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End Of Quarter Primary Dealer Asset Window Dressing Games Continue
It is time for the SEC to slap another token wrist. Now the the "regulator" has made it official that the punishment for fraud is roughly 3% of a firm's annual bonus pool for all godlike corporations, and millions of dollars, bars and jailtime for everyone else, it is time to tickle, pardon, we mean tackle, that other major fraud: Repo 105-type end of quarter window dressing, which we now know has been practiced not only by Lehman but by Bank of America. Because according to the just released primary dealer holdings data by the New York Fed, the end of quarter window dressing continues across all PD asset classes to this day. As the chart below shows, the week following the EOQ asset balance hit a total of $270 billion, which was a $15 drop from the week prior, the subsequent week has surged by $19 billion, and is now back to $289.5 billion. This is a two week swing only matched by... the prior quarter window dressing farce, when the roundtrip amount was $81 billion.
The chart below highlights the EOQ total assets held by PDs as disclosed by the FRBNY:
Since December 2008, the average asset reduction going into the End of Quarter week is $23 billion, and the subsequent asset increase on the other side of the quarter, is $28 billion, for a round trip asset change of over $50 billion each quarter end. So let's go SEC: please fine all the PDs $250,000 each, make them take a behavioural adjustment course, have them sign a piece of paper promising never to do anything naughty again, and allow us to get on with watching American Idol, and ignoring that each day total US debt increases by $10 billion.
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might as well reduce social security to pay for it (per the IMF).
Pay for what ?
the SEC fine, what's 3% of the NYFed's bonus pool?
I'm stunned. Who would have guessed that the suck-the-stooge into common shares game would continue?
If your big enough,do what you want no matter what the outcome and pay 3%.Very nice.What shall we destroy today,who cares as long as we make loads of wonga and only pay 3%.
Ahh, GS turned it's HFT machines on quick wash and dry for a day, saw the results and OK'd the settlement based on a complicated formula of a percentage of the days' profits + 5 select do-nothing-touch-nothing positions for the SEC staff and 50000 July 145 Call options for the attorneys. After today, net cash will increase 33% , Bonus pool by 4% and it will be seen as a less than 100 million dollar winning day in the quarter end results but more than 50 million. All in just another day with the vampire squid.
Think of all the congressional insiders who bought calls too. It really was a winning day for at least a few thousand people and a dire warning to 100s of millions.
I agree that this is ridiculous but I have a question: If the PD's have $6 trillion in assets, why even bother with $81 billion? It's not even a rounding error.
OK, but what if those 81 billion can be attributed to window dressing activities of one or two PD only...
If so, then the question is why they do this?
Or, what should not be seen at the end of a quarter in which PD?
What would be the consequence if they were not doing this?
dup.
end of the day and I'm happy tyler is still posting. when I didnt immediately see any stories during that last bizarre 30 minutes of fed coordination - BP well cure, GS settlement, finreg salvation, i thot someone in a van picked up TD. TD do you have security?
reviewing the general media tonight, its unbelievable what they are telling the public. obama said at his press conference that the new fin reg will mean we will never have another fin. crisis again and the american taxpayer wont have to pay for any more LEHs.
tonight we can have a small idea of what its like to live in venzuela
The taxpayer will never again be on the hook to bail out TBTF.
Right.
Yaba Daba Do!
--- Fred, your Friend
Glad someone pointed out the calculus that large, well-connected corporations factor in when deciding whether or not to commit fraud or endanger the public. I'm referring to GS and BP as the two prime examples. For GS the cost risk has now been demonstrated to be minimal. The risk to reputation, in a roguish financial world, is actually inversely correlated to the risk of being charged. For BP it is clear that the money they saved by being the worst offender of offshore drilling safety violations of any oil major was clearly a case of money saved is money earned. And as I've repeatedly said, Exxon's Valdez oil claims were reduced by The Supreme Court in a 2007 decision after tying up the claims for nearly 2 decades.
Bullet proof. Get out of jail free. Big well-connected corporations can take ever larger calculated risks with both public safety (BP, Massey) and public treasure (GS, AIG etc...)
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