"Our Children and Grandchildren are not merely statistics towards which we can be indifferent" JFK

Wednesday, June 30, 2010

Senate says too bad for the unemployed and votes no to extending benefits

Senate says too bad for the unemployed and votes no to extending benefits as they prepare for their "independence" holiday. It is very clear that the unemployed do not have the lobbying muscle of Wall Street, Oil Companies, Banks, Insurance Companies.......

Arthur Delaney
Huffington Post

The Senate rejected Wednesday -- for the fourth time -- a bill that would have reauthorized extended benefits for the long-term unemployed, by a vote of 58 to 38. Democrats will not make another effort to break the Republican filibuster before adjourning for the July 4 recess.

By the time lawmakers return to Washington, more than 2 million people who've been out of work for longer than six months will have missed checks they would have received if they'd been laid off closer to the beginning of the recession.

Only two Republicans, Sens. Olympia Snowe and Susan Collins of Maine, crossed the aisle to support the measure. That gave Democrats 59 of the 60 votes they needed to break the GOP filibuster, but without the late Sen. Robert Byrd (D-W.Va.), Nebraska Democrat Ben Nelson's nay vote was enough to kill the bill.

(The final tally shows only 58 yea votes due to arcane rules of Senate procedure, which require Senate Majority Leader Harry Reid (D-Nev.) to vote against the bill in order to allow for another vote on it in the future.)

"We will vote on this measure again once there is a replacement named for the late Senator Byrd," Reid said in a statement after the vote. "In the meantime, I sincerely hope that Republicans will finally listen to the millions of unemployed Americans who need this assistance to support their families in these tough times. These Americans and millions more demand that Republicans stop filibustering support for unemployed workers."

Already, more than 1.2 million people out of work for longer than six months have missed checks since federally-funded extended benefits lapsed at the beginning of June.

"Senators had a chance to put election year posturing aside and one too few rose to that challenge," said Judy Conti, a lobbyist for the National Employment Law Project. "It's a sad night, especially for the over one million workers and their families who will have little cause to celebrate this holiday weekend. It is a disgrace and an absolute slap in the face to basic human decency."
I'm Senantor BenNelson of Nebraska and I voted
against extending unemployment benefits
as there is nothing in it for me..

I am Mitch Mcconnell from the great state of Kentucky.
I forgot why I voted against extending unemployment benefits.
Give me a break, I have been camped in D.C. since 1985.

I am Senator Scott Brown and I voted no
simply for my personal power play strategies. I have
some empathy for the unemployed however D.C. is
like Survivor and look at how much attention I am
receiving as a junior Senator!

House of "Wall Street Representatives" passes the 3.2 Beer version of Financial Reform

By Andy Sullivan and Kevin Drawbaugh
WASHINGTON, June 30 (Reuters) - The U.S. House of Representatives on Wednesday approved a landmark overhaul of financial regulations but the Senate put off action until mid-July, delaying a final victory for President Barack Obama.

Still, the 237 to 192 vote in the House marked a win for Obama and his fellow Democrats, who have made the most sweeping rewrite of Wall Street rules since the 1930s a top priority in the wake of the 2007-2009 financial crisis.

"That's why were are here today, to make sure that never happens again," House Speaker Nancy Pelosi said. "We will pass the toughest set of Wall Street reforms in generations."

Analysts say Obama is all but certain to get the measure on his desk eventually, but Democrats' hopes of sending a bill to him to sign into law by the July 4 Independence Day holiday were dashed.

The death of Democratic Senator Robert Byrd and cold feet among Republican allies has complicated efforts to round up the votes needed in the Senate. A week-long break following the July 4 Independence Day holiday means the Senate won't act until the week of July 12, at the earliest.

The bill would impose tighter regulations on financial firms and reduce their profits. It would boost consumer protections, force banks to reduce risky trading and investing activities and set up a new government process for liquidating troubled financial firms.

With congressional elections approaching in November, Democrats have ridden a wave of public disgust at an industry that has awarded itself fat paydays while the rest of the country struggles with high unemployment.

Wall Street and Republicans have tried to delay the bill or lessen its reach, but the measure has actually gotten tougher during its year-long journey through Congress.

Republicans say the bill would hurt the economy by burdening businesses with a thicket of new regulations. They also point out that it ducks the question of how to handle troubled mortgage finance giants Fannie Mae and Freddie Mac, which Democrats plan to tackle next year.

Fannie Mae and Freddie Mac, which own or guarantee half of all U.S. mortgages, have received a total of about $145 billion in taxpayer bailouts since being seized by the government in September 2008. Their regulator has said he does not know how much more taxpayer support they will need.

"All this bill before us does is perpetuate the same dumb regulation that got us into this financial pickle in the first place," said Republican Representative Jeb Hensarling.

Democrats have seized the opportunity to link their political foes with an unpopular industry. Obama on Wednesday accused Republicans of being out of touch with the American people for opposing reforms, and others echoed his line of attack on the House floor.

"Republicans have sided with big Wall Street banks at every opportunity," said Democratic Representative Luis Guitierrez. "If it helps Wall Street banks, they favor it, but if it helps Main Street and regular Americans, they won't vote for it." Link to Pretend Financial Reform

Barney Frank, Chris Dodd
and Nancy Pelosi Version

Scott Brown and John Boehner Version

Coffee With Lobbyists

WASHINGTON — There are no Secret Service agents posted next to the barista and no presidential seal on the ceiling, but the Caribou Coffee across the street from the White House has become a favorite meeting spot to conduct Obama administration business.
Here at the Caribou on Pennsylvania Avenue, and a few other nearby coffee shops, White House officials have met hundreds of times over the last 18 months with prominent K Street lobbyists — members of the same industry that President Obama has derided for what he calls its “outsized influence” in the capital.

On the agenda over espressos and lattes, according to more than a dozen lobbyists and political operatives who have taken part in the sessions, have been front-burner issues like Wall Street regulation, health care rules, federal stimulus money, energy policy and climate control — and their impact on the lobbyists’ corporate clients.

But because the discussions are not taking place at 1600 Pennsylvania Avenue, they are not subject to disclosure on the visitors’ log that the White House releases as part of its pledge to be the “most transparent presidential administration in history.”

The off-site meetings, lobbyists say, reveal a disconnect between the Obama administration’s public rhetoric — with Mr. Obama himself frequently thrashing big industries’ “battalions” of lobbyists as enemies of reform — and the administration’s continuing, private dealings with them.

Rich Gold, a prominent Democratic lobbyist who has taken part in a number of meetings at Caribou Coffee, said that White House staff members “want to follow the president’s guidance of reducing the influence of special interests, and yet they have to do their job and have the best information available to them to make decisions.”

White House officials said there was nothing improper about the off-site meetings.

“The Obama administration has taken unprecedented steps to increase the openness and transparency of the White House,” said Dan Pfeiffer, director of communications. “We expect that all White House employees adhere to their obligations under our very stringent ethics rules regardless of who they are meeting with or where they meet.” Coffee and a lobbyist link

Grandpa: of course there was nothing improper about the off-site meetings. They merely met off-site as Caribou's coffee is way better than the "office coffee".

Citizens for Responsibility and Ethics Calls for House Investigation into Obama Staffers’ Use of Personal Email, Meetings with Lobbyists

CREW Calls for House Investigation into Obama Staffers’ Use of Personal Email, Meetings with Lobbyists

ABC News’ Karen Travers reports:

On Monday good-government group Citizens for Responsibility and Ethics in Washington (CREW) asked a House committee to look into whether the Obama White House violated federal laws regarding electronic records by using private email accounts to communicate with lobbyists and meeting with lobbyists outside the White House.

CREW wrote a letter to the House Committee on Oversight and Government Reform asking it to investigate and hold hearings to determine any violations of the Presidential Records Act (PRA) and Federal Records Act (FRA).

The group’s letter is in response to an article in The New York Times on June 25 that said Obama White House officials have met “hundreds of times” over the last 18 months with prominent Washington lobbyists.

“But because the discussions are not taking place at 1600 Pennsylvania Avenue, they are not subject to disclosure on the visitors’ log that the White House releases as part of its pledge to be the “most transparent presidential administration in history,” the New York Times reported.

The Times also reported that lobbyists said they “routinely” get emails from White House staff members’ personal accounts, not their White House emails which are subject to public records review.

The White House declined to comment on the CREW letter calling for the investigation.

As a candidate and as president, Obama has been sharply critical of lobbyists and their influence in the political process. He pledged to institute greater transparency and to close the revolving lobby door in Washington.

“It is outrageous that White House staff are deliberately using personal email accounts – in violation of the law – to hide the fact that they are in touch with lobbyists,” CREW Executive Director Melanie Sloan said in a paper statement. “This is what all the administration’s anti-lobbyist rhetoric gets you – less transparency. Rather than being open and clear about who is influencing White House policy, the White House is trying to hide who it’s really talking to. Even worse, the public is being suckered with lofty rhetoric about the evils of the same lobbyists White House officials are meeting with.”

This isn’t the first time CREW has called the Obama White House out for transparency.

After CREW filed a lawsuit last summer to force the President Obama to share White House visitors logs with the public, the White House on September 4 announced its new disclosure policy to regularly make public most of the names of visitors to the White House.

2010 Transparency

CBO report: U.S. Debt will be pushed to unsustainable levels...Ask your congressional "representative" to read the report

Congressional Budget Office (CBO)

The Long-Term Budget Outlook

Recently, the federal government has been recording the largest budget deficits, as a share of the economy, since the end of World War II. As a result of those deficits, the amount of federal debt held by the public has surged. At the end of 2008, that debt equaled 40 percent of the nation’s annual economic output (as measured by gross domestic product, or GDP), a little above the 40 year average of 36 percent. Since then, large budget deficits have caused debt held by the public to shoot upward; the Congressional Budget Office (CBO) projects that federal debt will reach 62 percent of GDP by the end of this year—the highest percentage since shortly after World War II. The sharp rise in debt stems partly from lower tax revenues and higher federal spending related to the recent severe recession and turmoil in financial markets. However, the growing debt also reflects an imbalance between spending and revenues that predated those economic developments.

As the economy recovers and the policies adopted to counteract the recession and the financial turmoil phase out, budget deficits will probably decline markedly in the next few years. But over the long term, the budget out look is daunting. The retirement of the baby boom generation portends a significant and sustained increase in the share of the population receiving benefits from Social Security, Medicare, and Medicaid. Moreover, per capita spending for health care is likely to continue rising faster than spending per person on other goods and services for many years (although the magnitude of that gap is very uncertain). Without significant changes in government policy, those factors will boost federal outlays sharply relative to GDP in coming decades under any plausible assumptions about future trends in the economy, demographics, and health care costs.

In fact, CBO’s projections understate the severity of the long  term budget problem because they do not incorporate the significant negative effects that accumulating substantial amounts of additional federal debt would have on the economy: CBO Summary Report

Link to complete report for the "left brainers": Complete report

For the sake of our children and grandchildren,
"unsustainable levels" is not a viable option!!!!

Domestic equity funds had estimated outflows of $1.25 billion and $31.49 Billion since 5/5/2010

Washington, DC, June 30, 2010 - Total estimated inflows to long-term mutual funds were $5.55 billion for the week ended Wednesday, June 23, the Investment Company Institute reported today. Flow estimates are derived from data collected covering more than 95 percent of industry assets and are adjusted to represent industry totals.

Equity funds had estimated outflows of $1.27 billion for the week, compared to estimated outflows of $1.80 billion in the previous week. Domestic equity funds had estimated outflows of $1.25 billion, while estimated outflows from foreign equity funds were $17 million.

Total Domestic Equity Flows/Week Ending
-$2.437 Billion 5/5/10
-$7.018 Billion 5/12/10
-$745 Million 5/19/10
-$13.442 Billion 5/26/10
-$1.117 Billion 6/2/10
-$3.660 Billion 6/9/10
-$1.824 Billion 6/16/10
-$1.248 Billion 6/23/10

Since May 5th, 2010, $31.491 BILLION has been withdrawn from Domestic Equity Funds.

Bond funds had estimated inflows of $6.32 billion, compared to estimated inflows of $4.47 billion during the previous week. Taxable bond funds saw estimated inflows of $5.88 billion, while municipal bond funds had estimated inflows of $438 million.

During the prior 5 weeks, $22.726 BILLION has flowed in to bond funds! BOND BUBBLE TO BURST. The 10 year treasury is trading around 2.95%....WARNING...no sharp objects or flammables around the balloon.

Foreclosure Sales Account for 31 Percent of All Residential Sales in First Quarter

IRVINE, Calif. – June 30, 2010 — RealtyTrac® (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its first U.S. Foreclosure Sales Report™, which shows that foreclosure homes accounted for 31 percent of all residential sales in the first quarter of 2010, and that the average sales price of properties that sold while in some stage of foreclosure was nearly 27 percent below the average sales price of properties not in the foreclosure process.

A total of 232,959 U.S. properties in some stage of foreclosure — default, scheduled for auction or bank-owned (REO) — sold to third parties in the first quarter, a decrease of 14 percent from the previous quarter and down 33 percent from the peak during the first quarter of 2009, when sales of foreclosure homes accounted for 37 percent of all residential sales.

“First time homebuyers and investors continue to buy foreclosure properties in large numbers, and at substantial discounts,” said James J. Saccacio, chief executive officer of RealtyTrac. “As lenders have begun repossessing homes at record levels over the first half of 2010, it will be interesting to watch how they will manage the inventory levels of distressed properties on the market in order to prevent more dramatic price deterioration.”

The average sales prices on properties in some stage of foreclosure decreased 23 percent from 2006 to 2009 while the average discounts on foreclosure purchases steadily increased from 21 percent in 2006 to 27 percent in the first quarter of 2010. Discounts on REOs are larger than discounts on pre-foreclosures, although discounts on pre-foreclosures appear to be trending higher as short sales become more common.

Foreclosure sales increase 2,500 percent from 2005 to 2009

More than 1.2 million U.S. properties in some stage of foreclosure sold to third parties in 2009, an increase of 25 percent from 2008 and an increase of nearly 327 percent from 2007. Total foreclosure sales in 2009 were up more than 1,100 percent from 2006 and up more than 2,500 percent from 2005. Foreclosure sales accounted for 29 percent of all sales in 2009, up from 23 percent in 2008 and up from 6 percent in 2007.

The average sales price of properties that sold while in some stage of foreclosure in 2009 was 25 percent below the average sales price of properties not in the foreclosure process. That was up from an average discount of 22 percent in 2008 but down from an average discount of 26 percent in 2007. The average foreclosure discount in 2005 was 35 percent, driven by a nearly 50 percent discount on REOs; however, the discount on pre-foreclosures trended up slightly over the same five-year period, from nearly 12 percent in 2005 to 15 percent in 2008 and 2009.
Link to RealtyTrac® Report

Bill Fleckenstein: The Financials' Earnings "Are Pure Nonsense"

Bill Fleckenstein (one of grandpa's favorites) shoots straight about the equity market

.I don't know how much of those S&P earnings are due to financials: all the financial earnings are pure nonsense, they are making it all up, we don't know where assets are priced necessarily and they are bailed out on the back of the Fed putting rates at zero. So I don't believe the earnings and I don't know what the multiple's going to be. It could easily trade at ten times."

Bill Fleckenstein...grandchild friendly

Scott Brown....just another self-centered spoiled brat Senator and Harry Reid states no vote before the 4th

Brown remains uncommitted after fix to bank bill


WASHINGTON — Despite lawmakers' last-minute change to win his vote, Republican Sen. Scott Brown said Wednesday he needs more time to study a sweeping overhaul of financial regulations before committing his vote.

His stance leaves Democrats short, for now, of the 60 votes they need to overcome procedural hurdles to the bill. Senate Majority Leader Harry Reid said the Senate will have to wait until after the weeklong July 4 congressional break to take up the bill.

The House was expected to vote on a final, combined House-Senate bill, late Wednesday afternoon.

Congressional Democrats have been inching closer to passage of a major rewrite of financial industry regulations, making fixes as they go in hopes of securing the votes of straying Republicans.

On Tuesday, House and Senate negotiators reconvened to remove a $19 billion fee on large banks and hedge funds after Brown threatened to vote against the bill. Brown, of Massachusetts, supported a Senate version of the bill last month but said he objected to the fee, inserted by negotiators last week.

In a statement Wednesday, Brown said he appreciated the removal of the fee, but said he would review the bill over next week's recess.

"I remain committed to putting in place safeguards to prevent another financial meltdown, ensure that consumers are protected, and that this bill is paid for without new taxes," he said.
Link to article

By Alexander Bolton (The Hill)
Senate Democratic leaders as expected on Wednesday postponed a final vote on Wall Street reform. The Wall Street reform conference report will not pass until Congress returns from the July 4 recess during the week of July 12, Democratic leaders said.

Senate Majority Leader Harry Reid (D-Nev.) told reporters Wednesday that Senate procedures would not allow him to bring the bill to the floor on Thursday.

Members of the Senate will be away from Washington on Friday to attend the funeral of Sen. Robert Byrd (D-W.Va.) in Charleston. “I can’t because I can’t procedurally get to it,” Reid said.

Senate Banking Committee Chairman Chris Dodd (D-Conn.) said that after House approval, the soonest the Wall Street reform could pass the Senate would be Saturday or Sunday.

He expressed concern that some Republicans who are likely to vote for it might change their mind if forced to stay in session into the July 4 weekend to get the bill to President Barack Obama’s desk. Dodd said the House would not likely pass the revised Wall Street reform bill until Thursday.

Final approval of the legislation was slowed by GOP opposition to a proposal to pay for its cost with a nearly $19 billion tax on large financial institutions. Dodd and other negotiators have since changed the legislation, paying for it with a plan to end the Troubled Asset Relief Program several months before its scheduled expiration.

It is unclear whether that change will win the votes of Sen. Scott Brown (R-Mass.) and Maine Republicans Susan Collins and Olympia Snowe, who all voted for the Senate's Wall Street reform bill.

Brown issued a non-committal statment on Wednesday. “I appreciate the conference committee revisiting the Wall Street reform bill and removing the $19 billion bank tax," Brown said in the statement. "Over the July recess, I will continue to review this important bill."

Tuesday, June 29, 2010

Barney Frank and Chris Dodd to remove Bank Tax and sell out kids and grandkids again!

By Matt Viser, Globe Staff

WASHINGTON -- Responding to a threat by Scott Brown to vote against the the massive Wall Street overhaul package, US Representative Barney Frank and Senator Christopher J. Dodd were planning to reconvene a conference committee today to revisit the bill and remove a $19 billion tax on big banks that would have paid for increased oversight.

Dodd told reporters that they were planning to scrap a $19 billion bank fee – which has been Brown’s latest objection – and that the 43-member committee would meet as early as this afternoon.

Brown declined to comment on the changes, telling a battery of reporters that he wanted to wait and see what the conference committee decided.

Earlier today, Brown said that he would vote against the Wall Street regulatory overhaul that was adopted by the committee last week, citing the last-minute addition of the $19 billion in bank taxes to pay for the bill. It was a switch in position for Brown, who had previously voted in favor of an earlier version in the Senate.

The Massachusetts Republican sent a letter this morning to the top House and Senate negotiators – Representative Barney Frank, of Newton, and Senator Chris Dodd, of Connecticut – to reiterate his strong opposition to the tax.

It was the second time that Brown has used the leverage of his swing vote in the Senate to influence the bill in ways that were beneficial to the financial industry. He previously had made his continuing support contingent on winning key provisions in the conference committee for State Street Corp. and other banks, allowing them to continuing using a percentage of their capital to invest in Wall Street securities. Link to Barney and Dodd selling out

Brown sought to exempt altogether financial institutions that use banks for limited purposes, such as MassMutual and its insurance business or Fidelity Investments and its investment funds.

He also wanted to let firms invest a limited amount of their top capital in hedge funds and private equity funds. Brown initially called for a 5 percent cap, but negotiators settled on 3 percent. Those changes were backed by Boston-based State Street Corp. and Bank of New York Mellon Corp., which has several thousand Massachusetts employees.


Scott Brown..He Did It! He held finanical reform hostage
so State Street Corp. Mass Mutual and Bank of New York Mellon
got what they wanted. Scott remains commited to his
financial constituents and remains indifferent to
the impact his self centered and self serving
representation will impact grandchildren.
He deems himself pretty and throws temper
tantrums like he is still in junior high.

Let's simply bend over for Scott Brown and tap into
TARP funds to pay the $19 billion and simply send the
bill to grandchildren as it will be years before they
know what hit them....

Financial Reform-Not until 2022 for Goldman Sachs and Citigroup

Affording the Wall Street, TARP recipient pillaging thugs 12 years to comply is deemed "toughest financial reforms since the 1930s". Our grandchildren will be entering junior high by the time Goldman Sachs MIGHT comply with finanical reform!

By Bradley Keoun
June 29 (Bloomberg) -- Goldman Sachs Group Inc. and Citigroup Inc. are among U.S. banks that may have as long as a dozen years to cut stakes in in-house hedge funds and private- equity units under a regulatory revamp agreed to last week.

Rules curbing banks’ investments in their own funds would take effect 15 months to two years after a law is passed, according to the bill. Banks would have two years to comply, with the potential for three one-year extensions after that. They could seek another five years for “illiquid” funds such as private equity or real estate, said Lawrence Kaplan, an attorney at Paul, Hastings, Janofsky & Walker LLP in Washington.

Giving banks until 2022 to fully implement the so-called Volcker rule is an accommodation for Wall Street in what President Barack Obama called the toughest financial reforms since the 1930s. The Glass-Steagall Act of 1933 forced commercial banks such as what is now JPMorgan Chase & Co. to shed their investment-banking units in less than two years.
Link to complete Article

Grandpa: Chris Dodd voted in favor of repealing Glass-Steagall in 1999 and 11 years later, he deems himself the God of Financial Reform.

Chris Dodd
"No one will know until this is actually in place how it works. But we believe we've done something that has been needed for a long time. It took a crisis to bring us to the point where we could actually get this job done."

"Financial Reform Bill Would Stop Goldman-Style Shenanigans"

 “This is a tremendous day,” said Dodd. “After great debate, we have produced a strong Wall Street reform bill that will fundamentally change the way our financial services sector is regulated.”

“I am proud of this bill, and I am proud of the open and transparent process that led to such a successful result.”

Monday, June 28, 2010

US Supreme Court Invalidates Part Of Accounting Board (update from Prior Post)

By Brent Kendall and Fawn Johnson
WASHINGTON (Dow Jones)--A divided U.S. Supreme Court on Monday struck down some federal provisions that created a private regulatory body to inspect and discipline public-company accountants, but the decision doesn't dismantle the accounting board or invalidate the 2002 Sarbanes-Oxley Act as some critics would have liked.

The high court, in a 5-4 opinion by Chief Justice John Roberts, found fault with some parts of the Public Company Accounting Oversight Board, which was created as part of Sarbanes-Oxley to combat corporate accounting scandals in the wake of collapses at Enron and WorldCom.

Congress had given the five-member board, a not-for-profit corporation, broad regulatory authority over accounting firms that audit publicly traded companies.

Roberts said the structure of the accounting board violated constitutional separation-of-powers principles because it was too difficult for the president to remove board members.

"The president cannot take care that the laws be faithfully executed if he cannot oversee the faithfulness of the officers who execute them," Roberts wrote.

The court, however, refused to strike down the accounting board in its entirety, saying the board's mere existence didn't violate the Constitution.

PCAOB said it will continue to run all programs as usual, and no legislation will be needed to bring it in line with the Constitution. "We are pleased that the decision allows the PCAOB to continue without interruption to carry out its important mission of overseeing public company audits," said PCAOB Acting Chairman Daniel L. Goelzer.

Roberts said Sarbanes-Oxley "remains fully operative as a law." He said the unconstitutional provisions governing the board could be severed from the rest of the law.

The authors of the accounting law, in a joint statement, said "PCAOB provides essential protections to the more than half of American households that invest savings in securities."

"The decision from the Supreme Court adjusts the law in a way that allows the PCAOB to continue to ensure the integrity of public company audits," said former Sen. Paul Sarbanes (D., Md.) and Rep. Michael Oxley (R, Ohio).

Roberts said the Securities and Exchange Commission will now have the authority to remove board members at will. Previously, the SEC could only remove members for good cause.

"I am pleased that the court has determined that the board's operations may continue and the Sarbanes-Oxley Act, with the board's tenure restrictions excised, remains fully in effect," said SEC Chairman Mary Schapiro. "The PCAOB is a cornerstone of the Sarbanes-Oxley Act and serves a critical role in promoting investor protection and audit quality."

The accounting industry also applauded the ruling. "This is the least disruptive decision," said Center for Audit Quality Executive Director Cindy Fornelli. "We're pleased the court made it clear the PCAOB could continue to function....It's important for investors." Complete WSJ Article

Volume Abysmal As Nobody Left Trading (Zero Hedge)

Zero Hedge Once Agin Nails the Volume Factor of the Equity Market

The intraday accumulation volume difference in the SPY is 146 million compared to an average of 220 million by EOD: a solid 33% below baseline. Today is the lowest volume day since April 26, when the market was near 2010 highs. If one assumes (simplistically) that 70% of normal daily volume is HFT and computer based, human traders have added -3% to today's trading volume. Everyone is now out watching football. Yet even with this abysmal volume, the market still was unable to stage a melt up: are even the algos fans of the Cariocas?

Sarbanes-Oxley auditing board ruled unconstitutional (creative accounting protected by the Constitution)

WASHINGTON (Reuters) - The Supreme Court on Monday struck down part of a 2002 law that created a national board that polices auditors of public companies, ruling that it violated the constitutional requirement on the separation of powers among the branches of government.

The high court's ruling on the Public Company Accounting Oversight Board (PCAOB) could put pressure on Congress to revisit the Sarbanes-Oxley corporate reform law, opening it up for potential changes in the reporting duties of companies.

The court's mixed ruling held that the board violated the U.S. Constitution's separation of powers principle, but also held that the law does not violate the Constitution's appointments clause.

At stake in the case was how corporate America is audited and a key provision of the Sarbanes-Oxley corporate reform law adopted in response to the Enron and WorldCom accounting scandals early in the decade.

The ruling was a victory for the Free Enterprise Fund and a small Nevada accounting firm, which argued that the law unconstitutionally stripped the president of power to appoint or remove board members or to supervise their activities.

Board members are appointed by the U.S. Securities and Exchange Commission and can only be removed by the SEC for cause. The board, set up as a quasi-private agency, has the power to impose rules and to inspect and fine accounting firms.

The board is funded through fees it collects from public companies. It inspects thousands of auditors, including the Big Four accounting firms: Ernst & Young LLP, KPMG, PricewaterhouseCoopers and Deloitte & Touche LLP.

The Free Enterprise Fund and the accounting firm sued in 2006. A federal judge and a U.S. appeals court rejected the challenge.

The Supreme Court's majority opinion said the limits on the removal of board members violated the separation of powers requirement.

But the court also held that the unconstitutional provisions can be separated from the rest of the law.

(Reporting by Rachelle Younglai and James Vicini. Editing by Robert MacMillan)

The Public Company Accounting Oversight Board (PCAOB) stated purpose is to 'protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports'. How about these salaries! The salary of the PCAOB's chairman is currently $556,000 per year, while the salaries of other board members are $452,000 annually.
Link to website

The Sarbanes–Oxley Act of 2002 set new or enhanced standards for all U.S. public company boards, management and public accounting firms. The bill was enacted as a reaction to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These scandals, which cost investors billions of dollars when the share prices of affected companies collapsed, shook public confidence in the nation's securities markets.

It does not apply to privately held companies.

Not even the Supreme Court is Granchildren Friendly! They are concerned about the separation of powers on the enforcement side while Wall Street continues their "Band of Brothers" on a unified power front to assure their "mark-to-model" valuations.

What oversight is required when the country endorses creative accounting? FASB is changing their name to FAB given the fact standards no longer apply!!

G20 deficit cuts 'a fantasy' (G-20 sounds like Geithner-20)

ABC News
By economics correspondent Stephen Long, staff

Commitments by world leaders from the G20 group of major economies to cut spending will undermine economic growth and risk scuppering recovery, experts say.

Countries have agreed at least to halve their budget deficits within three years and to stabilise the level of government debt by 2016.

But the communique from their meeting in Toronto leaves nations free to do so in their own way and at their own pace.

It is a compromise between the United States, which was pushing to maintain fiscal stimulus, and European nations such as Germany and Britain that wanted radical spending cuts.

The statement from the summit talks about the risk that synchronised cuts to government outlays will undermine the recovery.

Yet in vague terms, it also warns that failure to consolidate government finances could undermine growth.

Joseph Stiglitz, a Nobel Laureate economist and the renegade former chief economist at the World Bank, turned against the IMF's prescriptions of fiscal austerity as the answer to economic ills.

He says it is a fantasy to believe that cutting deficits will restore the global economy. "I think it's fantasy. I think it reflects the excess optimism about the recovery," he said. "There are almost no successful cases of countries cutting back on their expenditures as a way of getting out of the kind of economic downturn. "There are many cases where these kinds of austerity measures have led to downturns [turning] into recessions - recessions into depressions."

Risk analyst Satyajit Das agrees, but questions how countries will finance growth. "I think fundamentally Stiglitz is right in the sense that if you actually withdraw the fiscal stimulus, growth will go down," he said.

"But what Stiglitz does not answer is how, in heaven's name, the governments are going to keep financing it. "People forget that governments can only do one of two things which is tax and spend or borrow and spend.

"None of the politicians, none of the policymakers in any of the developed worlds or the G20 want to face up to the fundamental fact that we've had a period of debt-fuelled growth and that debt-fuelled growth is going to be very difficult to sustain in the future."

Banks feared that the G20 meeting would mandate a global tax on finance to make banking pay for future bailouts, but that plan was scotched.

The meeting did agree on new capital requirements for banks to be put in place within two years as an understandable and perhaps necessary response to the financial crisis.

But like the plans to rein in government debt, it could undermine economic growth by constraining lending

Sunday, June 27, 2010

Old Wall Street Discusses the New (New York Times)

Floyd Norris-New York Times
June 21, 2010

Old Wall Street Discusses the New

Christian Wyser-Pratte, a retired investment banker, sends a note that deserves a wider audience. (I have edited it a bit to conform to the norms of a family Web site.)

He writes:
The old pay system (era of John Whitehead): you work at an investment bank for 30 years, have a reasonable draw and cash bonus, build up stock in the firm as most of your bonus, and when you decide to retire you request of the partners their permission to go limited. If they assent, you get to withdraw your money over five years, all the while continuing to expose the balance to the risks of the enterprise.

The new pay system post-Donald Lufkin Jenrette’s original I.P.O.: you’re a young 29-year-old punk playing with OPM (Other People’s Money), taking huge risks for which you get huge bonuses, while the outsiders shoulder the losses on your bets. You make all the money you’ll ever need in three years, stay around 15 years to pile up five times as much as you need, and then you retire with your cash hoard, buy a winery in Napa/Sonoma or a huge farm in Connecticut, living above the fray for the rest of your life.

Which system, do you think, makes people consider the downside of their actions?

Saturday, June 26, 2010

Sunday Comics-early edition

Apple admits iphone 4 antenna issues

Kellogg's recalls 28 million boxes of cereal
Foul odor and tastes like chicken?

Barney Frank and Chris Dodd sponsored a
congressional sleepover while negotiating the
financial reform legislation

Internet Kill Switch approved by the
Senate Committee on Homeland Security
and Governmental Affairs

Response from auto dealers as they are exempt from
the Consumer Protection Bureau

Given the recent financial reform bill, Hasbro
is contemplating the removal of the following
Monopoly cards given their irrelevance

Hasbro maintains the following cards will
remain relevant

Financial Reform: Wall Street Wins, Investors Lose (Jacob Zamansky-Forbes)

Financial Reform: Wall Street Wins, Investors Lose

Jacob Zamansky, 06.26.10, 10:40 AM EDT

Fraud, sleazy sales tactics to go on as before.
If you want to know who got the upper hand when it comes to the financial reform bill, follow the money. Bank stocks are currently trading higher and financials are outperforming all other sectors. As Dick Bove, a high-profile analyst that covers Wall Street, put it, “I think I would be buying bank stocks this morning.”
That’s because the financial reform bill Washington is touting didn’t protect investors in any substantive way. Congress failed to address the Supreme Court’s “Stoneridge” decision, which would have afforded investors protection against Ponzi schemes and other large scale frauds commonly aided and abetted by large financial institutions. And don’t let the headlines fool you, Congress totally punted on the requirement that brokers put their clients’ interests ahead of their own, the so-called fiduciary standard. Failing to address these two issues is a one-two punch in the gut for investors.
As I previously predicted, Wall Street was able to stonewall the Stoneridge provision. A few members of Congress initially used the issue to garner some good press, but in the end they caved to Wall Street’s pressure. Had they stood up to the industry’s powerful interests, a provision to combat the Stoneridge decision at a minimum would have forced investment banks, accounting firms and other gate-keepers to perform a reasonable amount of due diligence on those they choose to do business with.
For example, if a bank knew it could be held liable for actions related to its dealings with a convicted felon, do you really think they would risk litigation in order to make a few shekels? I think not, but as it stands, firms can act with near impunity and support criminal activities knowing they are afforded protection by the Stoneridge decision.
As for the fiduciary standard, time will tell whether the members of Congress that loudly supported the standard will regret caving and agreeing to “study” the change’s effect. Apparently it didn’t matter that the SEC already studied the fiduciary standard and found that investors didn’t know when they were getting actual financial advice as opposed to being sold a product. Without a congressional mandate, it’s unclear whether the SEC will have the gumption to make an investor-friendly decision and adopt the standard broadly.
Though Chairman Mary Schapiro very publicly has endorsed the wide adherence to the fiduciary standard, the SEC is currently very divided. SEC investigators were only authorized to file charges against Goldman Sachs ( GS - news - people ) after SEC commissioners voted 3-2 along party lines. Indeed, getting SEC’s decision-makers to agree on anything is an uphill battle to say the least.
It’s actually a pretty sad day for investors, yet without a doubt some are seeing short-term gains as a result of Congress’ gift to Wall Street. Long-term, however, Wall Street has gained the upper hand and has shown Washington who’s in control.

Jacob H. Zamansky is a principal at the law firm Zamansky & Associates.

Grandpa has nothing more to say......for now

Friday, June 25, 2010

Financial Reform...not based on headlines...judge for yourself

June 25, 2010 Headlines
Banks ‘Dodged a Bullet’ as Congress Dilutes Rules
Bove Says ‘Buy’ Banks as Regulatory Overhaul Won’t Hurt Them
U.S. Stocks Gain on Banks; Russell 2000 Surges Before Changes
Bank Stocks Advance as S&P 500 Fluctuates; Oil Rises on Storm

Bank Stocks Rally As Financial Reform Comes Together
Financial Reform Leads Stocks Higher

Financial Reform Makes Biggest Banks Stronger‎

Associated Press
Bank Stocks Rise on Financial Reform News
Bank stocks soar on financial regulation agreement

Financials climb on reform deal

The banks did well today...(great job Barney Frank and Chris Dodd)
JP Morgan up $1.41
Goldman Sachs up $4.67
Morgan Stanley up $.75
Mastercard up $3.50
Discover Financial up$.44
Capital One up $.67
American Express up $1.61
Bank of America up $.40

46 Governments Facing Greek-Style Deficits (Bloomberg)

By Edward Robinson
June 25 (Bloomberg) -- Californians don’t see much evidence that the worst economic contraction since the Great Depression is coming to an end.

Unemployment was 12.4 percent in May, 2.7 percentage points higher than the national rate. Lawmakers gridlocked over how to close a $19 billion budget gap are weighing the termination of the main welfare program for 1.3 million poor families or borrowing more than $9 billion in the bond market. California, tied with Illinois for the lowest credit rating of any state, is diverting a rising portion of tax revenue to service debt, Bloomberg Markets magazine reports in its August issue.

Far from rebounding, the Golden State, with a $1.8 trillion economy that’s larger than Russia’s, is sinking deeper into its financial funk. And it’s not alone.

Even as the U.S. appears to be on the mend -- gross domestic product has climbed three straight quarters -- finances in Arizona, Illinois, New Jersey, New York and other states show few signs of improvement. Forty-six states face budget shortfalls that add up to $112 billion for the fiscal year ending next June, according to the Center on Budget and Policy Priorities, a Washington research institution. State spending is 12 percent of U.S. GDP.

“States are going to have to cut back spending and raise taxes the same way Greece and Spain are,” says Dean Baker, co- director of the Center for Economic and Policy Research in Washington. “That runs counter to stimulating the economy and will put a big damper on the recovery in the latter half of this year.”
Link to complete Bloomberg Article

Friday Funnies

Congress not likely to extend Homebuyer tax credit
closing date for at least 1,295 inmates

11 of the 10,282 taxpayers who obtained tax credits
for purchasing the same homes that other taxpayers
were using to claim the credit themselves

2,555 taxpayers took advantage of the early bird special
and received $17.6 million on home purchases that
occured before the program launched

Trillions in stimulus and Q1 GDP 2.7%

Mr. Blankfein, what is the likelihood of
Goldman Sachs not conducting business as usual
given the financial reform bill?

Mr. Dimon; With the recent congressional agreement on
financial reform, how effective was JPMorgan's $7.6 million
lobbying expenditures during 2009-2010?

Q1 2010 GDP Revised to 2.7% from 3.00%...swing and a miss

Bureau of Economic Analysis (BEA) Press Release:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.7 percent in the first quarter of 2010, (that is, from the fourth quarter to the first quarter), according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2009, real GDP increased 5.6 percent.

The deceleration in real GDP in the first quarter primarily reflected decelerations in private inventory investment and in exports, a downturn in residential fixed investment, a deceleration in nonresidential fixed investment, and a larger decrease in state and local government spending that were partly offset by an acceleration in PCE.

Real personal consumption expenditures increased 3.0 percent in the first quarter, compared with an increase of 1.6 percent in the fourth. Real nonresidential fixed investment increased 2.2 percent, compared with an increase of 5.3 percent. Nonresidential structures decreased 15.5 percent, compared with a decrease of 18.0 percent. Equipment and software increased 11.4 percent, compared with an increase of 19.0 percent. Real residential fixed investment decreased 10.3 percent, in contrast to an increase of 3.8 percent.

It takes the government 3 swings to calculate GDP and the 3rd revision figure of 2.7% is down significantly from their initial guess of 3.2%.

The U.S. government spent trillions in stimulus, placed a huge debt burden on our grandchildren and the economy barely grew. The stock market "experts" paraded around CNBC day after day will now be forced to reduce their lofty earnings estimates for the 2nd half of 2010 and full year 2011.

Consumer spending fell to 3% from 3.5% earlier, business investment was revised down to 2.2% from 3.1% previously. Q1 GDP of 2.7% is less than 1/2 Q4 2009 GDP of 5.6%.

Thursday, June 24, 2010

Dylan Ratigan recaps the current Financial Reform compromises

Dylan Ratigan recaps the current Financial Reform compromises and the amount of holes in what Chris Dodd and Barney Frank would have you believe is "real reform". Grab a beverage as this is a 13 minute clip however, do yourself a favor and watch! IN 2007, Chris Dodd wrote a letter to the SEC opposing very language that he now supposedly supports.

Ryan Grim of Huffington Post and Professor William Black join in and explain why Congress and the White House are trying to weaken the bill. Finally, Dylan has a clip of Larry "I am completely worthless" Summers discusses TARP and Dylan perfoms surgey on Summers with a pipe wrench! Accounting gimmicks endorsed by Ben Bernanke enable the banks to present results that are nothing but smoke and mirrors.