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Joshua Rosner is Managing Director at independent research consultancy Graham Fisher & Co and advises regulators and institutional investors on housing and mortgage finance issues. Previously he was the Managing Director of financial services research for Medley Global Advisors. In early 2003 Mr. Rosner was among the first analysts to identify operational and accounting problems at the Government Sponsored Enterprises, in the third quarter of 2005 Mr. Rosner identified the peak in the housing market, In October of 2006 Mr. Rosner highlighted the likely contagion from structured securities and credit markets into the real economy.

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Sources have suggested that Senator Barbara Boxer (D-CA) intends to vote “yes” on Chairman Bernanke’s cloture vote and “no” on the floor. The cloture vote requires 60 “yes” votes to approve and really is THE vote to confirm. The floor vote only requires a simple majority to pass and therefore is a less important vote requiring fewer “yes” votes. The blogs and the press should warn those Senators, in advance, that they will out Senators and dog them to the mid-term elections if they try this cheap ploy to look like they are taking a stand. Vote “yes” or “no” – period.

Senators should be told: “If you think Chairman Bernanke has done a good job and fulfilled his mandate (price stability and full employment) then, by all means, vote yes. If you are so focused on your polls that you can’t vote your conscience – either way – you deserve to be sent packing”.

I would add one thing:

The most important story of the week is not being written. Why? A whistle blower suggested to Rep. Issa (R-CA) and, either the same or a different source suggested to Senator Bunning (R-KY), that Chairman Bernanke’s staff at the FRB recommended he allow AIG to file for bankruptcy and recommended AGAINST a bailout of AIG. It is claimed he overrode that recommendation and supposedly the staff recommendation was changed prior to being disclosed to the full Board of the FRB.

In today’s House Oversight Committee meeting both Secretary Geithner and Secretary Paulson repeatedly stated “we had to bail out AIG, we had no choice”. If, in fact, Federal Reserve Board Staff recommended against the bailout. Was it so clear they really “had to”?

Ranking Member Issa does not have subpoena power and has requested that Oversight Chairman Towns (D-NY) subpoena certain relevant documents (“sb-aig-01000092″, “sb-aig-01000125″, “Draft Memo on AIG”).

There has been no real pressure exerted by the press to get this information into the hands of Senators and the public BEFORE the cloture vote. Chairman Bernanke’s cloture VOTE SHOULD NOT BE HELD UNTIL our elected representatives have full information either exonerating Bernanke of these allegations or supporting the allegations. Moreover, we have a right to know “if we had to bail out AIG”

Anyone that want’s to try and suggest mine is a partisan position merely has to look at my willingness to, in the interest of functioning and transparent markets, take on Republicans and Democrats alike.

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Joshua Rosner
Managing Director
Graham Fisher & Co., Inc.
O – (646) 652-6207

Cute:

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Schedule A

This is the document the Congressman was talking about during his opening remarks in today’s committee interviews —

It was dubbed confidential by the SEC at the NYFRB’s request until 2018, and subsequently uncovered via committee subpoena.

click for pdf

PDF here

Scribd Embed here

Hat tip Dylan!

UPDATE: Huff Po has more

Matthew Greenfield of StoneWork Capital answers the above question thusly:

“Using ten racks of co-located blade servers, one quant can detect a janitorial inefficiency, step in between janitor and light fixture, and screw in 49,500 bulbs in less than a millisecond, keeping five hundred lightbulbs of profit.

Two quants competing with each other can screw in 99,998 bulbs in a millisecond, with each quant retaining a profit of one lightbulb.

When ten quant firms try to screw in a light bulb, the bulb explodes, the light fixture gets ripped from the ceiling, the building falls down, the entire electrical grid of the city of Greenwich shuts down, innocent civilians all over the world have their retirement accounts electrocuted, and the Federal Reserve has to give the counterparties of each quant firm five hundred million light bulbs to maintain the stability of the system.

Afterward, each of the ten quant firms subjects its strategies to a probing and relentless critique, hires fifteen additional Ph.D.’s from MIT, Cal Tech, Harvard, and the Indian Institutes of Technology, buys four new supercomputers, and searches for new arbitrage techniques and algorithms.

Independently of each other, each of the ten firms develops the same brilliant and innovative strategy of “Knock knock, who’s there?” arbitrage.

The FOMC statement is almost identical to the last one in Dec. The comments on both the economy and inflation were little changed and they still plan on keeping the end of Q1 deadline for the purchases of MBS/Agency debt. The key difference though is that one, Fed Pres Hoenig, believes that “economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the fed funds rate for an extended period was no longer warranted.” My translation: the financial emergency that brought the fed funds rate to almost zero in Dec ’08 is no longer here and thus the Fed should adapt to a different, though still difficult, economic situation. He’s only one but at least there is some pushback to the extraordinary easy money policy that Ben only seems to know. We’ll see how long he’s the only one.

From the FOMC statement:

This stood out:

“Voting against the policy action was Thomas M. Hoenig, who believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.”

Is consensus on policy starting to crack?

Full statement after the jump

Read the rest of this entry »

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LOL — Paul, the Producer dinged you, not me.

Interesting chart from Bill Gross, on the eve of the SOTU address.

You will note that missing from the chart is the $5.5 trillion in mortgages that the Uncle Sam has on their books, having followed Gross’ suggestion that the government make the GSE backing explicit instead of implicit.

Essentially, Gross is complaining that (amongst other factors) the government listened to him . . .

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Source:
The Ring of Fire
Bill Gross
PIMCO, November 2010
http://media.pimco-global.com/pdfs/pdf/IO%20Feb%202010%20WEB.pdf

A successful fund manager friend is developing a new Model for running assets. He has a solid math background, but needs a good quant to help him develop and refine his approach.

He is looking for two people — a college grad/student, and a PHD mathematician. They run a variety of different types of long term asset management and ST trading algos.

For you math whizzes, Send email to Quant for Model Development

Here is his Bloomberg advert:

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