokerage reported its "largest quarterly earnings loss ever," said Baxter. At that point, he said the Fed blocked MF Global from dealing securities.

 

Lawmakers have been holding a series of hearings regarding MF Global, which filed for Chapter 11 bankruptcy on Oct. 31 after disclosing $6.3 billion in exposure to unstable sovereign debt from troubled European countries, causing investors to panic.

 

The hearings have featured former chief executive officer Jon Corzine, who said on Dec. 8 that he could not account for "many hundreds of millions of dollars of client money" that went missing from the company books.

 

More than $1.2 billion could be missing, according to James Giddens, the trustee overseeing the brokerage's liquidation.

 

Corzine, a former governor and senator from New Jersey and the former Goldman Sachs CEO, said that he was "stunned" to learn of the missing money the day before MF Global filed for bankruptcy. He quit as CEO three days later. To top of page

[southsider2k5]

http://www.reuters.com/article/2011/12/14/...E7BC1AE20111214

 

MF's Corzine said to know of customer fund misuse

 

Former MF Global CEO Jon Corzine testifies about the firm's bankruptcy during a hearing before the U.S. House Agriculture Committee on Capitol Hill in Washington, December 8, 2011. REUTERS/Jonathan Ernst

 

By Alexandra Alper and Aruna Viswanatha

 

WASHINGTON | Tue Dec 13, 2011 9:41pm EST

 

(Reuters) - The regulatory arm of CME Group has turned over interviews to the Justice Department that allege former MF Global chief Jon Corzine knew that the now-bankrupt brokerage firm used customer money to lend to a European affiliate, a CME executive said on Tuesday.

 

The information is fourth-hand but is the strongest statement yet from a regulator that Corzine may have personally known customer funds were diverted for firm use.

 

Federal investigators are probing why hundreds of millions of dollars in customer funds are missing, and whether the futures brokerage raided customer money to try to counter a liquidity crisis, a major violation of industry rules.

 

Corzine, who resigned as chief executive of MF Global early last month, has given sworn testimony that he does not know where the money is, but it is unclear if this latest revelation will legally harm him.

 

CME Executive Chairman Terrence Duffy, testifying to the Senate Agriculture Committee, on Tuesday said a CME auditor participated in a phone call during which an MF Global employee indicated that Corzine knew of the loan.

 

During an internal CME interview, the auditor also revealed that the loan was for roughly $175 million to a European affiliate of MF Global and was likely made in the last couple of days prior to the firm's October 31 bankruptcy, Duffy said.

 

The CME is a front-line regulator for MF Global.

 

"A CME auditor ... participated in a phone call with senior MF Global employees wherein one employee indicated that Mr. Corzine knew about the loans that had been made from the customer segregated accounts," Duffy said.

 

A spokesman for Corzine and his lawyer, Andrew Levander, declined comment.

 

Duffy said his company has provided this information to the Justice Department and the Commodity Futures Trading Commission, which are investigating the matter.

 

The Senate Agriculture Committee's hearing on Tuesday was the second to feature both Duffy and Corzine, among others, as lawmakers seek answers about the missing funds.

 

Corzine told lawmakers: "I simply do not know where the money is, or why the accounts have not been reconciled to date."

 

Barry Pollack, a criminal defense attorney at Miller & Chevalier, said it is uncertain if the CME auditor's claims could hurt Corzine.

 

But he said that by testifying, Corzine knowingly opened himself up to the potential for charges beyond his conduct while MF Global CEO - from perjury to obstruction of justice.

 

"It absolutely could be nothing more than a classic game of telephone," Pollack said. He also noted, "Mr. Corzine is sophisticated enough that he knew going into this that if he gave testimony, he was going to open the flood gates."

 

'WHERE'S THE MONEY?'

 

Corzine appeared during a panel that preceded Duffy's testimony, dressed in a somber dark suit and closely watched by his attorney seated behind him.

 

He used his opening statement to try to correct comments he gave the prior week before the House Agriculture Committee.

 

At that hearing, Corzine said that while he "never intended" to break rules, an employee may have misinterpreted instructions to try to save the firm, a comment he sought to clarify on Tuesday.

 

On Tuesday, Corzine said: "I want to be clear, I never gave any instructions to misuse customer funds, I never intended anyone at MF Global to misuse customer funds."

 

Also testifying to the Senate panel on Tuesday were two top-ranking Mf Global executives - Chief Operating Officer Bradley Abelow and Chief Financial Officer Henri Steenkamp - who said they, too, lacked answers about the money.

 

Senators became agitated about the testimony, frequently asking the executives and Corzine "Where's the money?" and "What happened?"

 

Senator Pat Roberts, the top Republican on the committee, raised his voice, asking, "How many heads do we have to have around here before we finally drill down and find somebody's name that knows what the heck is going on?"

 

CME's Duffy provided the most answers.

 

He not only revealed the allegations about Corzine's knowledge about customer-backed loans, but also stated that $950 million dollars was moved out of the customer segregated accounts to MF Global's broker dealer.

 

Typhon Capital Management CEO James Koutoulas, who is helping MF Global customers recover their funds, was at the hearing on Tuesday and said Duffy's testimony was a breath of fresh air after the panel with Corzine and the executives.

 

"We'd listened to the three stooges say they knew nothing and it wasn't their responsibility and then somebody like Duffy came in. The reaction was great. He dropped a total bombshell," he said.

 

'BREAK THE GLASS'

 

Senator Roberts also pressed the executives and Corzine about an internal report, asking whether it was "an actual plan that would break the glass and tap into your customers' segregated accounts, perhaps described as a loan."

 

Corzine admitted there was such a "break the glass" report, but he said it did not involve raiding customer money.

 

"To my knowledge and understanding of that report it was not ever the intent to recommend tapping into segregated customer funds."

 

According to a copy of the document obtained by Reuters, the contingency plan did not contain explicit recommendations to tap customer funds.

 

It did, however, lay out emergency methods for drawing down lines of credit and for exiting complex investments.

 

The document, which was undated but appeared to be drafted before October 20, estimated that under tested scenarios, "there is sufficient liquidity to manage through one month under a severe stress event."

 

'CALLED STEALING BACK ON MAIN STREET'

 

Farmers who became collateral damage from the collapse of MF Global got a chance to air their frustrations, telling lawmakers that their confidence in the markets has been shaken.

 

Dean Tofteland, a corn and soybean farmer from Minnesota, said when he heard news that MF Global was having problems, he talked to his broker, who told him, "No customer has ever lost a penny in customer segregated accounts."

 

But three days later his $253,000 account was frozen and he could not adjust his short positions.

 

Tofteland's positions were transferred to a new broker with only 15 percent of the required collateral, and he was forced to liquidate the hedges, he said. Since then, prices dropped and he lost another $100,000 without having the hedge.

 

Tofteland said he has not returned to the futures market.

 

"What they call 'unlawful comingling' on Wall Street is called 'stealing' back on Main Street," he told lawmakers.

[southsider2k5]

http://blogs.reuters.com/felix-salmon/2011...e-rogue-trader/

 

Jon Corzine, rogue trader

 

Felix Salmon

Dec 12, 2011 09:53 EST

 

Dealbook has a big piece on what went wrong at MF Global today, which removes any doubt about the way in which the firm’s sudden death was entirely the fault of Jon Corzine. The idea that Jon Corzine was a “rogue trader” has been raised in the past by the likes of Bill Cohan and John Carney, just on the basis of the size and riskiness of MF Global’s $6.3 billion bet on European sovereign debt. But now it’s looking increasingly as though Corzine demonstrated virtually all of the pathologies of the rogue trader more generally.

 

Lots of financial firms make big bets and blow up. But what we saw at MF Global was much more than that. In fact, as Corzine detailed at great length in his prepared testimony last week, his big sovereign-debt bet didn’t actually lose money at all. But MF Global died all the same, because the bet was so large and risky that it caused a fatal cascade of downgrades and margin calls.

 

Now the risk of such a fatal cascade is always front of mind at any broker-dealer, and all such firms have mechanisms in place to prevent any single bet getting big enough to imperil the company as a whole. What distinguishes rogue traders from traders who simply have big losses is fourfold:

 

they develop an ability to circumvent risk-management controls;

they aspire to be recognized as a star trader making huge amounts of money for the firm;

they tend to arrive earlier and leave later than anybody else, as they jealously guard their trades;

and they panic when losses start appearing, doing things which are downright illegal in the process.

 

Corzine had much more ability to get around risk-management controls than most rogue traders, because he was the CEO. As a result, his big sovereign bet was, relative to the size of the company which made it, by far the largest rogue trade of all time. And the way that he circumvented existing controls was brazen:

 

Soon after joining MF Global, Mr. Corzine torpedoed an effort to build a new risk system, a much-needed overhaul…

 

The size of the European position was making the firm’s top risk officers, Michael Roseman and Talha Chaudhry, increasingly uncomfortable by late 2010, according to people familiar with the situation. They pushed Mr. Corzine to seek approval from the board if he wanted to expand it… Mr. Roseman eventually left the firm.

 

In August, some directors questioned the chief executive, asking him to reduce the size of the position. Mr. Corzine calmly assured them they had little to fear.

 

“If you want a smaller or different position, maybe you don’t have the right guy here,” he told them.

 

As CEO, of course, Corzine could and did overrule or ignore any concerns about his big trade: “One senior trader said that each time he addressed his concerns, the chief executive would nod with understanding but do nothing,” we’re told in the Dealbook piece. Only the board had the ability to rein Corzine in — but Corzine made it abundantly clear that as far as he was concerned, the board had only one job: to keep him in his job, or to fire him. If they wanted him to run the company, he was going to run it his way, with all the risks that entailed.

 

Of course, Corzine was happy to structure his bet in such a way as to minimize its perceived riskiness:

 

The firm bought its European sovereign bonds making use of an arcane transaction known as repurchase-to-maturity. Repo-to-maturity allowed the company to classify the purchase of the bonds as a sale, rather than a risky bet subject to the whims of the market.

 

This is absolutely the kind of thing that a rogue trader does, rather than a CEO. A CEO wants to be paranoid about all risks; a rogue trader wants to hide them. It’s clear which one Corzine was.

 

Corzine’s risk circumvention has been widely reported already. But other parts of Corzine’s pathology were new to me. For instance:

 

He fashioned new trading desks, including one just for mortgage securities and a separate unit to trade using the firm’s own capital, a business known as proprietary trading.

 

Not to be outdone, Mr. Corzine was the most profitable trader in that team, known as the Principal Strategies Group, according to a person briefed on the matter. Mr. Corzine traded oil, Treasury securities and currencies and earned in excess of $10 million for the firm in 2011, the person said…

 

His obsession with trading was apparent to MF Global insiders over his 19-month tenure. Mr. Corzine compulsively traded for the firm on his BlackBerry during meetings, sometimes dashing out to check on the markets. And unusually for a chief executive, he became a core member of the group that traded using the firm’s money. His profits and losses appeared on a separate line in documents with his initials: JSC…

 

At Goldman, which he joined in 1975, the young bond trader quickly gained a reputation as someone able to take big risks and generate big profits. Even after ascending to the top of the firm, he kept his own trading account to make bets with the firm’s capital.

 

I still can’t quite believe this, although it does seem to be true — did Corzine really have his own personal trading account while also being CEO, both at Goldman and at MF Global? At Goldman, which was still a partnership when Corzine was in charge, there would at least have been serious limits on what he could trade, and the bank was big enough to be able to withstand losses in his personal account. But at MF Global, where he was charged with turning around the entire company, the picture of the CEO trading on his Blackberry during meetings is, frankly, bonkers.

 

Does this happen elsewhere? Are there other brokerages where the CEO has his own personal P&L line in the trading books? Citadel, perhaps.* But this is not a good idea. You want the CEO encouraging the rest of the trading desk, not competing with them. And you want the CEO judging himself by the performance of the firm as a whole, rather than obsessing over the profits and losses he’s personally responsible for.

 

Certainly the fact that Corzine was working two jobs — as well as more general rogue-trader pathology — helps to explain the fact that he “impressed colleagues” with his work ethic:

 

He often started his day with a five-mile run, landing in the office by 6 a.m. and was regularly the last person to leave the office.

 

(I’ll guess, though, that he wasn’t up at 2:30 most mornings, trading the European markets from the foot of his bed.)

 

In the macho world of Wall Street, working incredibly long hours is generally grounds for admiration, so it’s easy to see how this didn’t raise any red flags. But it should have.

 

And then, at the end of the story of any rogue trader comes the spiral of panic-driven illegal activity.

 

MF Global filed for bankruptcy on Oct. 31. As the firm spun out of control, it improperly transferred some customer money on Oct. 21 — days sooner than previously thought, said people briefed on the matter. And investigators are now examining whether MF Global was getting away with such illicit transfers as early as August, one person said, a revelation that would point to wrongdoing even before the firm was struggling to survive…

 

A deal became crucial as trading partners and lenders circled the firm. LCH.Clearnet, the firm responsible for clearing the vast majority of MF Global’s European sovereign debt trades, was also demanding $200 million to maintain the positions, atop $100 million it had claimed from MF Global earlier in the week, one person briefed on the situation said.

 

Other people close to the investigation, led by the Commodity Futures Trading Commission’s enforcement division, have said that as the firm rushed to pay off creditors, MF Global dipped again and again into customer funds to meet the demands.

 

It’s quite common for rogue traders to go to jail; as one of the biggest rogue traders in history, it looks as though Corzine might well join their ranks. It would certainly be a great shame if he avoided that fate by dint of the fact that he was CEO and therefore has some kind of plausible deniability about the mechanics of the illegal transfers. Everything in this sorry story has his fingerprints all over it.

 

*Update: Citadel calls to say that Ken Griffin, the CEO, does not engage in trading at the company.

[Jenksismyhero]

Sorry, that wasn't a shot at you, but someone else did post Heritage's annual "the 'poor' have cooking appliances, I guess they're not so poor!" earlier this year. It was a shot at that.

 

I thought it was luxury goods like premium cable, multiple HDTV's, xbox's, etc?

[StrangeSox]

I thought it was luxury goods like premium cable, multiple HDTV's, xbox's, etc?

 

That was part of it. It also included such luxury goods as refrigerators, ceiling fans and stoves. The gall of the poor, having appliances to store and cook food! Bah, if only they worked harder, they wouldn't be so poor!

[VictoryMC98]

Why bother posting? Seems in your world, either you have to delude yourself into believing something manifestly false (as stated in the very article you cited), or else that means you think poor people have it great. Most sane people are in between.

 

You will trigger some real, actual discussion if you don't twist the words of other posters, and defend it by outright lying about the words from a published article.

 

In all seriousiness, that isn't even the point. The point is, the Tax cuts from 01/03 failed to do what they are designed to do. Well let's be honest here, designed what they were "sold" to do. It doesn't matter the wording of who is in poverty or just above it. That's not the point what so ever.. The point is the Tax Cuts are a failure for anyone not in the upper brackets of income. And in reality, that was what they were designed to do. That's the issue... So lets start talking about it...

 

I bring this up, since the GOP wants to think giving more tax Cuts are going to help the everyday Americans, and this article is proof.. It won't.

Edited December 15, 2011 by VictoryMC98

[kapkomet]

That was part of it. It also included such luxury goods as refrigerators, ceiling fans and stoves. The gall of the poor, having appliances to store and cook food! Bah, if only they worked harder, they wouldn't be so poor!

 

 

The "part of it" IS the problem, not refrigerators, ceiling fans, and stoves.

[StrangeSox]

The "part of it" IS the problem, not refrigerators, ceiling fans, and stoves.

 

Having some relatively cheap electronics doesn't mean you're not poor. It also didn't specify Xboxes and HDTV's, but "more than one TV" and "gaming console" of unspecified age.

 

But the Heritage report included plenty of basic appliances in their "look, they're not really poor!" annual report.

[VictoryMC98]

Having some relatively cheap electronics doesn't mean you're not poor. It also didn't specify Xboxes and HDTV's, but "more than one TV" and "gaming console" of unspecified age.

 

But the Heritage report included plenty of basic appliances in their "look, they're not really poor!" annual report.

 

It seems to the Heritage Foundation, anything outside of living in a cardboard box shouldn't be considered poor. And even then.. those people still have shelter.

[kapkomet]

Having some relatively cheap electronics doesn't mean you're not poor. It also didn't specify Xboxes and HDTV's, but "more than one TV" and "gaming console" of unspecified age.

 

But the Heritage report included plenty of basic appliances in their "look, they're not really poor!" annual report.

 

 

I saw the report and I agree that it is one of the biggest pieces of s*** to come out of the Heritage Foundation in quite some time. But I'm sure Hannity is slobbering all over this "news" like it's the biggest study to rock America since Reagan, right? Excuse me while I barf.

 

But, I will disagree with your take, if I understand what you're trying to say correctly, that having Iphones, Smart phones, HDTV's, gaming consoles, etc. up the ass when you're living under government programs is complete bulls***, and there's a s***load of people out there in just that condition, all the while screaming "POOR!"

[StrangeSox]

I saw the report and I agree that it is one of the biggest pieces of s*** to come out of the Heritage Foundation in quite some time. But I'm sure Hannity is slobbering all over this "news" like it's the biggest study to rock America since Reagan, right? Excuse me while I barf.

 

Well, since they published the same garbage last year or a few years ago. It's a pretty regular report for them.

 

But, I will disagree with your take, if I understand what you're trying to say correctly, that having Iphones, Smart phones, HDTV's, gaming consoles, etc. up the ass when you're living under government programs is complete bulls***, and there's a s***load of people out there in just that condition, all the while screaming "POOR!"

 

But this study didn't specify HDTV's or smartphones. Just "television," which could be a $100 set from Walmart, or maybe a $50 Goodwill pickup. A "gaming console" could be a Nintendo 64. It just said "cellphone," which could be a cheap pay-as-you-go thing. The poor have the audacity to own cars (old beaters to get to their jobs that are probably 20+ miles away from their homes and for which there's no public transportation available). The reporting on this study by idiots like Hannity, though, will feature lots of images of fancy 60" LED TV's, PS3's, iPhones, etc. to drive that deceptive slight-of-hand home.

 

Being poor is about a lot more than not having the latest electronics, and having some relatively cheap entertainment devices to distract you from your otherwise grinding existence doesn't make you suddenly not poor. That's where the fundamental problem of these studies lies: focusing on a few material trinkets that do not actually reflect what poverty is or isn't.