Frontrunning: September 22

• China local governments may risk insolvency in investment drive (Bloomberg): Editorial alert - apparently this headline was too risky, so Bloomberg promptly changed it to "China Investment Drive May Imperil Local Governments"
• Crudele: What did Paulson know and when did he know it? (Post)
• What the SEC might look like if it did its job (Bloomberg, h/t Kevin)
  
• The government ponzi comes full circle: FDIC may borrow funds from banks (NYT)
• Fed effort to stoke growth may be undermined by "tight" credit (Bloomberg)
• Laffer: Taxes, depression and our current troubles (WSJ)
• Find the difference: why Ponzi finance fails (Market Ticker)
• Dollar down = futures and commodities up (Reuters)
• Will the US$ be an FOMC discussion topic (Big Picture)
• Does China have a lease on America's future? (FX Solutions)
• Hedge funds, historians are winners of recession (Bloomberg)
• McArdle: Why Goldman always wins (Atlantic)
• How the financial crisis reshaped Morgan Stanley (Time)
• GIC makes $1.6 billion from Citi stake sale as halves holdings to below 5% (FT)
• SEC to vigorously sue Bank of America, may add to accusations (Bloomberg)
• Errant policy continues to threaten market stability (Int'l Forecaster)

Comments

[Sardonicus]

AIG already in orbit...LOL

[Bearish Spirits]

So...DXY either breaks decisively below 76 or we have, at best, a slightly up day?  Wonder which option will be chosen.

Interesting...after Dick Bove ups JPM's price target by almost 50%, he ups BAC over 25%.  Wasn't he the one talking a month ago about how bank earnings are going to be weak moving forward?

[Jim_Rockford]

Did you guys notice that in the article @ bullet #3 (SEC/Bloomberg), that Schapiro is named as a defendant in a case brought by Standard Investment Chartered Inc. ?  The case got assigned on Sept. 11th to Judge Jed Rakoff.  I have googled around for more info on this case but have not found anything yet.  Anyone have details?

excerpt:

"

It’s worth noting that Finra is a defendant in three lawsuits dating from Schapiro’s tenure. One of them, by Standard Investment Chartered Inc., names Schapiro as a defendant and seeks to make unredacted versions of certain documents public. Those might wind up embarrassing the woman in charge of the SEC if they show that she misled brokerage firm members about the “special member payments” they got when Finra was formed in 2007.

You probably haven’t heard the last on this one: On Sept. 11, Standard and Finra heard from the court that the case had been assigned to Jed Rakoff. We may not get good regulation from our pathetic securities agency. But you can’t say they don’t put on a good show. "

[Handle with care]

The FDIC borrowing from the banks is particularly disgusting.

A big part of the reason the FDIC is short of funds is that it allowed the banks to not make their required deposit insurance payments for TEN YEARS!

So for the banks now to be allowed to earn interest (ultimately from the tax payers) on money that they should have paid ten years ago is just disgusting.  They should be repaying money PLUS interest from their ten year payment holiday period

[DrPsycho]

RE: FDIC borrowing from the banks instead of from Treasury:

"“Borrowing from healthy banks, instead of the Treasury, has the advantage of keeping this in the family,” said Karen M. Thomas, executive vice president of government relations at the Independent Community Bankers of America, a trade group representing about 5,000 banks."

  hahaha.....in other places "keeping it in the family" is called incest, and considered "unhealthy"..........

Another juicy tidbit from that story:  The loans will be considered assets for the banks...lol....i.e., more taxpayer bailouts, we pay the interest.......lolol.....I'm gonna die laughing pretty soon at these jokes on us taxpayers. hahahaha

"Borrowing from the industry is allowed under an obscure provision of a 1991 law adopted during the savings and loan crisis. The lending banks would receive bonds from the government at an interest rate that would be set by the Treasury secretary and ultimately would be paid by the rest of the industry. The bonds would be listed as an asset on the books of the banks."

[Stevm30]

HILARIOUS statement from Bill Gross (interview on CNBC here: http://www.creditwritedowns.com/2009/09/bill-gross-sell-equities-and-buy...)

"The absence of $2 trillion of purchasing power" (referring to ending QE programs) "will have a perhaps not a significant effect on asset prices and yields but at least a marginal effect."  Gee whiz Bill - marginal effect - you think?

$2 trillion is 2/3rds of the federal government's yearly expenditure...

[Anonymous]

Did I see the name "Laffer" above? How does that fool still get ink? Who the hell is sponsoring him?

[Anonymous]

Did I see the name "Laffer" above? How does that fool still get ink? Who the hell is sponsoring him?