Posts Tagged ‘SEC’

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Last night, on the BBC program Business Matters, I argued that the Securities and Exchange Commission’s settlement of the insider-trading case with SAC Capital Advisors was just a slap on the wrist—a fine of $1.8 billion that still allows Steven A. Cohen to keep the bulk of his estimated $8-9 billion wealth.

But it was a necessary slap on the wrist in the sense that it was intended to restore faith in markets, not unlike the law establishing insider trading as a crime when the SEC was created back in 1934. Cleaning up financial markets then, five years into the First Great Depression, was designed to rebuild confidence not only in financial markets but in capitalism more generally.

And it worked—alongside the other programs of the first and second New Deals, and of course the recovery created by World War II.

But, I added, I’m not sure it’s enough now. Yes, the SEC is seeking to levy large fines (on Steven Cohen’s SAC and probably on Jamie Dimon’s JPMorgan Chase). However, the people who have been most affected by the financial meltdown—who lost their homes and jobs, and are struggling to put food on the table and send their kids to college—have every right to say, “Been there, done that. We’ve tried investigations, fines, and regulations before and look at the mess we’re in again, in the midst of the Second Great Depression.”

And so maybe, they’ll be singing along with The Who:

And I’ll get on my knees and pray
We don’t get fooled again
Don’t get fooled again

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Today is the second anniversary of Occupy Wall Street. To judge by the lack of coverage of the OWS movement in recent days, you’d think the movement was a failure.

But you’d be wrong. Wrong because it put the issue of economic inequality on the political map in the United States. “We are the 99 percent!” continues to resonate, especially given the return to the unequalizing pattern of growth that caused the crash of 2007-08 and marks the New Gilded Age.

And wrong because, as Allison Kilenny explains, many of the former Occupards continue to work to change things around—in activities like Occupy the SEC and Occupy our Homes.

There has been little talk of a mass gathering to celebrate the two-year anniversary of OWS, but that’s not unusual (anniversary protests are notoriously underwhelming).

But the lack of organizing may also stem from some of the best and brightest organizers having moved on to instead channel the spirit of Occupy elsewhere: in the battle to keep schools from closing, to lend solidarity to striking fast food workers, to fight to keep people in their homes and to hold officials accountable.

The “Occupy is dead” trope is ridiculous precisely because all of the elements that led to the movement’s birth are still in place—if not worse now. The rich are richer, the corrupt live without fear of going to jail, and everyone knows institutions aren’t coming to save us.

Occupy’s spirit of resistance may be scattered, but it can never die. Not as long as a sense of injustice lives.

That sense of injustice is what galvanized the initial OWS movement in the first place. Now, two years later, much work remains to be done.

Update

Speaking of ongoing work, Lisa Pollack provides a sympathetic commentary on (and an actual copy of) Occupy Finance, produced by the Alternative Banking Group of Occupy Wall Street. This is from the introduction:

This book is our reckoning. Some of us have long experience in the world of finance, having worked in banks or hedge funds or as financial advisors. Others of us are teachers, lawyers, students, or Teamsters who started out with a limited understanding of “securitization,” “credit default swaps,” and “collateralized debt obligations” but have taught ourselves about these instruments because we recognize their importance within our current economy. We have found that you do not need a PhD in math or economics to understand what is happening. We have also learned that it is imperative for us to know as much as we can about the workings of the financial system because some of the most interesting facts never get reported. Contrary to what the 1% would have us believe, the way things are is not the way they once were, not the way they have to be, and most importantly—not the way they should be. . .

We know that the way it is is not the way it has to be. Economic arrangements, however complex, opaque, and interconnected, are created by human beings and can be changed by them—by us. Taking on this responsibility is daunting, but also exhilarating. It is the first step in the direction of economic justice.

 

The Center for Public Integrity has put together a three-part series on what has happened to the principals after the great meltdown of Lehman Brothers in September 2008.

  • The executives of the Wall Street banks: Richard Fuld (Lehman Brothers), Jimmy Cayne (Bear Stearns), Stanley O’Neal (Merrill Lynch), Chuck Prince (Citigroup), and Ken Lewis (Bank of America)—all “living in quiet luxury.”
  • The subprime lenders: “top executives from the 25 biggest pre-crisis subprime lenders—including at least 14 founders or CEOs— re back in the mortgage business at mortgage companies that are less regulated than banks.”
  • Their banks: “the major banks that survived the crisis, largely because they were saved with taxpayer money after being deemed ‘too big to fail,’ are now bigger and more powerful than ever.”
  • The government regulators: “most of the leaders of the agencies charged with oversight of the financial system—the SEC, Federal Reserve, Treasury, FDIC, and OTS—have moved on” while “many former regulators are cashing in on their experience—helping companies navigate reforms made after the crisis, writing books on their experiences, making a killing on the speaking circuit—or have retired quietly.”

Note: Cosmopolis accomplishes, in film, for the post-2008 meltdown what The Cook, The Thief, His Wife, and Her Lover did for Thatcherism.

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The series continues with the Nine of Hearts: Angelo Mozilo.

Angelo R. Mozilo was chairman of the board and C.E.O of CountryWide Finance until July 2008. Countrywide was not so interested in sub-prime loans in the beginning when the sub-prime loan industry took off. Mozilo described the people involved with those loans at the time as “crooks”. But facing significant loss of business, Country Wide moved quickly into the sub prime business.

Mozilo used his fiscal power to give favorable mortgage financing to key political figures and power brokers. This included loans to Senate Banking Chairman Christopher Dodd, Senate Budget Committee Chairman Kent Conrad and former Fannie Mae CEO Jim Johnson. Other people received favorable mortgages to buy political favors. This included Nancy Pelosi’s son, Paul, Barbara Boxer, Richard Holbrooke, Donna Shalala and others wielding influence and power.

Mozilo sold hundreds of millions of dollars worth of mortgages over the years personally. The SEC charged him in 2009 with insider trading and securities fraud. He reached a settlement with SEC in 2010. He paid $67.5 million of a fortune estimated as over $600 million.

Wall Street hold ‘em

Posted: 30 November 2012 in Uncategorized
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The series continues with the Queen of Spades: Mary Schapiro.

Mary Schapiro is the current chairwoman of the Securities and Exchange Commission, the main federal agency charged with enforcing the federal securities laws and regulating the securities industry. Previously she was a regulator for Presidents Reagan, George H.W. Bush and Clinton, and was one of the voices calling for deregulation of the securities industry. She powerfully advocated for lessening “the burden of regulation” as the chairperson and CEO of the Financial Industry Regulatory Authority (later called the National Association of Securities Dealers) which is a trade organization of those who do not want to be regulated! As chair of the SEC in a time of rampant financial malfeasance, she has not aggressively pursued individuals, organizations and vested interests with the full force of her office.

Schapiro steps down as chairwoman on 14 December, to be replaced by Elisse Walter.

SEC lawyers have scored some victories. In two cases related to subprime mortgages, they won settlements of $550 million from Goldman Sachs Group (GS) and $67.5 million from Angelo Mozilo, co-founder of Countrywide Financial. Still, the agency was attacked by lawmakers, judges, and consumer groups for not going after individual Wall Street bankers. SEC lawyers didn’t take action against anyone at Lehman Brothers orAmerican International Group (AIG), companies at the epicenter of the credit crisis. Lynn Turner, a former SEC chief accountant, says the agency’s enforcement record signals to Wall Street that the tough talk is just rhetoric. Schapiro “has created a culture where it is better to ask for forgiveness than beg for permission,” Turner says. “And the trouble is, she always forgives them.”