Matt Taibbi – On Tuesday, March 11th, 2008, somebody — nobody knows who — made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half their value in nine days or less. It was madness — “like buying 1.7 million lottery tickets,” according to one financial analyst.

But what’s even crazier is that the bet paid.

At the close of business that afternoon, Bear Stearns was trading at $62.97. At that point, whoever made the gamble owned the right to sell huge bundles of Bear stock, at $30 and $25, on or before March 20th. In order for the bet to pay, Bear would have to fall harder and faster than any Wall Street brokerage in history.

The very next day, March 12th, Bear went into free fall. By the end of the week, the firm had lost virtually all of its cash and was clinging to promises of state aid; by the weekend, it was being knocked to its knees by the Fed and the Treasury, and forced at the barrel of a shotgun to sell itself to JPMorgan Chase (which had been given $29 billion in public money to marry its hunchbacked new bride) at the humiliating price of … $2 a share. Whoever bought those options on March 11th woke up on the morning of March 17th having made 159 times his money, or roughly $270 million. This trader was either the luckiest guy in the world, the smartest son of a bitch ever or…

Or what? That this was a brazen case of insider manipulation was so obvious that even Sen. Chris Dodd, chairman of the pillow-soft-touch Senate Banking Committee, couldn’t help but remark on it a few weeks later, when questioning Christopher Cox, the then-chief of the Securities and Exchange Commission. “I would hope that you’re looking at this,” Dodd said. “This kind of spike must have triggered some sort of bells and whistles at the SEC. This goes beyond rumors.”

Cox nodded sternly and promised, yes, he would look into it. What actually happened is another matter. Although the SEC issued more than 50 subpoenas to Wall Street firms, it has yet to identify the mysterious trader who somehow seemed to know in advance that one of the five largest investment banks in America was going to completely tank in a matter of days. “I’ve seen the SEC send agents overseas in a simple insider-trading case to investigate profits of maybe $2,000,” says Brent Baker, a former senior counsel for the commission. “But they did nothing to stop this.”

The SEC’s halfhearted oversight didn’t go unnoticed by the market. Six months after Bear was eaten by predators, virtually the same scenario repeated itself in the case of Lehman Brothers — another top-five investment bank that in September 2008 was vaporized in an obvious case of market manipulation. From there, the financial crisis was on, and the global economy went into full-blown crater mode.

Like all the great merchants of the bubble economy, Bear and Lehman were leveraged to the hilt and vulnerable to collapse. Many of the methods that outsiders used to knock them over were mostly legal: Credit markers were pulled, rumors were spread through the media, and legitimate short-sellers pressured the stock price down. But when Bear and Lehman made their final leap off the cliff of history, both undeniably got a push — especially in the form of a flat-out counterfeiting scheme called naked short-selling.

That this particular scam played such a prominent role in the demise of the two firms was supremely ironic. After all, the boom that had ballooned both companies to fantastic heights was basically a counterfeit economy, a mountain of paste that Wall Street had built to replace the legitimate business it no longer had. By the middle of the Bush years, the great investment banks like Bear and Lehman no longer made their money financing real businesses and creating jobs. Instead, Wall Street now serves, in the words of one former investment executive, as “Lucy to America’s Charlie Brown,” endlessly creating new products to lure the great herd of unwitting investors into whatever tawdry greed-bubble is being spun at the moment: Come kick the football again, only this time we’ll call it the Internet, real estate, oil futures. Wall Street has turned the economy into a giant asset-stripping scheme, one whose purpose is to suck the last bits of meat from the carcass of the middle class.

What really happened to Bear and Lehman is that an economic drought temporarily left the hyenas without any more middle-class victims — and so they started eating each other, using the exact same schemes they had been using for years to fleece the rest of the country. And in the forensic footprint left by those kills, we can see for the first time exactly how the scam worked — and how completely even the government regulators who are supposed to protect us have given up trying to stop it.

This was a brokered bloodletting, one in which the power of the state was used to help effect a monstrous consolidation of financial and political power. Heading into 2008, there were five major investment banks in the United States: Bear, Lehman, Merrill Lynch, Morgan Stanley and Goldman Sachs. Today only Morgan Stanley and Goldman survive as independent firms, perched atop a restructured Wall Street hierarchy. And while the rest of the civilized world responded to last year’s catastrophes with sweeping measures to rein in the corruption in their financial sectors, the United States invited the wolves into the government, with the popular new president, Barack Obama — elected amid promises to clean up the mess — filling his administration with Bear’s and Lehman’s conquerors, bestowing his papal blessing on a new era of robbery.

To the rest of the world, the brazenness of the theft — coupled with the conspicuousness of the government’s inaction — clearly demonstrates that the American capital markets are a crime in progress. To those of us who actually live here, however, the news is even worse. We’re in a place we haven’t been since the Depression: Our economy is so completely fucked, the rich are running out of things to steal.

If you squint hard enough, you can see that the derivative-driven economy of the past decade has always, in a way, been about counterfeiting. At their most basic level, innovations like the ones that triggered the global collapse — credit-default swaps and collateralized debt obligations — were employed for the primary purpose of synthesizing out of thin air those revenue flows that our dying industrial economy was no longer pumping into the financial bloodstream. The basic concept in almost every case was the same: replacing hard assets with complex formulas that, once unwound, would prove to be backed by promises and IOUs instead of real stuff. Credit-default swaps enabled banks to lend more money without having the cash to cover potential defaults; one type of CDO let Wall Street issue mortgage-backed bonds that were backed not by actual monthly mortgage payments made by real human beings, but by the wild promises of other irresponsible lenders. They even called the thing a synthetic CDO — a derivative contract filled with derivative contracts — and nobody laughed. The whole economy was a fake.

For most of this decade, nobody rocked that fake economy — especially the faux housing market — better than Bear Stearns. In 2004, Bear had been one of five investment banks to ask the SEC for a relaxation of lending restrictions that required it to possess $1 for every $12 it lent out; as a result, Bear’s debt-to-equity ratio soared to a staggering 33-1. The bank used much of that leverage to issue mountains of mortgage-backed securities, essentially borrowing its way to a booming mortgage business that helped drive its share price to a high of $172 in early 2007.

But that summer, Bear started to crater. Two of its hedge funds that were heavily invested in mortgage-backed deals imploded in June and July, forcing the credit-raters at Standard & Poor’s to cut its outlook on Bear from stable to negative. The company survived through the winter — in part by jettisoning its dipshit CEO, Jimmy Cayne, a dithering, weed-smoking septuagenarian who was spotted at a bridge tournament during the crisis — but by March 2008, it was almost wholly dependent on a network of creditors who supplied it with billions in rolling daily loans to keep its doors open. If ever there was a major company ripe to be assassinated by market manipulators, it was Bear Stearns in 2008.

Then, on March 11th — around the same time that mystery Nostradamus was betting $1.7 million that Bear was about to collapse — a curious thing happened that attracted virtually no notice on Wall Street. On that day, a meeting was held at the Federal Reserve Bank of New York that was brokered by Fed chief Ben Bernanke and then-New York Fed president Timothy Geithner. The luncheon included virtually everyone who was anyone on Wall Street — except for Bear Stearns.

More

Insider Trading

            The federal government spent millions prosecuting Martha Stewart for making a few thousand dollars on an insider trading tip, and today, November 5, 2009, announced a large sting with 14 indictments in connection with its insider trading investigation of the Galleon hedge fund.  However, the SEC has ignored the $270 million that was made by a trader who bet $1.7 million on March 11, 2008 that Bear Stearns, then trading just below $63 per share, would lose more than half its value in a 9 day period.  The trader purchased $30 and $25 Puts on Bear which expired on March 20^th.  The day after the purchases, Bear’s stock went into freefall.  If any trade ever deserved an investigation, this one does.  After some Congressional questioning, the SEC issued subpoenas.  Strangely, no mention has ever been made of any findings. 

            Of critical note, on March 11^th, the same day the mysterious and hugely speculative trades were made, a meeting was held at the Federal Reserve Bank of New York (FRBNY) consisting of Geithner, then FRBNY’s President, Bernanke, and every major Wall Street firm except Bear Stearns.  The meeting was actually secret, only discovered by a Bloomberg reporter by accident, from a mention on Bernanke’s calendar.  Putting the pieces together, one could infer that Bear was the topic of discussion at the March 11^th FRBNY meeting and information was leaked to the trader that same day.  The following questions need answers:  1) Why, more than 18 months after the meeting, and after a period of financial panic, don’t we know the topic of the meeting?  2) If it wasn’t about Bear Stearns, why weren’t they invited?  3) Why won’t the SEC discuss or pursue the source of information used by the trader, or even identify the trader?

Naked Short Selling

            One of the tactics used to bring down Bear and later Lehman Brothers was “naked” short selling, an illegal and unethical practice used by (reserved for) the large Wall Street “prime brokers” when they smell blood.  SEC regulations say that to “sell short”, one must “borrow” existing shares.  This regulation is enforced by every broker/dealer for their regular accounts.  That is, you or I cannot “short” without first finding and borrowing the stock.  But, these rules apparently are not enforced on the large Wall Street firms.  In both the Bear and Lehman cases, on the days just prior to their demise, there were more shorts outstanding than there were shares in circulation.  Why isn’t there an investigation of this and a disgorging of the illegal profits as called for under SEC regs?  If you or I had done this, the SEC would want to put us in jail!

            What I have said simply here is well chronicled by author Matt Taibbi in the October issue of Rolling Stone.  Not unexpectedly, the article is somewhat irreverent.  What is unexpected is where it was published, Rolling Stone, not a beacon of conservatism.  Why hasn’t the business media, which pursued Martha Stewart with such passion, even made a mention of these “irregularities”?

The AIG Farce

            Unfortunately, there is more.  On October 27^th, a Bloomberg story (authors Teitelbaum and Son) appeared regarding the AIG bailout.  It seems that for several weeks prior to the AIG bailout, then CFO, Elias Habeyab,  was trying to persuade banks who had purchased $62 billion (notional value) of AIG’s CDOs to accept 40% discounts on the paper, as AIG didn’t have the wherewithal to pay at par.  On September 16, 2008, the FRBNY stepped in with an $85 billion credit line, effectively buying 78% of AIG for the American taxpayers.  Eventually, the rescue plan would amount to $182 billion.  In early November, Geithner (still President of FRBNY), Bernanke, and the Treasury (Paulson) began negotiations with the large Wall Street players about the price at which AIG would pay on its swap obligations.  The price of this stuff on the street was at 40% – 60% discount.  The authors found a term sheet from FRBNY regarding the price.  On the term sheet the discount at which AIG was to redeem this dubious paper was crossed out.  Geithner, Bernanke and Paulson had agreed to repurchase the AIG swaps at par.  The authors calculate that, as a result, the American taxpayers gave the large Wall Street firms a $13 billion gift.  FRBNY placed this paper into an LLC called Maiden Lane III.  As of June 30, 2009, Maiden Lane III was carrying this paper at a $7 billion loss.  Who benefited?  Large Wall Street firms mainly, including Goldman Sachs, JPMorganChase, Morgan Stanley, and Citi.

More Conflicts and Insider Abuse

            Clearly, the deal that FRBNY made on behalf of AIG contributed greatly to the profits of Goldman, JPMorganChase, et al.  Some say the deal even saved Goldman (remember, Goldman had to quickly raise capital during this period and even turned to Warren Buffet for a capital injection).   There are several disconcerting facts that need to be aired and investigated: 1) Both Jamie Dimon, head of JPMorganChase, and Stephen Friedman, Chairman of Goldman, sat on the Board of Directors of FRBNY.  Friedman was Chairman of FRBNY at the time.  What role did these two play in the determination of the par price that AIG paid?  If this wasn’t a conflict of interest, it sure has the appearance of one;  2) Friedman purchased 52,600 shares of Goldman stock while it was still under pressure from the market’s belief that AIG would not redeem its CDOs at par.  But, according to the Bloomberg story, those purchases occurred after FRBNY’s decision to pay at par, a decision that Friedman, as FRBNY Chair, certainly had access to, probably had knowledge of, and possibly had input into.  At today’s price for Goldman shares, Friedman’s profits on his Goldman purchases exceed $5 million.  Where is the “insider trading” and conflict of interest investigation? 

Control of the Fed

            Each of the 12 Federal Reserve Banks are owned by the “members” who contribute capital in proportion to their size.  Because the Fed is privately owned, its ownership list is not publicly available (yet the Fed makes monetary policy on behalf of the public!).  The members, according to their share holdings, elect the Board of Directors.  Thus, the large Wall Street, “Too Big To Fail” institutions, elect and control the Board of Directors. 

Winners and Losers

            Given the above, it should not be a shock that AIG was given $182 billion and paid its CDO obligations at par (instead of $.60) after it was seized by FRBNY because those in control of FRBNY, Goldman, JPMorganChase, et al, had a huge vested interest and stood to lose significantly, perhaps even to the extent of failure.

            In this light, it also isn’t shocking that TARP funds have been given mainly to “Too Big To Fail” institutions that had overleveraged and had lost on their risky bets, while such funds have been withheld from small community institutions that had not overleveraged or placed such risky bets.  Consider this, if the “Too Big To Fail” Wall Street institutions, now all of which are Bank Holding Companies, can get rid of their smaller rivals, there is market share to be gained!

            All in all, the whole financial meltdown episode stinks of greed, conflicts of interest, insider manipulation, and government acquiescence to the rich and powerful on Wall Street.  The investigations of “insider trading” now taking place appear to be a smokescreen to convince the public that laws are being enforced, when, in fact, the most egregious acts are ignored because of who committed them.  Unfortunately, there is no one in Washington who is willing or possibly is politically able to stand up to such outrages.  And the business media simply doesn’t want to rock the boat.  Typically, we find such conduct (greed, conflict of interest, unethical and illegal behavior) between the governments and private sector power brokers in third world countries.

Robert Barone, Ph.D.

November 5, 2009

http://urlet.com/schedule.anything

http://www.rgemonitor.com/emergingmarkets-monitor/257856/chinas_september_data_suggest_that_the_long-term_overcapacity_problem_is_only_intensifying

By Greg Morcroft, MarketWatch

NEW YORK (MarketWatch) — Seven more banks failed Friday, pushing the 2009 total to 106 and marking the first year since 1992 that at least 100 have gone under

Experts suggest we could be no more than 10% of the way through this cycle of bank collapses, which is sure to be the worst run of closures since the Great Depression.

http://urlet.com/len.man

http://www.marketwatch.com/story/bank-failures-hit-100-for-year-2009-10-23

Like all the great merchants of the bubble economy, Bear and Lehman were leveraged to the hilt and vulnerable to collapse. Many of the methods that outsiders used to knock them over were mostly legal: Credit markers were pulled, rumors were spread through the media, and legitimate short-sellers pressured the stock price down. But when Bear and Lehman made their final leap off the cliff of history, both undeniably got a push — especially in the form of a flat-out counterfeiting scheme called naked short-selling.

The new president for whom we all had such high hopes went and hired Michael Froman, a Citigroup executive who accepted a $2.2 million bonus after he joined the White House, to serve on his economic transition team — at the same time the government was giving Citigroup a massive bailout. Then, after promising to curb the influence of lobbyists, Obama hired a former Goldman Sachs lobbyist, Mark Patterson, as chief of staff at the Treasury. He hired another Goldmanite, Gary Gensler, to police the commodities markets. He handed control of the Treasury and Federal Reserve over to Geithner and Bernanke, a pair of stooges who spent their whole careers being bellhops for New York bankers. And on the first anniversary of the collapse of Lehman Brothers, when he finally came to Wall Street to promote “serious financial reform,” his plan proved to be so completely absent of balls that the share prices of the major banks soared at the news.

http://urlet.com/go.caught

http://www.rollingstone.com/politics/story/30481512/wall_streets_naked_swindle

 I recent read an amazing article about naked short selling by Mike Taibbi from RollingStone magazine (Link located below). Some of you may not be aware of what short selling and naked short selling is and what its implications for the market and the economy at whole. Lets begin with short selling: shorting selling is when an investor believes a company is overvalued and wants to profit from the company’s decline in stock value. This investor will call his broker so he can borrow the stock of the company he wishes to short. This investor wishes to borrow 1,000 shares of XYZ company at $100 per share. The broke checks the inventory and sees they have the 1000 shares of XYZ and agrees to lend them to the investor. The broker asks the investors to put half value of the 1000 shares to satisfy FED regulations. In order to keep calculations simple lets assume there are no margin rules for short selling. The investor receives the 1000 XYZ shares and sells them into that market at $100 per share. His account is now credited $100,000. Now XYZ falls to $75 per shares and the investor buys 1000 shares so he can return the stock he owes to his broker. The investor returns the stock and has made a profit of $25,000 (Borrowed value: $100,000 Return Value $75,000). Remember the broke only needs the shares back not the dollar value. Like Mike Taibbi stated, this is perfectly legal and socially acceptable. This form of short selling provides liquidity to the market and helps weed out failing companies.

However, not all people are ethical and abuses to the system are inevitable. The x-rated version or evil twin as Mike Taibbi calls it, is naked shorting sell. What is naked short selling? Naked shorting is the exact same thing as short selling but with a hitch. The same investor calls his broker and wishes to borrow 1000 shares of XYZ. The broke agrees and lends the investor the stock. A second investor calls and wishes to borrow 1000 shares of XYZ. However the broker no longer has 1000 shares of XYZ in his inventory. The broker who wishes to make easy money doesn’t really bother to check to see if he has more shares of XYZ and agrees to lend another 1000 shares. The broker has created 1000 XYZ shares out of thin air. Imagine this process done hundreds of times or even thousands of times. This broker has created a stealth public secondary offering of XYZ by creating virtual shares of XYZ. I though only shareholders can authorize the creation of new shares? Since the investors sell these shares in the market, these new virtual shares have a dilutive XYZ stock price hence creating a vicious cycle of downward pressure. Naked short selling at this level can be considered a “Bear Raid” (http://en.wikipedia.org/wiki/Bear_raid). This process is not limited to stocks, Wall Street has the guts to do this with U.S. treasuries. Yes U.S. treasuries. government debt!

What are the implications of naked short selling? Remember last November, when all the banks and investments banks were imploding? First Bear Sterns was under attack from naked short sellers and collapsed, then Lehman Brothers. Now these banks and others were over-leveraged and were bad investments to begin with would have probably failed. However, naked short selling accelerated this process so much so that it caused a public panic. People were beginning to lose to confidence in the banking system and were ready to cause bank runs and put the nation and the world into a depression. The federal government and other world governments had to spend trillions of dollars to restore the public faith in the banking system. Even though were aren’t panic mode, the world economy is not great shape thanks to naked short selling wonderful side effects. Who knows what future complications will happen to economy due the damage caused by naked shorting selling. Please Wall Street keep your clothes on, you aren’t pretty to look at naked.

If you want to learn more about this unethical practice I strongly suggest you buy this month’s issue of RollingStone.

Source
RollingStone Reporter : Mike Taibbi
http://taibbi.rssoundingboard.com/short-selling-vs-naked-short-selling-an-explanation#

I normally have a lot of respect for the Clusterstock blog.  They have witty and sarcastic commentary bringing the reader’s attention to events that matter to the markets.  This article about naked short-selling, written by John Carney and found here, however, disappoints me because I believe he misses the point.

Mr. Carney’s argument that naked short-selling, the practice of selling shares that you haven’t bothered to borrow in the first place, is ok rests on his claim that whether or not the seller has the shares is irrelevant because the amount of shares that are net short is no different than regular shorting. This is wrong.

Firstly, by eliminating the need to search for shares to borrow, naked shorting can happen a lot quicker, which raises volatility. We may only be talking about a matter of minutes, but if thousands of these transactions are happening at any one time, this can make a huge difference. Secondly, it can create a scramble to find the shares the shorter needs to close out the position, and if there are not enough available, the investor who thought he had bought an amount of shares from the shorter is screwed. This creates dissatisfaction in the market, to the disservice of all. Finally, by not disclosing their position, the number of net Shorters can increase dramatically as they can have multiple “claims” on the same shares, which can amplify the effect of the short interest and possibly cause a run on the stock.

Short sellers bet against a stock. They borrow a company’s shares – sell them -  and then buy them when the stock falls and return the shares to the lender while pocketing the difference in price.

“Naked” Short Selling occurs when sellers don’t even borrow the shares before selling them, and then look to cover positions sometime after the sale. Naked Short Selling has put out of business 6000 small public companies in the past 15 years. Naked Short Selling has been a loophole regulators (SEC) Market Makers, Hedge Funds and brokerage houses have been allowed to take advantage of.

The SEC Rule includes a requirement that brokers must Buy or Borrow securities to deliver on a short sale within four days or be subject to penalties. Another option would prohibit short sellers from making their trades until a stock ticks at least one penny above its previous trading price. The goal of the Uptick Rule is to prevent selling sprees that feed upon themselves and batter a stocks share price.

An alternative approach would ban short selling for the remainder of a trading session in a stock that declines by 10 percent or more. The SEC could decide on a final course of action by years end.

Short selling hedge funds lit the spark that led to the global economic meltdown

Now they want to help craft the laws Congress will pass to fix our broken regulatory system. That’s insane. Don’t just stand there, do something! … Write or call your Congressperson!

Video is MUST SEE > Hedge Funds and the Global Economic Meltdown from Judd Bagley on Vimeo.

Finance is not my forte, so sometimes I hear things that in my world cannot possibly exist, but out there in the real world they’re happening.

There’s the stock exchange for example. People trade in stocks, make a profit or lose money. I’ve never understood what stocks are, but I can understand the stock market as long as I force myself to think of stocks as a commodity like cars, houses or pets.

Once you think of stocks as a commodity, it’s easy to imagine that rising and falling prices create opportunities for the bungee jumpers among us to speculate. Buying stocks at a low price and selling them once their value has risen obviously delivers a profit, easy. But the other way round can also work: selling stocks at a high price and then buying them back after they value has fallen. There doesn’t seem to be much point in buying them back, why would you? Profit’s already been taken.

Well, this is what short selling is all about. The stocks you sell at a high price and buy back after a while at a low one aren’t yours, they’re borrowed. Hence the need to buy them back, otherwise you have a problem with the owner. Basically, you speculate with someone else’s property, counting on a fall in price. If the price doesn’t fall, you’re in trouble. Risky business.

But not risky enough for some. Those who prefer a real ride on a rollercoaster have invented naked short selling. It’s the same as short selling, but without borrowing the stocks you trade in. The owner simply doesn’t know you’re buying and selling his stocks. Naked short selling is a good tool to influence the stock exchange, because it can be used to drive the price down of a targeted stock.

In my world this is fraud. In the real world governments are trying to put laws in place that regulate the practice and forbid it in specific circumstances. For reasons I cannot fathom, ordinary anti-fraud laws aren’t sufficient and a downright prohibition isn’t feasible. Supposedly naked short selling can also have positive effects on ‘market liquidity’, a phrase that holds no meaning to me.

But this post is not about whether practices like naked short selling are wrong or not, it’s about their other worldliness. That’s what baffles me. If the stock exchange manages to organise buying and selling stock based on mere concepts like ‘price’, ‘rise’ and ‘fall’, then thinks of trading in borrowed items and subsequently invents trade in stuff that’s someone else’s without them knowing, why hasn’t the stock market ever thought of trading in stocks that aren’t there? What’s keeping them from trading in stocks that do not exist?

A hat tip to Uncle $cam who commented at Moon of Alabama.

This story has greed, cupidity, Jimmy Wales and Wikipedia involved.
From Judd Bagley at Antisocialmedia.net. Click the link to the lecture.

If the Depository Trust and Clearing Corporation has been indulging in practices of bold ethical nature (Australian libel laws) then the Australian Competition and Consumer Commission should be making in inquiries of the DTCC under the Free Trade agreement that the USA and Australia signed.

UPDATE

It is not the ACCC who should be doing the inquiries but the Australian Securities and Investment Commission (ASIC)

Just fix it!

To quote Saturday Night Live’s Kenan Thompson, there’s a short list of things that can be done quickly, and at no cost, that will go along way toward “fixing” the stock market. The SEC has allowed greed to run rampant by systematically changing rules that protected the average investor since the last Great Depression.

Here’s the list of “Fixes”

• Reinstate the Uptick Rule. This rule was designed to check unbridled short selling and was put in place by the nation’s first SEC Commissioner, Joe Kennedy, in 1937 with good reason. The SEC eliminated this rule in July 2007, which has allowed short sellers to pile on individual stocks and drive them down with alarming speed and frequency. If you’ve wondered why the indexes have been making those dramatic and frightening plummets, you can thank the repeal of the Uptick Rule for it. Many have begun to clamor for its reinstatement, including CNBC’s Jim Cramer, Steve Forbes and Ben Bernanke. A bill has been filed in the U.S. House to reinstate the Uptick Rule, H.R. 6517. POLL > Should Congress reinstate the uptick rule?
  
  
• Enforce Naked Shorting Regulations. Insist on a mandatory pre-borrow tracking cusip numbers … everything else is just clever shell game. “Oh sure I located shares to sell short … they’re in your grandmother’s wig.” Short sellers are supposed to “borrow” the real actual shares of a stock before shorting it. The SEC has failed to enforce existing requirements for shorting stocks, which allow shorts to go “naked” without completing a true borrow of the shares. This allows short sellers to “pile drive” down targeted stocks with no regard for playing by the rules. 
• Mark to Market. This rule was put in place in 2007 and forces banks, insurance companies and other financial institutions to “mark” (price on their balance sheet) assets at their current market value. Yet under current conditions, only predators are willing to bid … insultingly lowball bids at that. This has resulted in another alarming death spiral for banks and companies holding positive cashflow assets that have been marked down to fire sales prices (pennies on the dollar) due to a total “buyers strike.” This can be fixed by amending FAS 157 “Mark to Market” and replace it with a “Mark to Model” where cash flows can be factored in valuation.

This deregulation of the markets while the SEC was asleep at wheel during the Bush Administration has resulted in the total destruction of the average investor’s retirement funds. It’s time for the current Administration to just “fix it.”

As a recent WallStreet Journal editorial explained, “If the president really takes Roosevelt’s legacy seriously, he should suspend mark-to-market accounting rules, restore the uptick rule, and enforce the prohibition against naked short selling. If he doesn’t, historians will look back in utter amazement at Mr. Obama’s preservation of Mr. Bush’s worst economic policies.”

Call or write your Congressperson and the Obama Administration to demand action. Tell them to “JustFix It!”

Write Your Representative! > HERE

More background > HERE