Consumer protection

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Frontrunning: July 23





  • Here come the gates which we predicted in 2010: SEC Is Set to Approve Money-Fund Rules (WSJ)
  • Dick's cuts 400 jobs as golf now less popular (MW)
  • Kerry arrives in Israel, pushes for peace (Reuters)
  • Pay Penalty Haunts Recession Grads as U.S. Economy Mends (BBG)
  • Appeals Courts Issue Conflicting Rulings on Health-Law Subsidies (WSJ)
  • Rebel Stronghold Donetsk Holds Breath as Shellfire Mounts (BBG)
  • Business executive wins Georgia Republican runoff in U.S. Senate race (Reuters)
  • Five held in China food scandal probe, including head of Shanghai Husi Food (Reuters)
  • Jobs Hold Sway Over Yellen-Carney as Central Banks Splinter (BBG)
 
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Ackman Has 6 Months Left To Come Up With The Devastating-est HLF Presentation Ever





UPDATE: This is now the biggest single-day rise in HLF's history...

Bill Ackman's "most important presentation of his career" is not going so well. The 'Death Blow' expectations Ackman created yesterday (that sent the stock down 13%) have been entirely wiped away as a 2-hour presentation, 100s of slides, and nothing really new sent stocks 16% higher today... It appears time is running out for Mr. Ackman as his massive put position (bleeding value every day that passes) is set to expire in six months... and we suspect Carl Icahn can outlast Ackman's view of market 'irrationality'.

 
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$1 Million A Month - What Ex-NSA Chief Alexander Charges Wall Street For "Advice"





So what’s a Peeping Tom, anti-democratic, Constitution-trampling intelligence crony to do after leaving decades of “public service?” Move into the private sector and collect a fat paycheck from Wall Street, naturally. So what is Mr. Alexander charging for his expertise? He’s looking for $1 million per month. Yes, you read that right. That’s the rate that his firm, IronNet Cybersecurity Inc., pitched to Wall Street’s largest lobbying group the Securities Industry and Financial Markets Association (SIFMA)

 
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Bart Chilton Joins America's Largest Law Firm As Policy Advisor





It seems like it was only yesterday (actually it was early November) when infamous CFTC commissioner, legendary threat to gold manipulators nowhere, and Alexander Godunov impersonator, Bart Chilton made a very dramatic exit stage left. At the time, we asked rhetorically if said dramatic depature was just for show. The rhetorical answer to the rhetorical question: of course it was, confirmed moments ago when Chilton became just the latest "regulator" to take the great revolving door out of a worthless public service Washington office into a just as worthless, but much better paying private-sector Washington office. Presenting the latest employee of DLA Piper, the largest law firm in the US, and possibly the world, by number of partners - Bart Chilton, poet.

 
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The Five-Year Fantasy Is Ending





For five long years, we have pursued the fantasy that we could return to "growth" without having to fix or change anything. The core policy of the fantasy is the consensus of "serious economists," i.e. those accepted into the priesthood of PhD economists protected by academic tenure or state positions: what we suffered in 2009 was not the collapse of leveraged crony-state financialization but a temporary decline of "aggregate demand" and productive capacity. The five-year fantasy that free money would fix all the distortions and systemic problems is drawing to a close. Why can't the fantasy run forever? The two-word answer: diminishing returns. Handing out subprime auto loans works at first because it pulls demand forward: anyone who wants or needs a new car buys one now, rather than put the purchase off a year or two. Eventually the marginal buyers default and demand falls off, and the distortions cause an even greater collapse in demand and auto loan quality.

 
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Bitcoin Community Gangs Up On "Bad Actor" As Mt.Gox Site (And Feed) Disappears





UPDATE: Mt. Gox website and feed is now offline

Much as we are not surprised, given our previous discussion of the end of major Bitcoin exchange Mt. Gox, this evening's release by Coinbase must be the final nail in the final coffin of the Tokyo-based firm...

"The purpose of this document is to summarize a joint statement to the Bitcoin community regarding Mt.Gox. ... As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today. "

And scene...

 
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Volcker Is LOLkered As TruPS CDO Provision Eliminated From Rule To Avoid "Unnecessary Losses"





So much for the strict, evil Volcker Rule which was a "victory for regulators" and its requirement that banks dispose of TruPS CDOs. Recall a month, when it was revealed that various regional banks would need to dispose of their TruPS CDO portfolios, we posted "As First Volcker Rule Victim Emerges, Implications Could "Roil The Market"." Well, the market shall remain unroiled because last night by FDIC decree, the TruPS CDO provision was effectively stripped from the rule. This is what came out of the FDIC last night: "Five federal agencies on Tuesday approved an interim final rule to permit banking entities to retain interests in certain collateralized debt obligations backed primarily by trust preferred securities (TruPS CDOs) from the investment prohibitions of section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, known as the Volcker rule." In other words, the first unintended consequences of the Volcker Rule was just neutralized after the ABA and assorted banks screamed against it.

 
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"Anything Goes And Nothing Matters"





The so-called Volcker Rule for policing banking practices, approved by a huddle of federal regulating agency chiefs last week, is the latest joke that America has played on itself in what is becoming the greatest national self-punking exercise in world history. The Glass Steagall Act of 1933 was about 35 pages long, written in language that was precise, clear, and succinct. It worked for 66 years. The Volcker rule comes in the form of nearly 1,000 pages of incomprehensible legalese written with the “help” of lobbyist-lawyers furnished by the banks themselves. Does this strain your credulity? Well, this is the kind of nation we have become: anything goes and nothing matters. There really is no rule of law, just pretense.

 
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Guest Post: Does the FDA Think You’re Stupid?





Does the FDA think you're too stupid to have access to your own genetic information? It sure seems so. On November 22, 2013, the FDA sent a warning letter to the well-known consumer genomics company 23andMe, ordering it to "immediately discontinue marketing" its only product. For those of you who are not familiar with 23andMe, the company provides a "DNA Spit Kit" and "Personal Genome Service" (PGS) that supposedly reports on 240+ health conditions and traits and helps clients track their ancestral lineage. 23andMe is information, not a medical device. This is really a first amendment issue, and the FDA should not be in the business of regulating freedom of speech and information.

 
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Guest Post: Our Era’s Definitive Dynamic: Diminishing Returns





We all intuitively grasp the meaning of diminishing returns: Either it takes more effort to maintain a project’s payoff, or the payoff declines even though the effort invested remains constant. The key driver of diminishing returns is easy to understand. We naturally continue to do more of what was successful in the past. As the returns decline, we redouble our efforts, confident that what worked in the past will once again be successful if only we invest more labor, energy, and capital. However, the status quo's default diversion of 'money/credit' to support diminishing returns has two costs: the opportunity costs of what else did not get financed because available resources were poured down the rat hole of failing programs, and the largely hidden increase in systemic fragility as productive investments are starved by the diversion of resources to the rat holes of diminishing returns. This dynamic leads to the final phase of doing more of what has failed spectacularly.

 
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Ackman Books Herbalife Losses, Forced To Cover 40% Of Short To Avoid Being "Forced To Cover" Short





It just keeps getting worse and worse for Bill Ackman. A few weeks after the epic humiliation, not to mention even more epic losses, he suffered on his now defunct JCP long position (despite ample warnings by the likes of Zero Hedge who said long ago JCP is merely a melting icecube and fast-track Chapter 11/7 candidate) all those who predicted (such as Zero Hedge back in January) that an epic HLF short squeeze would result in the aftermath of Ackman's Herbalife short announcement leading to Ackman's ultimate capitulation, have been proven correct. Moments ago, in a letter to investors, Bill Ackman just announced that he has covered over 40% of his Herbalife short position, with his forced buy-in explaining the endless move higher in Herbalife stock in recent weeks. The explanation of being forced out of nearly half of his position is amusing: "we minimize the risk of so-called short squeezes or other technical attempts by market manipulators to force us to cover our position." So Ackman is forced out by his Prime Brokers so as not to be forced out by market manipulators? That's an interesting explanation for what is a far simple situation: booking your paper losses.

 

 
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Frontrunning: September 27





  • House GOP banking on Plan C (Politico)
  • Pimco shook hands with the Fed - and made a killing (Reuters)
  • BlackBerry's Torsten Heins has a $55 Million golden parachute (Reuters)
  • JPMorgan Urged to Pay More in Mortgage Deal (NYT)
  • Soros Adviser Turned Lawmaker Sees Crisis by 2020 (BBG)
  • U.N. Members Agree on Syria Disarmament (WSJ)
  • U.N. Says Humans Are 'Extremely Likely' Behind Global Warming (WSJ)
  • The non-falsifiable threats emerge: Shutdown Would Shave Fourth-Quarter U.S. Growth as Much as 1.4% (BBG)
  • Swaps Rules Worry Industry: Coming Regulations Have Market Players Concerned About Possible Disruption (WSJ)
 
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"They Got It Wrong On All Accounts" - Where Is Obamacare Now?





The Obamacare that consumers will finally be able to sign up for next week is a long way from the health plan President Obama first pitched to the nation. As Politico notes, millions of low-income Americans won’t receive coverage. Many workers at small businesses won’t get a choice of insurance plans right away. Large employers won’t need to provide insurance for another year. Far more states than expected won’t run their own insurance marketplaces. And a growing number of workers won’t get to keep their employer-provided coverage. But, apart from that - and all the exemptions - six more days and we will all get to see the shiny new exchanges; which may (or may not) prove Sen. Barraso right when he said "It was bad policy and bad politics. They got it wrong on all accounts."

 
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