Subscribe: RSS Feed | Twitter | Facebook | Email
Home | Contact Us

Wall Street-Washington Incest and Insider Trading

Posted by Larry Doyle on November 13, 2011 9:39 PM |

I have written about the incestuous nature of the relationship between those on Wall Street and their cronies in Washington for the last three years.

The stench of this incest is overpowering but is hopefully now becoming more public.

How uncanny that a few days ago I received the following message from a regular reader asking my opinion on the following:

Larry,

Think back to 2008/2009, with market moving events unfolding due to government action, some times over a weekend.  

I’m particularly recalling the GMAC bailout.   The Fed, Treasury whoever called the shot set certain conditions for this, and it was apparent GMAC would not be able to comply; I think it was its ability acquire a bank and get access to the Fed window.

At any rate it was announced on a Monday in early Jan., 09 that the conditions were dropped, and GMAC got the bailout.    GMAC had these outstanding hybrid notes, par of $25, which were trading at $3 on Friday and $9+ on Monday after the announcement.

Wondering if you have any sense that for at least some occurrences like this there were two sets of people—those who didn’t know it was going down, .99999999999999999%, and a select few who got the word.

Obviously in such cases somebody could have made a killing, and I’m sure if it were the right people, the fact they made a massive bet at a most opportune time would have merited zero scrutiny from FINRA or SEC.    Realizing some of these things were undecided going into the weekend so there could have been no tips.

But anyway, any thoughts on that?  With all that has gone on, it would not surprise me one bit.

How prophetic this reader is. I am not sure if he had an advanced indication of this week’s 60 Minutes but his question is the basis of a segment that takes the incestuous nature of the relationship that is crippling our society to an entirely new level.

My thoughts on this topic are brief but direct.

People without principles will sell their souls for not a lot of money.

While not every trade or trader engaged with sensitive inside information is corrupted, the fact is many are. In fact, an industry unto itself has developed in this space. As CBS News’ 60 Minutes reports in writing, Congress: Trading Stock on Inside Information?,

In the past few years a whole new totally unregulated, $100 million dollar industry has grown up in Washington called political intelligence. It employs former congressmen and former staffers to scour the halls of the Capitol gathering valuable non-public information then selling it to hedge funds and traders on Wall Street who can trade on it.

Baird: Now if you’re a political intel guy. And you get that information. Long before it’s public. Long before somebody wakes up the next morning and reads or watches the television or whatever, you’ve got it. And you can make real– real-time trades before anybody else.

Baird says its taken what would be a criminal enterprise anyplace else in the country and turned it into a profitable business model.

Baird: The town is all about people saying– what do you know that I don’t know. This is the currency of Washington, D.C. And it’s that kind of informational currency that translates into real currency. Maybe it’s over drinks maybe somebody picks up a phone. And says you know just to let you know it’s in the bill. Trades happen. Can’t trace ’em. If you can trace ’em, it’s not illegal. It’s a pretty great system. You feel like an idiot to not take advantage of it.

The fact is those on Wall Street and in Washington engaged in these activities are stealing.

They are stealing from ordinary everyday American investors. While they are stealing not insignificant amounts of money what they are really stealing is the trust, confidence, and integrity upon which our markets and country were built.

As for Congress and their staffs in Washington who engage in this ‘legalized version’ of insider trading, spare us the bulls&^$ as to whether there are laws or not against these specific activities.

Those who appreciate Sense on Cents count these people as not only thieves but also as treasonous cowards.

I write that with no sense of hyperbole. TREASONOUS COWARDS.

I exhort you to watch this 15 minute segment. Regular readers will not be surprised but you will vomit nonetheless.

TREASONOUS COWARDS!!

Call on your Congressman and TELL him to co-sponsor the Stock Act.

Let’s take back our country!!

Larry Doyle

Isn’t it time to  subscribe to all my work via e-mail, an RSS feed, on Twitter or 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.

 

  • Rob Phillips

    “Treason cowards”: Another home run, Larry.

  • coe

    LD – Damning expose…but what would we come to expect from Congress? When they find themselves self-righteously believing they know what is best for the country; when they find themselves holding hearings with titans of industry who make multiples of what their salaries are; when they believe, no, make that expect that the importance of their jobs entitles them to their own piece of the pie…I thought the hubris and disingenuousness of Nancy Pelosi was particularly galling! Throw all of these charlatans on the street – make them actually work for a living…what a pathetic scenario – if only it were a crime!

  • Randy B

    It is all too apparent that members of Congress and now even their staffers feel they are simply above the law… and funny thing that.. THEY are the ones who draft the damn laws!

    None of this is going to get fixed unless and until we get the money out of politics. We all know darn well there is only ONE way to do that.. and that is to disband Congress. There is no other way.

    Do you really think the members of Congress are really all so stupid that they have no idea how to solve our present economic problems, even though at least a handful of thoughtful and intelligent experts (outside of the corrupt DC crew) have pointed the way? NO.. they would jump on it tomorrow IF and only IF they could figure out how to still get RE-ELECTED after taking the actions to fix things.

    They know darn well the American people want things fixed but they do NOT want to experience any more pain. In other words, they know that most of us just want to get well without taking any medicine. They are 100% certain that if they cause us the pain necessary to begin righting the ship, that we will toss them out on their ears at the next election and their lying, cheating and thieving days may be over permanently. That is just too much of a sacrifice for them to even consider.

    Like it or not, that is the reality of things. Frankly, if they thought they could get away with it their response to our whining about their special above the law benefits, etc. would start out something like this:

    “Silence you foolish peasants!” Whatever made you think we would subject ourselves to the laws we made for you and the other swill of society?… If you keep up this whining we shall have to use the powers we granted to ourselves under the Patriot Act (don’t you love how cleverly we worded the name of the act which strips all the real patriots of their rights and freedoms?) and make you disappear as an example to any other members of the rabble outside of DC who might think of objecting to our continual lying, cheating and thieving… Now get back to work while we focus on how best to steal the rest of whatever you own.”

  • LuckyLuke

    If you get big enough, you can’t get down…example…governments…they can rule your life, through having the right to tax you and spend for their own personal pleasure, but, at some point, in this information age, which gives us only a part of the story by the way, the story is about to change..I am a canadian, and I share those feelings with my collegues down south, something has to change, don’t you get tired to see your hard worked for money just waisted by these bozos ?

  • Bill

    I believe it was George Mason who advocated at the founding of the republic a form of term limits. He thought that those in public office should after some reasonable interval be required to return to private life so they would have to live under and obey the laws they had enacted. So, the concept of term limits is not some new creature. You look at this congressional insider trading, wanton tax evasion undertaken with impunity by the likes of Geithner, Daschle, Rangel, and other flouting of the laws by our mandarin political class, and one can only conclude that term limits would go a long way toward solving the country’s problems.

  • David Thetford

    Larry, you’re right: I’m not surprised, but I want to throw up!






Recent Posts


ECONOMIC ALL-STARS


Archives