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Random Sense on Cents

Posted by Larry Doyle on November 1, 2011 11:02 AM |

The freak storm that ran through New England over the weekend has left millions without power including yours truly. While the power outage has been more than a nuisance, a number of developments on our global economic landscape deserve comment. On that note, I am compelled to address the following:

1. Regarding my recent commentary about Mitt Romney’s view on housing, I hope readers do not think for a second that I have lost my enthusiasm for exposing the massive fraud that occurred within our mortgage finance industry. I am not optimistic that these frauds will be fully exposed and properly adjudicated but my interest in embracing market based solutions does not lessen my desire for truth, transparency, and integrity in exposing what I believe were elements of racketeering in this space. I believe some of the government programs and public policies have been orchestrated to mask the racketeering under the guise of helping homeowners.

What should the government do? Expose the frauds and the fraudsters.

What is a market based solution? As Laurie Goodman of Amherst Securities recently highlighted, Uncle Sam in conjunction with the banks should promote what amounts to a sales-lease back program in which homeowners rent their homes from institutions holding their mortgage with a shared appreciation component incorporated into the transaction.

2. When is a deal not a deal? The European debt deal announced last week is farcical. With limited details and less money behind this deal, it is now being exposed as falling far short of what market participants and central bankers may have hoped.

Can anybody save the EU? China, perhaps? Don’t hold your breath although the Chinese are certainly gaining real leverage in the process. The IMF? Where are they going to get the money? I think it is a certainty that the EU is going into recession and will serve as a drag on the global economy as a whole.

Why do I think the financial sewage emanating from the EU will ultimately flow to the backdoor of the Federal Reserve? How do we keep a check and balance on Ben Bernanke through this process?

3. Sense on Cents is calling bull$*^# on both the SEC and its ne’er do well self-regulatory organization FINRA for the news that a FINRA office doctored documents prior to sending them to the SEC.

Why do more and more Americans have such limited trust in those regulating and overseeing our markets and financial institutions? Situations such as these in which little to no transparency and accountability are on display and in which individuals and specifics are not highlighted.

What was doctored? Who doctored it? Why was it doctored? Who benefitted from the doctoring? Why isn’t there an independent external investigator employed to expose this situation? How do we know that there have not been more documents doctored?

4. In regard to the bankruptcy filing by MF Global, we learn today that funds from customer accounts may have been moved to shore up the firm. Customer funds are sacrosanct and can never be touched in this manner! Will we learn what really happened here? If customer funds were moved, will those involved be held accountable? Does Jon Corzine, the CEO of MF Global and former governor of New Jersey, have legal liability?

What a world.

Questions, comments, constructive criticisms encouraged and appreciated.

Navigate accordingly.

Larry Doyle

Isn’t it time to subscribe to all my work via e-mail, an RSS feed, on Twitteror Facebook? Do your friends, family, and colleagues a favor and get them to do the same. Thanks!!

I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.

  • Ed


    I agree with your comment that action should be taken to “Expose the frauds and fraudsters.”

    But that will not go far enough. To simply expose someone who has stolen millions of dollars is totally insufficient. They will take their millions and go abroad for a few years and then come back for their grandchildren’s Bar Mitzvah or confirmation. Crooks have no sense of shame for their theft. They consider themselves “above” the common masses they stole from.

    Why not sentence them based on the extent of their fraud – one million dollars equals one year in a bad state prison with no time off for “good behavior.” $20 million = 20 years. No charge for a self-administered End of Life Pill.

  • Huckleberry

    On Point #2:

    Still on my exposure hunt. Am trying to determine possible blowback from Greece, et al. Found the following from Bloomberg. Now my head hurts:

    “U.S. banks increased sales of insurance against credit losses to holders of Greek, Portuguese, Irish, Spanish and Italian debt in the first half of 2011, boosting the risk of payouts in the event of defaults.

    Guarantees provided by U.S. lenders on government, bank and corporate debt in those countries rose by $80.7 billion to $518 billion, according to the Bank for International Settlements. Almost all of those are credit-default swaps, said two people familiar with the numbers, accounting for two-thirds of the total related to the five nations, BIS data show.”

    This is a six-fold increase – what the hell is going on here?!?

    On the surface, this looks like a replay of AIG – with the mortgage bonds replaced by nation-states.

    Are these bankers idiots? I don’t think so. So: are these banks just collecting premiums – with no intention of paying when the house burns down?


  • fred

    The problem is the Fed.

    1. They failed to enforce banking regulation and properly supervise the banks and bankers.

    2. They try to micromanage markets/economy with neg real interest rates.

    If there was widespread mtg fraud, where was the Fed? The Fed should fire all their economists and hire forensic accountants to enforce banking regulation and properly supervise bank lending. Even if banks are allowed to report on a mark to model basis, capital ratios and reserves should be managed mark to market.

    The Fed should not be responsible for setting interest rates markets should. The only time the Fed should get involved with interest rates is when market rates drop to 0, otherwise Fed funds should be pegged to mkt rates and the Fed should provide liquidity via asset swaps w/o expanding their balance sheet.

  • Bill

    “What should the government do? Expose the frauds and the fraudsters.” The government is full of the frauds and fraudsters, like Barney Fraud and all those dems who plundered Fannie and Freddie, Chris Dodd, the list is endless. I don’t see any prospect of that, unless the Govt. investigates itself.

    I read that guy Corzine got $12 million in severance from MF. What the #&*!? In any place with a rule of law that guy would have to pony from his Goldman millions and make good on the customer loss. But I predict nothing will be done to the guy because of his political cover. Like Don Corleone in the Godfather.

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