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HomeMary Schapiro Owes America Some Answers
Posted by Larry Doyle on December 21st, 2009 8:47 AM |
Who is willing to ask the hard questions? Who is willing to call people out? Who is willing to fly in the face of the Wall Street-Washington incest? Regrettably, very few journalists and media outlets have the character and courage to truly serve the American public interest. Who is not lacking in the courage and character department? Bloomberg’s Susan Antilla.
Time and again, Antilla takes on Wall Street and the financial regulators. In my opinion, her finest piece of work comes out this morning. Susan Antilla writes, Hot Seat for SEC Chief Schapiro Won’t Cool Off:
The chairman of the Securities and Exchange Commission has a past that is fast coming back to haunt her.
Mary Schapiro’s story has none of the lurid details of philandering celebrity golfers or hedge fund titans who get sued by ex-wives for concealing marital money.
Her history and two pending lawsuits, though, raise an important question for investors: Is the woman who oversees the U.S. financial markets someone willing to fudge the facts to get things done?
If what I heard in federal Judge Jed Rakoff’s New York courtroom last week is even close to accurate, I’d say that it’s time for some serious conversations as to whether Schapiro is the person we should entrust to the top SEC job.
I totally concur. Mary Schapiro, the current SEC Chair and formerly the head of FINRA, possesses a wealth of information on a number of topics for which America would like greater detail. What are some of these topics? (more…)
No Quarter Radio’s Sense on Cents with Larry Doyle Welcomes Erin Arvedlund, Sunday Night at 8pm ET
Posted by Larry Doyle on December 19th, 2009 4:15 PM |
UPDATE: This episode of NQR’s Sense on Cents with Larry Doyle has concluded. You can listen to a recording of the episode in its entirety by clicking the play button on the audio player provided below. Once the audio begins, you can advance or rewind to any portion of the episode by clicking at any point along the play bar.
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“That idiot woman from Barron’s.”
Who is speaking? What ‘idiot woman?’
This quote is by none other than Bernie Madoff. His assessment is of Erin Arvedlund after she had written the first comprehensive review of Madoff’s business in 2001. Ms. Arvedlund seriously questioned the integrity of Madoff’s enterprise. Madoff later admitted he was shocked that the SEC did not follow up on the points raised by Ms. Arvedlund.
Our markets and media are filled with analysts and pundits who are overly qualified in reviewing events after the fact. Where are those who have the insights, intellect, and courage to pursue the story before it breaks? Erin Arvedlund is one of the few who possess those admirable traits.
Sense on Cents looks to pursue truth, transparency, and integrity in our markets and our economy. On that note, I am thrilled as No Quarter Radio’s Sense on Cents with Larry Doyle Welcomes Erin Arvedlund.
Ms. Arvedlund’s top selling book, Too Good To Be True, provides the most comprehensive review of the entire Madoff fiasco. Let’s learn more about Erin Arvedlund:
Erin Arvedlund began her career as a reporter at Dow Jones newswires in 1993. In 1996, she moved to Moscow to write about business and emerging markets for The Moscow Times. In 1998, she joined TheStreet.com, one of the first real-time news and stock market web sites. She then moved to Barron’s magazine to cover options, mutual funds and hedge funds from 2000-2003. From late 2003 to 2005 Arvedlund reported on business and politics in the former Soviet Union for The New York Times. She also has Wall Street experience, having worked in the hedge fund industry at two separate firms, Vision Opportunity Capital Management and Sanford C. Bernstein. Arvedlund has a B.A. from Tufts University in International Relations and studied abroad for a semester at Leningrad State University in St. Petersburg. She has also freelanced extensively for print and online magazines such as Fortune, Outside, The Economist Intelligence Unit, Portfolio.com, and Slate.com. She is married and divides her time between New York and Philadelphia.
The Madoff investigation is a long way from being over. What about Bernie’s family’s involvement? What about the feeder funds? What about Bernie’s relationships with the regulators, including current SEC Chair Mary Schapiro? What hasn’t been revealed by regulators? What has not been fully exposed of Bernie’s early years in the business?
Please join me Sunday evening from 8-9pm ET as we explore these questions and so much more with Erin Arvedlund. As a preview, here’s a short video clip of Ms. Arvedlund discussing her book. – LD
December 19, 2009: Month to Date Market Review
Posted by Larry Doyle on December 19th, 2009 11:26 AM |
Our economic landscape is anything but normal. The fits and starts, ups and downs, hills and valleys remain challenging and all assertions to the contrary are not about to change anytime soon. Those in Washington continue to try to put a happy face on our economy. Those on Wall Street revel in the easy money and try to project a populist image. But those on Main Street are paying the price in terms of navigating the real challenges of our economy. On that note, welcome to Sense on Cents. Let’s move on to our weekly review.
With most eyes fixated on problems here at home, the real issues in the global markets occurred in the Euro-zone. Is Greece close to a sovereign default? Would that create a chain reaction? The Euro continued to give ground this week and our greenback benefited in the process. Given the negative correlation between our greenback and many sectors of the equity, commodity, and bond markets, volatility remains a concern and risks remain high as we go into year end.
We continued to see a semblance of this phenomena play out again this week. Will it continue? Watch the U.S. Dollar Index and expect that it will continue to be negatively correlated with the markets.
Let’s navigate. Prior to reviewing the month to date market returns, I’ll address economic data released this week. (more…)
Tiger Woods and The Greatest Risk
Posted by Larry Doyle on December 18th, 2009 3:07 PM |
What do the dalliances and sexploits of Tiger Woods have to do with Sense on Cents? Everything.
Uh-oh. Are you thinking, “Don’t tell me, LD, that you are going to turn a staid and fairly conservative business blog into a place for social stargazing and barroom gossip.”
No, don’t worry about that. While there are some obvious personal lessons involved in the Tiger Woods saga, there is a very real business lesson as well. I initially addressed this lesson when writing about Bear Stearns a year ago. My piece, “The Greatest Risk,” addresses reputation. I wrote then:
For those who have read my pieces, you have heard me stress how important it is to understand risk. On Wall Street,as in any business, there are all types of risk. For example, there is market risk, credit risk, interest rate risk, prepayment risk, and counter-party risk amongst others. For anybody involved in the markets, all of these risks are facts of everyday life, but they pale in the face of what many feel is the greatest risk of all, and that is “in never taking risk.” For without risk, there is no reward.
However, in my opinion, there is a greater risk that lurks everyday and for my money is massively mispriced, and that is reputation risk. When I say mispriced, I mean there is no premium high enough to jeopardize one’s personal and professional reputation.
Again, there are many who would say Tiger Woods, or any individual for that matter, is entitled to his personal privacy and should not be publicly judged by his private actions. I would respond that Tiger Woods is not strictly a private person, but he is also very much a public brand, and effectively an industry unto himself. The power of the Tiger brand was enormous. As with any brand, the marquee value is maintained only by continually burnishing and polishing the image.
Say what you want, but the Tiger image is forever changed and with it the Tiger brand. Can Tiger redeem himself? Of course. The power of redemption is a remarkable force. I hope for his personal sake that he addresses his issues and does redeem himself. That said, the Tiger brand is forever changed.
The lesson for all of us, and especially those starting out in the professional world, is one I address with every individual whom I mentor. As I highlight in my Career Planning link here at Sense on Cents:
While I am fully supportive of taking prudent risks in a career, the one risk for which there is no premium high enough is the risk of a tarnished reputation. With word of mouth being the most powerful form of advertisement, you never want to run the risk that your product is viewed as impaired by a questionable reputation.
Tiger Woods’ personal transgressions put his professional brand at this greatest risk. He has lost more than he would have ever imagined.
Tiger is perhaps the greatest golfer to ever play the game. As in any business, though, the risk of jeopardizing one’s reputation goes far beyond any golf course, trading floor, or boardroom.
That is the Tiger lesson for all of us.
LD
Will Cantwell-McCain Reinstate Glass-Steagall?
Posted by Larry Doyle on December 18th, 2009 11:18 AM |
Might we turn the clock back in an attempt to make our way forward? How so?
Pressure is certainly building in America to curtail, if not derail, the excessive risks embedded in our largest banks. How may these risks be unwound? Reinstating the Glass-Steagall Act, which separated commercial and investment banking activities. If this Act were to be reinstated, that would be the end of the mega-banks (Citi, JP Morgan, Bank of America, Wells Fargo) as we know them.
Who has been harping on this? Former Fed Chair Paul Volcker. Although Wall Street and Washington turn a deaf ear to Volcker, America listens to him intently.
In September, I wrote “Volcker Launches Bombshell on Wall Street and Washington” which highlighted Volcker’s call to reinstate Glass-Steagall. That story resonated far and wide. Now we learn from the American Banker that Senators Maria Cantwell (D-WA) and John McCain (R-AZ) have introduced legislation which would once again separate commercial and investment banking activities. (more…)
Will Ignorance Defense Continue to Screw Auction-Rate Securities Investors?
Posted by Larry Doyle on December 18th, 2009 8:03 AM |
Auction-rate securities investors remain at a decided disadvantage when it comes to pursuing legal claims. Misrepresentation by those distributing the auction-rate securities does not seem sufficient to warrant a claim, let alone retribution. The fact that investors are having difficulties bringing suit against Wall Street firms which distributed auction-rate securities should be further reason for investors to be cautious in engaging brokers and financial planners. Why? The fact that selected cases of auction-rate securities distribution have been designated as having occurred in a fraudulent fashion would seem to have established a significant precedent. The fact that the precedent has not been established is mind boggling.
$149 BILLION in auction-rate securities held by thousands of investors remain frozen. Where’s the justice?
Bloomberg provides a recent review of these developments in writing, Auction-Rate Investors Get Redo After Loss of First Fraud Suits:
Auction-rate securities investors who sued banks including Citigroup Inc. and UBS AG to recoup billions of dollars in losses went 0 for 5 as their first cases were thrown out. Now some are gearing up for a rematch over part of the $149 billion in securities that remain outstanding. (more…)
Foreclosures Cast Increasingly Long ‘Shadow Inventory’
Posted by Larry Doyle on December 17th, 2009 5:52 PM |
I continue to reiterate that as long as mortgage delinquencies increase, we will experience a subsequent increase in foreclosures, in turn excessive housing supply, and a weak housing market.
This dynamic is not about to change anytime soon. We saw evidence of this today as one of the largest homebuilders, Hovnanian Enterprises, reported extremely weak earnings. The Wall Street Journal covers the Hovnanian story specifically and housing in general in this video clip.
Specifically on the foreclosure front, Bloomberg reports Shadow Inventory of U.S. Homes Climbs:
The number of homes that may be in the pipeline for a sale because of foreclosure and delinquency climbed about 55 percent to 1.7 million at the end of September, according to estimates by First American CoreLogic.
The “shadow inventory” rose from 1.1 million a year earlier. Such properties include those taken over by banks and mortgage companies and those where the loans are at least 90 days delinquent, the Santa Ana, California-based research firm said in a report today.
How long might it take for the excess housing supply and foreclosure problem to abate? Bloomberg offers:
the pending supply reveals there is still quite a bit of inventory that will impact the housing market for the next few years,” First American said.
Batten down the hatches.
LD
How Big Was Mary Schapiro’s Lie?
Posted by Larry Doyle on December 17th, 2009 2:55 PM |
Will our chief financial regulators be allowed to operate above the law?
That plea of immunity is the foundation of the FINRA defense in the complaint filed against it by Standard Investment Chartered. Recall that the very core of the Standard Investment Chartered vs. FINRA lawsuit is the premise that current SEC Chair Mary Schapiro and her then FINRA colleagues lied verbally and in a proxy statement about the details of a payment to FINRA member firms. FINRA paid 35k per firm and indicated that figure was the maximum allowed by the IRS.
I provided extensive details on this case in writing on October 22nd, NASDAQ Sale: Why Would Mary Schapiro and FINRA Execs Lie?
High five to Bloomberg’s Susan Antilla for doggedly pursuing this case. Susan reports on the hearing held yesterday on this case in United States Court in New York. Susan writes, Broker’s Lawyer Says FINRA Understated Offer to Firms,
A lawyer for securities firms suing the Financial Industry Regulatory Authority said sealed documents show its executives understated how much they could pay brokers in the 2007 merger that created the oversight body.
NASD, which became Finra after merging with the New York Stock Exchange’s oversight unit, could pay “something” from $70,000 to $111,000, Jonathan Cuneo, the lawyer for Benchmark Financial Services Inc. and Standard Investment Chartered Inc., said yesterday at a hearing, citing confidential Internal Revenue Service documents. NASD told brokerages in 2006 that IRS policy limited the payments to $35,000. (more…)
CFO/Duke University Survey Paints Different Picture Than Federal Reserve
Posted by Larry Doyle on December 17th, 2009 9:24 AM |
A recently released survey of CFOs paints a decidedly different picture on the jobs front than that portrayed in yesterday’s Federal Reserve release. Let’s compare, contrast, and navigate the most important trail on our economic landscape.
The Federal Reserve’s statement yesterday:
Information received since the Federal Open Market Committee met in November suggests that economic activity has continued to pick up and that the deterioration in the labor market is abating. The housing sector has shown some signs of improvement over recent months. Household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment, though at a slower pace, and remain reluctant to add to payrolls;
In every report that I have read and heard, this statement has been portrayed as one in which the employment situation is improving. I am an optimist by nature, but one has to spin that statement very hard to view it as a sanguine outlook for jobs. (more…)
