Sense on Cents

Will Congress hit the Wall Street banks with a one-time assessment in order to compensate Madoff investors? Why might that happen? Very simply because SIPC (Securities Investor Protection Corporation) was woefully underfunded given the fact that SIPC member-firms, including all the large Wall Street banks, paid a token $150 (yes, that is not a misprint, a token $150) annual premium from 1996 until April 2009 for SIPC coverage.

Each and every investor in America should be livid at the insurance scam perpetrated by SIPC and its member firms, but especially by the largest firms taking the greatest risks!

I will address this insurance scam in a post later today, but for now I want to highlight an engagement between Rep. Paul Kanjorski (D-PA) and Stephen Harbeck, the head of SIPC that occurred last week during a hearing on securities investor protection reform.

This interaction should have received massive coverage by the mainstream media. Regrettably, but not surprisingly, it did not. Why? If it received the appropriate coverage, it would shine a laser beam on the incestuous nature of the relationship between Wall Street firms and its regulators (SEC and FINRA) and insurer (SIPC).

From the transcript of the hearing last week: (more…)