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HomeJanuary 17, 2010: Week in Review
Posted by Larry Doyle on January 17th, 2010 2:05 PM |
While many analysts and pundits would like to highlight a variety of Fed induced or government supported programs as evidence of an improving economy, the only real story worthy of attention this week is JP Morgan’s earnings release from Friday morning. What was in that release? JP Morgan’s massive exposure to the mortgage and housing market is a huge drag on earnings. The outlook for these mortgages, primarily prime Jumbo and adjustable rate product, remains challenging.
The market can gyrate all it wants, but without progress on housing and employment the real economy continues to huff and puff along while climbing a very steep slope.
Welcome to our Sense on Cents Week in Review where I provide a streamlined recap of the major economic news and the month-to-date market moves. Let’s navigate. (more…)
Who Is David Slaine?
Posted by Larry Doyle on January 17th, 2010 7:45 AM |
Editor’s Note: Please see LD’s update to this fascinating story just published on Tuesday evening February 2nd at 10:02 PM.
With friends like these, who needs enemies?
I have written previously on the importance of strong relationships while working on Wall Street. While the Wall Street numbers and dollars are voluminous, ultimately Wall Street is a ‘people business.’
I have also written previously how ‘information is everything’ on Wall Street. Traders work tirelessly to determine what is moving or what will move the market. Utilizing this information, millions of dollars can be made or lost in the course of a very short time span.
Combining these two critically important factors, it should be no surprise how some will use – but then abuse – these two primary cornerstones of our financial industry.
Folllowing this line of reasoning, are you ever shocked when a guy who cheats on his wife also then cheats on his girlfriend? Where am I going with this? Let’s enter the world of David Slaine, the government’s mole in the insider trading scandal currently rocking Wall Street. (more…)
More Bank Fraud
Posted by Larry Doyle on January 16th, 2010 12:53 PM |
The bailing out of our largest financial institutions was a violation of moral hazard of the greatest magnitude. With that violation well in place, America is now facing violations of other moral hazards. What do I mean?
The mortgage modification program is a joke because the banks holding the mortgages have no incentive in modifying them. Why? Because, to a very large extent, if the bank modifies the primary mortgage then it has to write off the value of a second lien, if in fact a second lien exists. Given the amount of equity borrowers took out of their homes, there are a lot of second liens outstanding.
How are the banks handling these second liens? Violating a moral hazard and committing fraud in the process. A report from CNBC, Big Banks Accused of Short Sale Fraud, highlights this reality. The report outlines: (more…)
Helene Horan Giving Students A Shot at Life
Posted by Larry Doyle on January 15th, 2010 4:22 PM |
During 2009, I wrote a few commentaries about a fabulous educational program in Stamford, CT called Domus. That program is truly saving lives. I felt so strongly about Domus and its head, Mike Duggan, I inducted him into the Sense on Cents Hall of Fame.
I am firmly convinced that our country’s greatest long term issue is education. Urban graduation rates are running at 50% and those figures are likely heavily manipulated. What are the ramifications of this reality? A future in which our nation has increasing numbers of unskilled workers and concomitant increasing social costs.
In the face of that reality, I am heartened by those like Mike Duggan who have dedicated their lives to helping others get educated so they can have ‘a shot at life.’
Today I came across another story of heartfelt dedication in the person of Helene Horan, an educational counselor in Worcester, MA. (more…)
Mary Schapiro and Mark McGwire
Posted by Larry Doyle on January 15th, 2010 10:22 AM |
“I’m not here to talk about the past.”
Mark McGwire, the steroid abusing home run hitting phoney, may have issued a massive mea culpa this week, but his career will forever be defined by his March 2005 Congressional obfuscation.
In my strong opinion, Mary Schapiro is the financial industry’s equivalent of Mark McGwire. How so? In McGwire’s 2005 testimony, he very much wanted to position himself as a positive influence for future developments regarding the use and abuse of steroids in baseball. Fast forward to January 14, 2010 and we witness Mary Schapiro very much trying to assume the same positive position in her testimony and answers to the Financial Crisis Inquiry Commission. In Schapiro’s opening statement, Testimony Concerning the Financial Crisis, she states as much:
To assist the Commission in its efforts, my testimony will outline many of the lessons we have learned in our role as a securities and market regulator, how we are working to address them, and where additional efforts are needed. I look forward to working with the FCIC to identify the many causes of this crisis.
Oh, how kind. (more…)
Stimulus Dollars at Work
Posted by Larry Doyle on January 14th, 2010 2:07 PM |
Cartoon by Lisa Benson
Let’s Introduce the Financial Crisis Inquiry Commission to FINRA
Posted by Larry Doyle on January 14th, 2010 11:10 AM |
This morning the Financial Crisis Inquiry Commission is questioning FDIC Head Sheila Bair, SEC Chair Mary Schapiro, Attorney General Eric Holder, and Assistant Attorney General Lanny Breuer. We continue to hear from Bair, Schapiro, Holder, and Breuer about what changes are and will be occurring in the financial regulatory future more than we hear about what occurred in the past. A few questions about the regulatory past have not truly drilled down and they’ve been easily parried by Schapiro, primarily, but also by Bair and Holder.
The most egregious shortcoming in this morning’s questioning, though, is the fact that I have yet to hear anybody on the Commission question Ms. Schapiro about her role and responsibilities at FINRA, the Wall Street self-regulatory organization.
Schapiro continually references what is currently going on at the SEC. Current activities and future developments of the SEC are not the charge of this Commission. (more…)
Can Mary Schapiro be in Two Places at Once?
Posted by Larry Doyle on January 14th, 2010 9:24 AM |
Mary Schapiro is going to be very busy today. How so?
Her presence will very much be a factor in two venues which are holding public hearings. What venues? What hearings? What will the public learn from and about Ms. Schapiro today?
Most eyes will be on Washington where Ms. Schapiro, the current SEC Chair, will be a witness in the second day of hearings of the Financial Crisis Inquiry Commission. The Commission is charged with unearthing the truth in the factors that led to our economic crisis. Should we expect any grand mea culpas from Ms. Schapiro in front of the Commission? I think not.
Ms. Schapiro and her former FINRA colleagues have proven to be artful dodgers when it comes to skirting the tough questions. Avoiding tough questions is not difficult when the questions themselves are softballs offered by her incestuous partners in Washington. When did we first witness this reality? A year ago tomorrow. (more…)
Pray for Haiti
Posted by Larry Doyle on January 13th, 2010 3:35 PM |
In the midst of our economic trials and tribulations, let’s not lose sight of the fact that there are people around the world suffering tremendously. Certainly, no country is suffering more right now than the poverty-stricken island nation of Haiti.
As the people of Haiti search for loved ones and Haitian families here in America pray for their loved ones back home, let us join with them.
Let’s pause and stop thinking of financial crises, market movements, and the like. Pray for the people of Haiti and be thankful for our blessings.
LD
MA Senate Race = Healthcare Referendum = Obama Referendum
Posted by Larry Doyle on January 15th, 2010 1:02 PM |
Growing up in Massachusetts, there were (and still are) only a few topics that truly matter: politics, sports, politics, family, church, and politics. These topics are industries unto themselves and they are deeply intertwined. Other topics hardly register.
Against this backdrop, the MA Senate race between Attorney General Martha Coakley (D) and State Senator Scott Brown (R) has captured the nation’s attention. To be perfectly frank, I gave this race no attention until a week ago as I believed Coakley would win easily. Why? Massachusetts has three times as many Democrats as Republicans. It is the bluest of the blue states. Remember, Massachusetts was the only state to vote for George McGovern against Richard Nixon in 1972. (McGovern lost his home state of South Dakota)
This election has electrified the nation given the growing public rage against the Washington establishment. (more…)
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