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How Much Debt Does the S&P 500 Have?
About 25 years ago I worked for a few months with a team of deep
thinkers who were trying to convert Capital Leases into Operating Leases
for tax and accounting purposes. The objective was to get the most
optimal treatment; (1) tax deductible amortization of the asset and (2)
keep it off the balance sheet so as to hide the true debt level and
therefore improve balance sheet ratios. There were strict rules that
were supposed to avoid this. But is was a goldmine idea if it could be
done. This was early derivative days. Make something look different than
what it actually was. I thought it was a dumb idea, so I quit and went
to sell junk bonds at Drexel. Turns out the folks involved figured it
out and made a bundle selling it. I am still glad I was not involved.
Now, a quarter century later, the regulators are catching up to this. It
is possible that changes will be made. If they do, it will have very
significant implications. The Economist has an article that sums things up pretty well. Here is the link, some sections of the report:
This new rule, proposed on August 17th by the two regulators (IASB and FASB), has shocked companies everywhere.
The
change will make a lot of firms look wobblier: a survey by
PricewaterhouseCoopers, an accounting firm, found that it would add
about 58% to the average company’s interest-bearing debt.
Many
companies are close to their maximum debt limits, and the new rules
could push them over the edge. Small wonder they are howling.
Other
companies will see their apparent return on capital plunge. Many firms
will see their debt-to-equity ratio rise and their ability to borrow
fall.
You can look at each company's BS and estimate what the impact of the
new rules will be. The article suggests that airlines and retailers will
be hard hit. The list of companies with Operating Leases is endless. I
would imagine that most of the S&P 500 will be impacted one way or
the other. I did look for macro information on total outstanding
operating leases and did not find a source. I think we are talking a
trillion or so. Does anyone have a source for the big picture?
Watch for a big fight over this issue. Look for GE to be the biggest
opponent to any changes. I think they have the most to lose in this.
It makes me laugh/cry to see that it took them 25 years to come to the conclusion that lease accounting was being abused.
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what an incredible thread. thanks bruce, cd, mitch.
Great bunch of posts on this topic. So now we know that the Titanic really has hit an iceberg and really is sinking. My point is that when you are on the Titanic, you get into the life boats.
So...what life boats are available to us to survive the killing cold waters that are upon us. It does not matter what others think or do. What matters is how and where each of us jumps ship.
Reading back on 5,000 years of human history I see that governments have ALWAYS!!!! been made and maintained by and for the moneyed class. The people with money and power will always design and game the system to their advantage. Thorstein Vebline's Theory of the Leisure (kept) Class laid this all out in detail over 100 years ago. As far as I can see the only thing that has changed over time is the scoope of the destruction created by those in the top 5 - 10% of the population who, over time, always put their own personal short term interests over the long term viability of the whole culture.
The poor always pay the most for everything and the rich the least. All you have to do is live in a poor neighborhood for a while to see the truth of this.
Just a point. I have no quarrel with the person who becomes wealthy in a business that employs people and creates goods and services that are of benefit to people.
I expect that we will face at least 10 years of extreme uncertainty. The problem as I see it is that we have an economic system that, by design, employs fewer and fewer people, while we humans keep on creating more of ourselves. Human wages are treated as an expense. And the goal is always to decrease expenses either by eliminating the expense (layoffs) or substituting a cheaper product (technology). Notice that executive pay is NOT considered an expense. It isn't even pay but "compensation" for their "contribution", as though no one else in the company makes a contribution. Every dollar of investment increases GDP with fewer and fewer jobs.
In the past, when a business expanded, it needed more people. Now business easily expands with fewer people working. Until we get an economic system that can actually and WILLINGLY employ more people as the population increases we are in deep shit.
This problem is not even being talked about that I can see. Until it is the economy can only continue on the down slide. I expect that it will take at least 20 years to even begin to make the changes we need to create an economic system that deals with the realities of a planet with 6 billion + people who need to work to be able to eat daily.
JC Bider
Pigs flying is one way to describe it; here's another: Gartley Bear.
Chart: SPX
http://www.screencast.com/t/MWUzMTUyYjI
All folks who think this FASB proposal a good idea should write in to the FASB in support of the proposal! Don't just blog here, do something concrete! I'm sure there are staffers who will need the supporting letters.
Another factor worth mentioning is US corporate pension deficits keep widening. Print away!!!!!!!!!!!!!
This could tank the DOW to sub 2000
A company in the UK called connought cnt on the LSE issued a profits warning in June stating some lost revenue because of some spending cuts from the UK government, The shares promptly dropped from £3.50 to about £1.00 Looking at the balance sheet the debt levels was high but the business looked good and the valuation at £1.00 looked good value so I bought some. After a few weeks the company reported that the debt levels was much higher than reported and its in breach of it banking covenents and now the shares are about 13p and its expected to go bust, Not good for me with this trade but it should give a good guide of things to come with exploding debt problems,
I have been watching the yields on US Treasuries and for a countrys deficit spending $trn year on year getting loans for these rates looks like the smart money is positioned for one hell of a crash, Could this be the reason?
Yoyo yoyo yo yo. I'm the mighty microsoft. I got 23 billion in cash when the downturn hit. Suck it bitches. I'm cash rich.
Goes to market and borrows 3.5 billion just before release of Windows 7.
Brags about windows being hottest selling product ever.
Goes to market and borrows almost another billion this year.
Makes ya wonder doesn't it.
This says a lot about the nature of operating lease accounting. Excellent article, Bruce, and I'm not trying to cast aspersions on your work at Drexel.
@Mitchman
Thanks for the informative comments. The level of financial fakery is UFB.
+ 1 Rocky, Bruce and above commentators!
I too read through the replies and am very impressed.
I know little of accounting minutiae, but just enough to have an idea of the frauds that can be covered up.
So much coming together so fast... When do we hit critical mass?
Let me give you an example of how the game is really played: You have a commercial airline that orders 30 planes from Boeing. For ordering 30 planes they get a discount off the sticker price of say 20%. However, when they sell these planes to a lessor, the airline arranges for an appraiser to say that even though the airline paid sticker minus 20%, the planes are actually worth say, sticker plus 20% say because the delivery position dates or the excess cash flow from the route or some other justification. The airline then sells the planes to the lessors at a gain which it takes into income over the life of the lease thus improving the airline's reported earnings per share.
Meanwhile since the lessor only puts up 20% of the cost of the planes, the remaining 80% of the appraised cost is raised in the public bond markets in the form of Enhanced Equipment Trust Certificates. (EETC's; all the airlines have them outstanding. You can look up where they trade on any Bloomberg screen). But the EETCs are tranched so that the A-1 EETC gets the first say, 10% of liquidation proceeds, the A-2 tranche gets the next 15%, etc. So because of these priorities, the rating agencies rate the EETC's at least three notches higher than the unsecured credit rating of the airline itself!
As if that were not enough, the rating agencies are provided with a set of appraisals that actually appraise the planes at values higher than the appraisal that was used in selling the planes to the lessor. So that higher credit rating is based on a valuation that has been inflated not once, but twice. And this debt is actually on no one's balance sheet. And investors buy this paper and think they are getting good security in an asset.
So that's where the real estate appraisers got their ground school...;>) Thanks for the explanation..... You sound like just the person to explain the true logic behind the airline mega mergers like the KLM, Air France...and ... the American, Iberia and British Airways...and....Continental/United. As they don't appear to be exchanging bodily fluids, what is the real benefit behind these deals? I'm sure Boeing isn't going to give any further significant discounts to an order whether it's 300 or 400 aircraft... as the economies of scale would have reached their max based on the price of production, not the size of the purchase, IMHO
Mitchman, there it is. What a great and squalid example! So, a playah gets his pals to rate his stuff, leverage up, make things so complicated (so that a merebearing (!!) cannot understand), and pull off other voodoo ALL for the effect of making some asset worth more by making it non-transparent.
I have been edging out of the markets since 1997. But, what I have seen since 2007 has REALLY opened my eyes. I am ever heading into the direction of Keeping It Simple. I only invest now in gold and our family owned bearing business in Peru.
Gold for my kid (and any she might have). Guns to defend it if TSHTF. What do I know will happen? Jack squat. I can see all the manipulation around me, and I feel the cognitive dissonance that our CogDis explains so well.
So these guys want to play these slimy games? Count me out. I just want to be left alone .gov. Banksters? Same as they always have been.
Thanks again, Mitchman, for a splendid example of what's wrong even in the "free markets".
Never going to happen...that is like the govt including SS, Medicare, Fannie and Freddie on the balance sheets...just ain't gonna happen.
Fabulous article, thanks to Bruce for reporting. The subtle micro-changes in the economic outlook are mounting up. A more macro view is emerging at ZH over the last year. In the beginning there were deeply esoteric articles on the minutiae of the markets, whereas, now we get great stuff like this article which form a larger picture that is more intellectually accessible to the general public. That may explain some of the change in readership over the last months. I, for one, am very grateful for the greater view now being presented.
It's all Bruce's fault. When he showed up, the place went all to hell and became understandable and accessible. Oh the humanity. :>)
I keep hearing on the news media that corporate America is "hoarding cash", implying that corporations are selfishly saving instead of doing their patriotic duty of hiring despite a difficult and uncertain environment, without mentioning that corporate America is also heavily indebted on the opposite side of the balance sheet. I probably read somewhat about that "opposite side" here on Zero Hedge. Or perhaps not; I don't recall for sure.
Supposing for a moment that Obama, like his "hero" FDR, decides to impose an Excess Profits Tax, thereby confiscating America's corporate cash savings, we will be in very deep doo doo! If history repeats itself, as it is prone to do, millions of businesses, large and small alike, will go belly up, and many more millions of Americans will find themselves jobless and living on the streets.
Thanks for an insightful article!
Tha illusion of corporate cash on the sidelines as explained by John Hussman...
http://www.hussmanfunds.com:80/wmc/wmc100809.htm
Cash on hand and profits have next to nothing to do with each other, especially in large corporations.
They will just shift more of their revenue offshore, along with whatever production they have left here.
We are at the end game for our high corporate tax (and thieving, cheating meganationals enabled by the government) and I predict when the "tax the profits" really gets going that we are going to watch a lot of "American" (named) companies go bye-bye.
Don't feel too bad though, the executives will still live great lives and you will still be able to buy their products at Walmart.
You need to extend the concept. Add leverage in the entire system. what percent of the total market value is represented by leverage/debt.
ZH had the graph one time. what is the market value of the whole system if 50% of the value isn't based on real money.
That my friends is the definition of Ponzi finance (as per minsky).
Fantastic thread guys...great comments.
Could it be the lease tax avoidence initiative represented the real seeds of derivative domination. To exploit the true weakness of the IRS, the inability to deal with complexity. Does unregulated really mean unactionable to the IRS?
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All the accounting types look around and wonder, if the financials are not representative how do you effectively manage risk? Are there two sets of books? The tax advantage ledger and the real aggregate ledger. Or is it you don't tally the true position. How do you then prepare in case of a lost ruling from the IRS? It this a kind of balance sheet leverage risk.
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In a macro sense, can we see the fundemental issue with tax. That is, complexity is really an uncollected tax, paid as wasted overhead, either by vehicle or code.
Mark Beck
MB, forgive me if I am not commenting properly on your post, but all corporates keep two sets of books: the accounting books and the tax books. The deferred tax account accounts for the difference between the tax books and the accounting books. One look at the size of the deferred tax account on GE's consolidated financial statements can give you an idea of how great these differences can be. Again, my apologies if I am off target in my comment.
Obviously the reference to "books" is just a historical idea in this day of corporate computer tax programming and data bases, both commercial and custom. The financials are just a distilled version of the data base access to established accounts. So essentially the lease or off balance sheet handling of accounts is a snap shot (for lack of a better term) of the accounts for release. And as we have talked about on ZH, for multinational corporations the report strategy, which could be automated through the accounting system, can use off balance sheet SIVs to skew results before and after reporting, to present the corporation in a the best possible light.
The point I was trying to target was providing management with an effect true picture of where the corporation stands and exposure to IRS risks. For these complex reporting systems management must be vigilent in understanding the risks. Probably better stated as, risks and their relative leverage, as compared to capital, or cash flow, which ever is most critical.
Mark Beck
Having worked for a multinational many years ago, you could not believe the charges back and forth for different tax jurisdictions, different year-ends.
Head office charges were constantly being shifted around to collapse taxable income.
Minimization of real-time taxable income; Just for fun; determine convergence through Monte Carlo techniques.
Mitchman and Kayman.
It just occured to me that I perhaps described accountants in a bad light in my original comment. I apologize for the wording. The name "types" was not meant to be derogatory, I really feel kinship to accountants, this was my focus before finance.
Mark Beck
An excellent commentary Bruce. I'm not sure why operating leases have been underneath the radar screen for so many years. I entered the business in 1984 at Salomon and we were taught from Day 1 to always looked at operating leases (e.g. calculate a fixed charge coverage ratio, not just pre-tax interest coverage; do credit analysis utilzing ratio definitions from S&P -- using capitalized operating leases in the debt / cap ratio -- Debt + 8x rent / total capitalization plus 8x rent). Over time, it just seemed to lose importance.
As you noted, the airline and retail sector will be particularly hard hit by this change. To their credit, the people who cover / invest in the airlines have historically focused on the impact of operating leases (using EBITDAR and capitalizing aircraft rental expense (7x) when it comes to credit and valuation). This is primarily due to the fact that operating leases dwarf on-balance sheet debt since it's more economic for airlines to lease than buy because the industry rarely pays any tax. However, the people who follow retail in general seem to ignore the financial impact of operating leases. I rarely see any analysts who calculate EBITDAR and use it in their valuation and credit analysis. I remember asking a buyside colleague who covered retail and consumer why she didn't incorporate the impact of off-balance sheet leases into her models and found her answer to be lacking - all of the retailers use operating leases so the impact is not material when comparing companies. I was dumbfounded by this comment, but not surprised given the general lack of interest in off-balance sheet leverage. I'm not sure why it takes a change in accounting regulations in order for people to get religion. The debt was there all the time.
what a lousy sense of taste! She is damn sexy!
http://covert2.wordpress.com
Thank you Bruce and you folks who posted as well. Thank you one and all for an excellent thread. I am frusrated J6P, small one man business, having stepped aside or early retired.
I know little of high finance and come here to learn more and look for signs of an end to this madness.
I could raise funds via the sale of equipment but am holding back thinking all REAL things that are useful will be worth much more after the dollar falls.
Basically am waiting for the crash to end.
And getting right impatient with the uncertainty in the future. My neighbors no longer believe me and shake their heads when they see me in the garden. Nuts. How much longer?
The end-game is nigh, though you may not recognise it when "it" gets here.
According to the charts, the SPX should rally well into the next three weeks or so, with TV talk of the "miraculous market," coming from the spinners in the bizmedia. To their limited perspective, they may not even understand that what they are witnessing is the slow death of a once thriving market.
For instance, we have seen in the medical field a very common phenomenon that occurs when people are literally on their last legs. The man who was incoherent for months suddenly recognises his family members and says he's hungry. They are shocked and amazed, convinced that now Grandpa will be back at home soon doing the sudoku puzzle in his armchair, just like the old days. He eats a giant plate of lasagna- his favourite. He chats a while, then goes to bed. You know the rest of the story.
It is the same as we will witness over the next three weeks on the SPX. Do not confuse this new-found vibrance with the dance of life, for it is the just opposite. Haynes will fawn over it and Bartiromo, ironically, will take on a sharp air of scepticism.
But you want a date. Okay, then...
"The end" is coming as the declining wedge is filled in the chart until about the twentieth of September 2010, give or take ten (SPX) trading days.
You expect a giant drop-off in equities, though, as the HFT bandits keep pumping their arrogant fists in the air, banged up on Monsters and Red Bull Colas? Nah, it just won't happen that way.
The real money knows that what I have said is true, so they will turn their machines off one at a time, for every hour, until there is nothing left but vapours in the tank that they have been priming for years. (If anyone wants to hire a Ph.D. mathematician with experience in fleecing America, now is the time...) As it becomes apparent that the volume has dried up, finding bids is going to be a problem, especially as mutual fund redemptions are bleeding any support right out of the market. Funds of all types will be forced to liquidate, though gradually.
In other words, don't expect the Big Bust out of this. Instead, expect a slow unwinding of untenable positions in the equity markets. A "Big Rollover," would better describe the action of the market coming into the fall.
Until then, expect a resurgence in stocks, championed high and mighty by the Shanghai Index. The chart there is making a giant wedging slope that will have its third and fatal touch toward the middle of September. After that, all bets are off for US equities. In other words, it will be over with for the retail stock marketeers, whether the SPX follows my "gradual" prescription or it does not.
Meanwhile, back at the ranch, as the Lone Ranger was disguised as a Chinese solar stock, Tonto...
Yes, meanwhile, as the third leg is moving up, stay long Euros and Pounds. Get long EURJPY, EURCHF and (to a more conservative extent...) the EURUSD and EURGBP pairs.
Get short the CHFJPY pair (it's gonna be brutal...). Be careful about shorting the USDJPY and the USDCHF pairs as they are at the culminus of massive long-term moves. But, after late September, stay long USD against anything with a pulse. (Sorry to burst your bubble about the "death of the Dollar" thing but it's not gonna happen...)
There, my chips are on the table.
:D
Orly
You've engaged in logical thought before. I can tell.
Excellent commentary.
Thank you.
Bruce
Have you seen evidence that companies are not paying on these leases but are still in possession of the equipment while banks and other companies carry them on their books at 100% of face value?
In my little corner, I would have expected half my competitors to be gone by now with leasing costs strangling them to death. Instead, I have seen pricing that doesn't seen to account for depreciation or the cost of the lease(s). I paid cash and waited patiently for my payday and it's not showing a hint. In fact there is less equipment on the liquidators lists in my industry than there was in 2005.
Public companies have a lot of operating leases. That is news?
There is a standard footnote in GAAP financial statements that discloses future operating lease payments. Just discount the payments to calculate the present value of the obligation.
And Lease Adjusted Debt/EBITDAR is a pretty common financial ratio.
It is also no secret that most Retailers are inherently levered because they tend to lease most of their stores. Which is probably one reason the LBO ‘tards love them. They are all about levering equity investments as much as possible and hoping one works occasionally…
not sure what i think of the article but the picture is priceless.
regulatory capture guarantees no change.
what will the outcome of the war be? will America win or surrender? why have not the we nuked the sharia countries yet? is this what George Washington or Ben Franklin had in mind? why is this and only this war filled with one sided only tolerance?
http://covert2.wordpress.com
I like your photo better than Covert's Leader........Joubert would probably concur on that fine point also.
Why are you repeating obfuscation?
no matter how much you believe it is or seems to be, it's much more.
http://covert2.wordpress.com
Leasing has caused distortions in municipal debt markets too. Lease-revenue securities allow municipalities to "lease" funding from the markets for projects placed as collateral. Banking intermediaries process the payments for a fee and those payments come from municipal operating budgets.....avoiding the need for municipal debt decisions from those pesky voters and disclosures to State regulatory boards.
The infamous City of Bell, CA had one of these for $ 35 million on a patch of raw land. Of course, it is now defaulted.
Nice Job Bruce
I referred to you here
http://globaleconomicanalysis.blogspot.com/2010/08/lease-accounting-and-...
it is highly likely some corporations are "raising cash" now, just to be safe, while they still can. That is one plausible explanation for at least a part of the massive corporate debt issuance as of late.
On the other hand, since when has there been any meaningful changes in accounting rules that were not discarded, ignored, or put on the back-burner for years or decades?
Regardless, we have yet another solid reason for stating that "high" corporate cash levels are nothing but a mirage.
Mish
Mish.......don't read your blog or know you either but follwed the link just to see, I guess.
Noticed the prominent endorsements for 3 Republicans......nothing against Republicans or Democrats for that matter, other than all work for GS since as far as I can see all look and talk and walk and vote the same way in the end.
What I do object to is the repetitive and deliberate drone of mind numbing, shallow rhetoric, ie. Lets clean house, America needs principaled change, Job crisis, and "I'm running to to take back our future"........
"I'm running to take back our future"..........what the fuck is that supposed to mean!?!
BJ Lawson, "I'm running to take back our future." You have to be fucking kidding, right???
And Lawson's initials are just a coincidence........and then the standard subliminal mindploy of hijacking an iconic and emotive photo, in this instance; Dorothea Lange's Migrant Mother .......what an insult to the Depression's real pea pickers.......
What does the lily white Lawson have in common with a pea picker besides nothing?
I get it! I finally get it, Mish!!.......Lawson is really Kent Clark in disguise!!!
How pathetic is that, Republican and Democrat.
Guess what asshole?.......I'm runninig to take back my own future.
Politics is the refuge for sociopathalogical liars, Republicans and Democrats.....
I think you're asserting that you don't read Mish's blog because you think it's a "Republican" (or "political") blog that endorses candidates.
IMHO, that's not an accurate summary.
Mish explicitly claims to *not* be an economist, but is a serious financial analyst with a lot of detailed information on a very well-organized blog that he updates regularly (e.g., more than once a day). Its analysis is very strong and original, and ranks high on my regular reading.
It's true Mish has at times shifted to political statements (e.g., based on economic policy implications). He calls himself a Libertarian, and rails against unions and runaway state spending. However, these are not emotional stands as much as they reflect the simple math and proportion for why California, Illinois, etc., are in crisis.
For example, mortgage recasts are an entirely foreseeable problem, and proper math and understanding of proportion permits one to know (with high confidence) what's about to happen, even though no one in the broader media is discussing it. Mish's blog is outstanding for topics like that. Further, he has novel insight and strong explanations regarding the meanings and questions inside very technical topics, like his regular breakdown of BLS statistics. Again, outstanding work, very approachable (even for the layman) and very difficult to find anywhere else. Finally, his analysis is novel (it is clear he thinks these things through, with rationalization and explanation, and is not merely parroting the topic-of-the-day).
Finally, Mish's Fed Uncertainty Principle (from 2008) was absolutely genius, timeless, and merits its own award. I'm not kidding when I assert it merits a Nobel Prize, although I'm not sure why anyone would want that political trinket anymore.
It's still amazing to me that people see that cash figure and don't ask the question, "Hey, I wonder why they're stockpiling all that cash?" Further, that many who do ask that question, accept the "uncertainty in the markets" answer. As if markets ever achieve certainty.
Aaaah, but now we have _unusual_ uncertainty, innit?
(I'm just joshing! Great point; +1. +1 the entire thread, whilst I'm at it. (And I'll have that levered & leased up to +1,000,000 before the day is out as long as I can avoid those pesky Standards Boards kids for just a little longer.))
Interesting about the period - “about 25 years ago”. Using Flow of Funds data for Nonfarm Nonfinancial Corporate Business, debt/equity peaked in 1989 based on “historical cost” equity figures, and in 1992 using “market value” equity. The two ratios trended down until 2004 and 2006, respectively, when they started rising. Four to five years from the time you cited to the late 80s early 90s sounds about right for widespread adoption. And here I’ve been puzzling over the Z.1 numbers, wondering what changed. Silly me.
While the "market value" ratio is still below its peak, they’re both up substantially from their 1945 levels:
1945 Peak Current
Debt/Mkt value equity 37% 91% 71%
Debt/Hist cost equity 23% 55% 57%
Incidentally, while derivatives work for the big boys, I suspect a lot of smaller outfits still use side letters to keep things off the balance sheet.
'Interesting about the period - “about 25 years ago”. '
Yup... around the era of cleaning up the S&L debacle with increased usage of derivatives.
The era of the beginning of "creative accounting."
The next phase in the junk bond revolution.
And the introduction of Citigroup's (then Citicorp, I believe) SIV, or structured investment vehicle.
And AIG used plenty of side letters as well....
Just to bring this story to a full circle. Way back when this started, when I was working with the quants, accountants and lawyers to figure a way to achieve the desired lease/debt treatment, I was working for.......Citicorp.
Surprised? I hope not.
bk
Thanks for quantifying my suspicions. "Debt" because it is deductible and dividends are at discretion has incduced a huge folly.
Bruce, the biggest failing we as honest and caring humans have is that we don't (wish to) have the capacity of the psychopathic personality. In other words, because we don't want to be a thief (well maybe not a large one) we don't think like a thief. And while we "know" there are thieves out there, we still approach the world on a daily basis assuming the thieves are only 2 or 3 % of the population.
And you would be correct to think so. OK, maybe 5%. But where we really go off the tracks is in assuming the regulators are at least trying to do their job. This is where we are raped and pillaged.
There is no reason for the regulators to be as incompetent and incapable as they consistently are unless it's intended to be this way. It's that simple. And there are hundreds of ways for the powers that be to place roadblock after roadblock in front of the regulators while still making it look like they aren't doing so. Why do you think the recent finreg bill was over 2,000 pages long?
The entire concept of regulators is that they are there simply to keep the honest people coming back to the dice table and the thieves coming to the same table to take advantage of the honest people. The regulators are there to keep selected competition out of "the game" as well as to look the other way when "da playas" are at the table. No more, no less.
Thus if the regulators are just now "discovering" something 25 years later, it's clear that "da playas" have a new game in town and they need to fleece the last of the honest money one more time and then make sure their enemies......er....irritating mosquitoes are caught and locked up for playing a game that's being retired soon for the next best thing.
Pardon my cynical slip for showing.