Why the Financial Reform Bill Will Help Rather than Hinder Goldmans
The always insightful Eric Falkenstein:
Blankfein is a crony capitalist, begging for more ‘regulation’ because he knows that a 1300 page bill basically only helps those with connections and extant massive legal infrastructure, and hurts potential competitors who merely have good ideas
posted on 29 April 2010 by skirchner in Economics, Financial Markets, Rule of Law
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Goldman Sachs and Gangster Government
Michael Barone highlights the real lesson from the fraud case brought against Goldman Sachs:
Republicans have been accurately attacking the Dodd bill for authorizing bailouts of big Wall Street firms and giving them unfair advantages over small competitors. They might want to add that it authorizes Gangster Government—the channeling of vast sums from the politically unprotected to the politically connected.
That can boomerang even against the latter. Goldman Sachs employees gave nearly $1 million to the Obama campaign and $4.5 million to Democrats in 2008. That didn’t prevent the Goldman from being shoved under the SEC bus. Gangster Government may look good to those currently in favor, but, as some of Al Capone’s confederates found out, that status is not permanent, and there is always more room under the bus.
Eric Falkenstein asks whether investments banks are committing fraud by selling State of California debt:
I bet all of the major investment banks are facilitating debt issuance by the State of California and its various agencies, counties, and municipalities. I bet also there is a small but spirited set of shorts, trying to make money off of the inevitable bankruptcy. With hindsight it will be obvious, and everyone currently buying California-related debt will develop amnesia and claim they never liked California debt, and were hoodwinked by greedy bankers.
At that point, should all the investment banks be liable? If so, is every bank facilitating California debt issuance committing fraud right now?
posted on 22 April 2010 by skirchner in Economics, Financial Markets, Rule of Law
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Nice Hedge Fund You’ve Got There, Shame if Something Were to Happen to It
Governments may sometimes feel threatened by hedge funds (and properly so), but no one beats the US Justice Department when it comes to bureaucratic intimidation and standover tactics:
The Justice Department has launched an investigation into whether hedge funds might have banded together to drive down the value of the euro, people familiar with the matter say.
In a letter last week, the department has asked hedge funds including SAC Capital Advisors LP, Greenlight Capital Inc., Soros Fund Management LLC and Paulson & Co. to retain trading records and emails relating to the euro, say people who have seen the letter.
The letter was dated Feb. 26, the same day a page-one article in The Wall Street Journal outlined a large bet being made in recent weeks by heavyweight hedge funds against the euro, in moves that are reminiscent of the trading action at the height of the financial crisis like bets against Lehman Brothers and other troubled firms…
The Justice Department’s letter said the antitrust division “has opened an investigation into agreements among various hedge funds that trade euro contracts,” including contracts to trade euros in the “cash or the derivatives market,” a person familiar with the matter says.
The letter requested that the funds “preserve all documents” and electronic communications relating to agreements to trade the euro or communications about agreements to trade currencies, the person says.
As the article notes, the US authorities have a dismal track record in bringing successful prosecutions in these matters, suggesting that bureaucratic intimidation has become an end in itself.
posted on 04 March 2010 by skirchner in Economics, Financial Markets, Rule of Law
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