Mary Schapiro

AIG Has Become A Figurehead Of All That Is Broken In America

The latest observation on our depressing economic reality, behind the glitzy headlines and the 3D TV screens, comes from Bloomberg's Jonathan Weil who rightfully asks "if AIG executives repeatedly claimed the stock was worthless, how do the executives, auditors, regulators, and, ultimately, the government, still have the balls to indicate the company's stock has any intrinsic value, both its publicly traded version and its book equity." Weil also joins the long list of people who wonder, just what the hell is the SEC's function in this day and age, when publicly-traded companies, many of them government backstopped, can disclose anything and everything they desire, even when such disclosure is flawed and purposefully misleading (see Bank of America and the earlier piece on a lying Tim Geithner and the very same AIG) with absolutely no repercussions. It is all really getting just far too depressing for US taxpayers to even be indignant. Maybe that has been the point all along...

In Order To Make The Ponzi Market Keep Going Ever Higher, Barney Frank Tries To Make Shorting Virtually Impossible

As part of the Barney Frank proposed Manager's Amendment, which will accompany HR4173, the "Wall Street Reform and Consumer Protection Act of 2009", are three little-noticed rules that, if adopted, will make shorting stocks if not impossible, then extremely problematic and difficult. It is obvious why these rules would end up in an amendment: the outcry from retail and institutional traders would have been huge had these proposals made the full text of the proper Bill, and into the full view of the Mainstream Media. So why bother with these - simple. As everyone is aware, Ponzi schemes only work when constantly growing, as otherwise they blow up, implode under their own weight, once price discovery is attempted by all. Case in point: when Madoff's securities was unable to find another greater fool in the face of collapsing asset values, the jig was up overnight, and the value of the pyramid went from $50+ billion to $0 instantaneously.

In this manner, Ponzies are like sharks - they need to swim to live: any deviation from the norm threatens their very survival. By comparison, shorting has always been the most traditional way to force price discovery: as idiot money pension funds tend to be long-only, selling only occurs in times when book gains have to be realized, and facilitates a rising market without any natural checks and balances. If this amendment passes, the entire equity market will have become Madoff securities to the dot. It will continue going up, until market values are a reflection of no underlying fundamentals, but simply the latest pension fund long-only dumb terminal willing to throw managed capital into the bonfire of an inevitable future stock market collapse. And, to borrow another page from the Madoff analogy, when the inevitable correction does occur, it would not be 10% or 20%: the entire worth of the Ponzi would be gutted.

Schapiro Forces Perot Insider Trader To Refund $8.6 Million Profits, Still No Announcement On NYB Insider Trading Case

The SEC, which had its Dell-Perot insider trading case handed to them by various blogs, has forced the disgorgement of $8.6 million in profits from the perpetrator Reza Saleh. And while this action is completely insufficient to warrant the continued abuse of taxpayer money by the SEC, and its ongoing worthless existence, we still demand that the SEC immediately initiate an investigation into the blatant insider trading, most likely facilitated by a person at the FDIC, in regard to the New York Community Bancorp taxpayer funded acquisition of recently defunct AmTrust Bank. We will keep reminding the Chairwoman of her grotesque failing as anything but a bureaucrat who managed to milk FINRA for so much more than she is worth ($3.3 million to be precise, and other insane pension benefits), and is currently merely a figurehead, whose sole responsibility is to let the Ken Lewises off the hook with nothing but a handslap.

Freddie 30 Year Fixed At 5.14%, 4 Month High, As 30 Year-1 Year ARM Spread Hits Another Absolute Record

A week ago Zero Hedge discussed the spread between the Freddie 1 Year ARM and the 30 Year fixed, concluding that the recent record spread is indicative that the Fed will do all it can to become the new subprime lender of any resort, even if it means creating exponentially more roll risk, as it seeks to lend money regardless of the probability of ultimate payback. Today Bloomberg points out that the Freddie 30 Year has just hit a 4 month high of 5.14%, a level last seen at the end of August. What is notable is that in less than two weeks the 30 Year Freddie Fixed has jumped by 20 bps. At this rate we will overtake the 2009 high of 5.59% within a month. However, our original observation is that even as the 30 Year Fixed has finally started to move in line with the 10 Year Treasury, which just can't find a floor in the past week, the 30 Year Fixed - 1 Year ARM spread has simply exploded: when we looked at its last it was 60 bps, a week later, it is now at 81 bps. The Fed is now literally throwing money away in the form of Adjustable Rate Mortgages.

Frontrunning: December 31

  • China Central Bank Zhou says 2010 is crucial for 'defeating' crisis (Bloomberg) in the meantime his subordinated are learning the intricacies of Treasury collateralized $19.95/pop reverse repos, in advance of withdrawing trillions in excess liquidity
  • Lawmakers want probe into aid for Fannie and Freddie - we'll spare you the Dan Brown suspense - the answer is the Federal Reserve in the 85 Broad lobby with a money printer
  • FDIC moves to seize slice of bank stock rallies (WSJ) - paging the worthless Mary Schapiro - when will the insider trading in New York Community Bancorp finally be investigated?
  • Speaking of worthless, regulatory-captured windbags, Wall Street waits as SEC fails to bring Madoff-inspired reforms (Bloomberg)
  • The end of Uncle Ben's unlimited piggybank means no more gains for those who benefited from taxpayer generosity to deadbeat homeowners (Bloomberg)
  • Do we need a new reserve currency? (Emirates Business)
  • So much for Wall Street sobering up (Fortune)

2009 Recapitulating Thoughts On HFT From Themis Trading's Joe Saluzzi

Some recapitulating thoughts on High Frequency Trading, in the year in which HFT probably became the primary market dynamic, courtesy of Themis Trading's Joe Saluzzi. "A NYSE study done recently indicates that spreads shrunk and liquidity was increased in large cap names, but in the small to mid-cap names it is just the opposite: liquidity has shrunk and volatility has increased because now you have predatory action." Yet with everyone trading just a few key stock purely on momentum trends, and everything else rising or falling on the beta wave, nobody will care until, again, it is too late.

Will The Last Person Please Burn The Building Down; It Is Time To End The Farce That Is The SEC

The SEC sure has a sense of humor. With everyone screaming for the agency's blood unless it does something to curb rampant and blatantly speculative high frequency trading, as well as to tighten insider trading regulation, what does the Mary Schapiro-lead circus do? Just the opposite. And even as the commission is weeping that its $1 billion budget is woefully inadequate, the agency decides to reduce its own projected revenue in the form of Section 31 fees, to benefit the High Frequency Scalping brigade. The schizophrenic, sociopathic, deranged lunatics have certainly taken over the asylum at 100 F Street, NW Washington. And as if that wasn't enough, the SEC is now slowly pushing to repeal Reg FD in order to make REIT follow-ons a daily occurrence.

Bank Of America's Fraudulent Acquisition Of ML Back In The Congressional Spotlight Tomorrow

Ken Lewis may think everyone has forgotten about him... But we haven't. Tomorrow's hearing before the House Oversight Committee will see the SEC's Robert Khuzami field questions about BofA's "criminal" acquisition of Merrill, which according to Dennis Kucinich represented an "egregious violation of securities laws." Consider it an appetizer ahead of the full blown jury trial before one Judge Jed Rakoff, coming soon to a publicly accessible courtroom near you.

The Longwave Group On Why The Fed Must Be Abolished

It is a well documented fact that a few big American banks have long fostered and enjoyed close relationships with U.S. regulators and agencies such as the Federal Reserve Board and the U.S. Treasury. History is also replete with Goldman Sachs executives attaining government postings such as the Secretary of the Treasury; including Robert Rubin and Hank Paulson of recent decades. These relationships of trust are developed and nurtured over time to the point where advice is sought and information exchanged regarding situations on a strictly confidential basis. It is difficult for Long Wave Analytics to believe, for example, that the Federal Reserve didn’t send up a trial balloon last February musing about the prospect of initiating a quantitative easing program involving new Treasury bond issues. How else could Goldman amass $27 billion (U.S.) in trading profits in the first nine months of the year. A 50 basis point move in yield on a 10-year maturity, for example, translates into a price change of $4.20 per $1,000 bond. On a long position of $1 billion (U.S.) of a 10-year Treasury bond, this means a capital gain of $42 million (U.S.).

Who’s in charge? We believe it to be the big American and European banks because, after all, they are the owners of the U.S. Federal Reserve.

For The SEC's Viewing Pleasure: NYB Stock And Option Chart

As we speculated on Friday, whoever bought those 7,500 calls on inside information ahead of the NYB assumption of massive taxpayer subsidies in the form of the AmTrust's $2 billion "failed bank" consideration via the FDIC, is now much richer. And we demand a full investigation into who and why i) leaked this information and ii) profited from it. With the stock up 9%, any inactivity by Mary Schapiro is equivalent to her spitting in the face of anyone still caring about a free and fair market.

Mary Schapiro Must Immediately Investigate The FDIC's Confidential Information Leak In Another Blatant Insider Trading Case, Then Resign

The degree of insider trading in this market is getting ridiculous. And the strangest thing is those who are executing on blatantly obvious material, non-public insider information, are no longer concerned the least bit about getting caught as they realize that the "mighty" SEC will do nothing against them, courtesy of the example the SEC has set by finding absolutely nobody "responsible" (except, of course, the regulator's own future employers who thus get immunity from prosecution) for the greatest market heist in history in which over $5 trillion has been transferred from the middle class to the Wall Street oligarchy (future providers of paychecks for SEC staffers).

Today's grotesque example of the SEC's futility to act as even a modest deterrent to insider trading activity: New York Community Bancorp (which, just so happens, is a $602 million recipient of TLGP debt), whose stock surged in the final minutes of trading for reasons (then) unknown. As reader QevolveQ pointed out at 5:30 pm, the activity in both the stock and the calls of the company was many standard deviations away from average and raised major red flags. Those questions were quickly put to rest when it became known at 6:33 pm that NYB would in fact receive FDIC subsidies to acquire newly failed AmTrust Bank in a transaction that would be "immediately accretive to earnings."

Is The SEC Intercepting Your Instant Messages?

In the aftermath of Galleon, the SEC is aggressively ramping up its enforcement techniques, and while we all know that the regulators, in "joint venture" with the Justice Department, are likely eavesdropping on every single telephonic conversation originating or terminating in a financial firm, it is likely that Mary Schapiro has finally realized that some time in the 90's a thing called instant messenger became quite popular and that the bulk of traders and analysts converse not so much via phone but by Bloomberg MSG and IM blasts, as well as via all sorts of other discrete electronic communication tools. And this may be precisely what Robert Khuzami is targeting now as the Galleon net continues to expand ever wider to even what were formerly considered untouchable stalwarts of the hedge fund community.

Sen. Kaufman Urges SEC To Work Quickly On Uncovering Possible High Frequency Market Manipulation And Systemic Risk

Sen. Kaufman admirably takes on the windmills again, this time sending a much more sternly worded letter to Mary Schapiro to finally step away from the game of taxpayer funded Solitaire, and instead of waiting for twitters and bloggers to hand her agency cases of insider trading on a silver platter, to finally do something proactive, before her thoroughly discredited agency comprising of what are apparently some of the most inept government workers in existence, is responsible for not only the biggest ponzi blow up (done and done) but for the greatest market collapse courtesy of a few unsupervised Atari consoles.