"What could he possibly have that's worth $1 million a month other than classified information?"
Former NSA head Keith Alexander goes directly into consulting for large financial associations, with a potential Congressional investigation to follow.
Tim Geithner says he doesn't know how he went from a "mediocre student" to leading the response to the "largest destruction of GDP in world history."
His resume highlights were from addressing economic crises in developing countries in ways that correlated strongly to increasing poverty and reducing growth. His main response to critics of his "bailout the top" approach is that disaster was the only alternative.
The personal price of exposing financial wrongdoing can be devastating.
Report for The Financial Times by William D Cohan, including interviews with whistleblowers formerly employed at Lehman Brothers, Deutsche Bank and JPMorgan Chase.
The furious to-do about Obamacare has obscured a basic fact about modern Americans: most of us, certainly the middle class, are sheltered by a complex web of insurance. Some insurance coverage is privately provided, such as life, accident, fire, flood, travel, liability, burial, and consumer product insurance. And some is government-provided or -required: Social Security, Medicare, unemployment, bank deposit, car, health, mortgage, food, crop, disaster insurance, and so on. All of these, without which American middle-class life as we know it would not be recognizable, are relatively recent developments. [more inside]
It used to be that when his trading screens showed 10,000 shares of Intel offered at $22 a share, it meant that he could buy 10,000 shares of Intel for $22 a share. He had only to push a button. By the spring of 2007, however, when he pushed the button to complete a trade, the offers would vanish. In his seven years as a trader, he had always been able to look at the screens on his desk and see the stock market. Now the market as it appeared on his screens was an illusion.
In an excerpt/adaption of his new book Flash Boys: A Wall Street Revolt
, Michael Lewis follows Brad Katsuyama from uncovering evidence of high-speed electronic front-running to the founding of the IEX exchange intended to discourage it. The Wolf Hunters of Wall Street
The Vampire Squid Strikes Again: The Mega Banks' Most Devious Scam Yet.
"Banks are no longer just financing heavy industry. They are actually buying it up and inventing bigger, bolder and scarier scams than ever." This is the latest and last article for Rolling Stone
by Matt Taibbi
, who is moving on
to join First Look Media
Matt Levine writes in the Wall Street Journal
: Morgan Stanley Now Obeying Rules, Reducing Risks, Eating Cupcakes
So while of course it's possible that this is just next-level perception manipulation and I've fallen for it -- that Morgan Stanley has found a novel way to take on immense amounts of complex risk and hide it behind an army of retail brokers and a layer of cream-cheese frosting -- I think that this story is what it appears to be. Morgan Stanley seems to be de-risking by cutting back on risky activities, and responding to new regulations by obeying them.
On the New Wall Street, Boring Is Better [more inside]
How the Robots lost - The Fall of High-Frequency Trading.
For the past few years High-Frequency Trading
was where the money was but now it looks like the worm is turning. The scale of HFT is stunning - see, for instance, what happens in a half second of trading in Johnson & Johnson.
. While profits are evaporating, serious concerns remain about systemic risk
, now-disgraced stock analyst Jack Grubman (previously
) was the central figure in a preschool-placement scandal
in New York's famously Wall Street connected
92nd Street Y.
The Price Of Perfection
The Lonely Redemption Of Sandy Lewis
“The complicity on Wall Street is sickness!” Mr. Lewis says. He fixes you with his laser stare. “If you think the big firms are being honest” — his tone slides streetwise — “well, sweetheart, go think something else!”
The temptation is to dismiss Mr. Lewis, 73, as a crank, except he once ruled as an eccentric genius of arbitrage, with a preternatural feel for the tectonic movements of the markets. He has railed for decades about venalities now on daily display. Rude truth is his currency. [more inside]
Wall Street begins playing again with the same matches that burned the economy in 2008
From the New York Times: "The banks that created risky amalgams of mortgages and loans during the boom — the kind that went so wrong during the bust — are busily reviving the same types of investments that many thought were gone for good. Once more, arcane-sounding financial products like collateralized debt obligations are being minted on Wall Street. "
(View article on a single page) [more inside]
Elizabeth Warren, in her new role as a member of the Senate banking committee, asks banking regulators: when did you last take a big Wall St bank to trial?
US Justice Department suing Standard and Poor's over a "scheme to defraud investors" before the financial crisis.
More details on these recent developments from The Tech online edition here
, which notes: "For many years, the ratings agencies have defended themselves successfully in civil litigation by saying their ratings were independent opinions, protected by the First Amendment, which guarantees the right to free speech. Developments in the wake of the financial crisis have raised questions about the agencies’ independence, however." Reuters opts to let S&P break the news for themselves here
Wall Street's leaders have utterly escaped jail.
"There have been no arrests of senior Wall Street executives." Frontline examines why the United States federal government didn't go after the financial titans.
Eunuchs of the Universe: Tom Wolfe on Wall Street Today: [Daily Beast]
"As America teeters on a cliff, Tom Wolfe draws up a sterling indictment of our unscrupulous financial culture. Twenty-five years after Bonfire of the Vanities, the author returns to Wall Street to see what happened to the Masters of the Universe."
Kevin Roose of Nymag.com posted about a brand new North Carolinian hedge fund
that seemed less than impressive. The fund then started to use a sarcastic quote from Kevin's post as a kind of ringing endorsement on their website. Uh oh
What can be done to prevent another financial meltdown? While some cry for armed revolution, others are whispering for incremental changes that could have a substantial impact on how high finance works – or doesn't.
John Coates, a former Wall Street derivatives trader
and now a neuroscientist
at the University of Cambridge, has done novel research on how testosterone
skews the thinking – and thus the behavior – of traders, inspiring them to take on more risk
than benefits society. His research is now available in a book
Would programs that encourage more women to enter – and/or climb the ranks of – trading groups make finance more responsible?
(If this strikes you as biological determinism, there are other lines of inquiry that may be headed in the same direction: how managers exploit subordinates
in ways that shape overall behavior and could be modified via both incentives and regulation; how cheating happens
and the best ways to prevent it.)
The Scam Wall Street Learned from the Mafia
is Matt Taibbi's take on the recent convictions
in the municipal bond bid-rigging case of United States v. Dominick P. Carollo, Steven E. Goldberg, and Peter S. Grimm
. These three fraudsters are among the fifteen convicted so far with regard to the federal government's investigation into nationwide municipal bond bid-rigging schemes. [more inside]
The JOBS Act
or "Jumpstart Our Business Startups Act" is not really about creating jobs but about loosening regulations on companies planning to IPO. SOX compliance and other financial regulations have made going public an expensive and time consuming process for young companies, and many are now staying private or getting acquired rather than going public. Fewer regulations encourages more IPOs, but what are the unintended consequences
of "exempting [companies] from independent accounting requirements for up to five years after they first begin selling shares in the stock market"?
Too Smart to Fail
: "A résumé filled with grievous errors in the period 1996–2006 is not only a non-problem for further advances in the world of consensus; it is something of a prerequisite. Our intellectual powers that be not only forgive the mistakes; they require them. You must have been wrong back then in order to have a chance to be taken seriously today; only by having gotten things wrong can you demonstrate that you are trustworthy, a member of the team. (Those who got things right all along, on the other hand, might be dubbed “premature market skeptics”—people who doubted the consensus before the consensus acknowledged it was all right to doubt.)" —Thomas Frank, The Baffler
Why I Am Leaving Goldman Sachs.
New York Time Op-Ed. March 14th 2012:
TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it. [more inside]
The Rolling Stone's Matt Taibbi uses a paper bag
to illustrate exactly how the sub-prime mortgage scam worked, and how we're still on the hook for the next catastrophe
. [more inside]
The End of Wall Street As They Knew It
After surprisingly successful financial reform, public vilification, and politics that have turned against them, the Masters of the Universe are masters no longer.
Andrew Lo reviews 21 books on the financial crisis.
In a 41-page paper, Andrew Lo, from the MIT Sloan School of Management, does a comparative review of 21 books about the financial crisis - some from academics and some from journalists and Secretary Paulson, looking for common threads. Tyler Cowen comments
Alan Moore and David Lloyd designed it 30 years ago. The V for Vendetta mask appropriated
by Occupy protesters the world over. The Guardian recently
asked Alan what he thought about the masks. Now Channel 4 news takes him into Occupy territory
to face that face. But who is
the true anarchist?
Critics of the Occupy Wall Street movement have complained that the protestors have no clear goals, so WE DON'T MAKE DEMANDS
composed a list of 12 concrete, specific suggestions focusing on economic reform, stronger regulation, and closing loopholes.
Occupy Wall Street
is an event comprised of anti-corporate non-violent protests that are being promoted by a range of groups including the AdbustersMedia Foundation and a New York City group called General Assembly. Months ago a plea was put out
to diverse political and activist groups urging them to descend on Wall Street on September 17th and take part in long-term occupation of the area in the spirit of the Arab Spring
rebellions. [more inside]
Is the SEC Covering Up Wall Street Crimes?
"A whistleblower claims that over the past two decades, the agency has destroyed records of thousands of investigations, whitewashing the files of some of the nation's worst financial criminals."
On July 23, 1920, Charles Ponzi
hired former Boston Post journalist William H. McMasters as his publicist, who quickly realized that his new client was defrauding the public. Just ten days later, McMasters wrote an exposé published in the Post that led to Ponzi's ultimate downfall. The newspaper won a Pulitzer. McMasters was The Man Who Time (Almost) Forgot (Via) [more inside]
In an investment manager's view on the top 1%
- referring to the richest Americans by wealth and income - we learn that one needs $1.2 million in net worth to barely slip in the door of the top 1%. But that's just a start: the real power and influence in the U.S., the author argues, resides in the top 0.1%. You can guess who you'll find there: bankers and large-cap CEOs. Relevant quotes include... [more inside]
Reuters reports that Goldman Sachs is storing aluminum in several warehouses outside Detroit
. Apparently not much aluminum is actually leaving
the warehouses. This may help explain the recent spike in the price of - any guesses? - aluminum. [more inside]
A Dirty Business
. New Yorker article on the prosecution of Raj Rajaratnam
, head of the Galleon hedge fund. Previously
: Matt Taibbi on Wall Street regulation and prosecutions.
Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs? The Real Housewives of Wall Street
) [more inside]
Why Gas Is So Expensive Today (Hint: It’s Not Libya)
A long but enthralling proposal that current gas prices have nothing to do with supply and demand, but are instead due primarily to rampant unchecked commodities speculation ("unchecked" because it had been granted special exemption from the clearly-defined checks). Quotes heavily from this article
and this book
. (found via Hacker News
In his Oscar acceptance speech, documentary filmmaker Charles Ferguson reminded viewers worldwide that "not a single financial executive has gone to jail" for the fraud that created the 2008 financial meltdown. His film Inside Job (on Netflix DVD
) explains, among other things, that the crisis was avoidable. See also the Inside Job trailer
and a subsequent followup video
in which Ferguson says that many sources "mysteriously backed out" before being filmed. He also spoke at MIT