Posts filed under “Bailout Nation”

SEC Increasing Whistle Blower Payoffs

One of the suggestions I made in the new chapter of Bailout Nation (written for the paperback prior to fin reg passing) was some common sense advice to the SEC:

“To root out more corporate fraud, [the SEC] should establish an aggressive whistle blower program that rewards those who identify fraud with a percentage of any recovery of penalties imposed (similar to the program the IRS has).”

It turns out that the the financial reform legislation has big cash rewards to whistleblowers who report fraud and other wrongdoing at publicly traded firms and Wall Street banks:

“Under the program, which is already live, anyone who provides a tip that leads to a successful Securities and Exchange Commission action will be able to collect between 10% and 30% of the amount recovered — as long as the total amount exceeds $1 million. This means the minimum payout is $100,000. The whistle-blower could be a company insider or a private investor, if they’re able to offer information or analysis that leads to an action. And with potential payoffs netting millions — or even tens of millions — of dollars, experts are bracing for a surge in tipoffs.”

We should look forward to the annual SEC reports of how much in fraud and corruption was rooted out by whistle blowers.

I also expect to see this become somewhat institutionalized — we might see some well capitalized hedge funds hiring or funding whistle blowers to gain insight into stocks to short;

I wonder if we might see a new hedge fund model: A fund that is formed and funded to literally chase whistle blower rewards with a similar pay structure as traditional 2/20 hedge funds.

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Source:
SEC Now Offering Big Payoffs To Whistle-Blowers
Janet Morrissey
Time, Aug. 19, 2010
http://www.time.com/time/business/article/0,8599,2012066,00.html

Category: Bailout Nation, Regulation

Simplifying the Financial-Reform Bill

> Stephen J. Dubner, NYT journalist and co-author of the book Freakonomics, asks the following question at the Freakonomics/Times blog: “How Would You Simplify the Financial-Reform Bill? The rules were simple: 5 suggestions, 500 words. The other participants are Nassim Taleb, Justin Wolfers (Professor of Business and Public Policy at the University of Pennsylvania), and…Read More

Category: Bailout Nation, Bailouts, Regulation

2008 Bailout Counter-Factual

Earlier this month, I discussed a NYT OpEd by Treasury Secretary Tim Geithner (Welcome to My Job Security). Geithner pointed approvingly to the report released by Alan Blinder and Mark Zandi, advisers to President Bill Clinton and Senator John McCain, respectively: “The combined actions since the fall of 2007 of the Federal Reserve, the White…Read More

Category: Bailout Nation, Bailouts, Financial Press, Regulation

Fannie Freddie NYT OpEds

There are two OpEds in today’s New York Times regarding the GSEs. One of them is full of insight and intelligence and rationality. The other is by John Carney. The insightful column, Say Goodbye to Fannie and Freddie, was written by former St. Louis Fed president Bill Poole. During the credit bubble and housing boom,…Read More

Category: Bailout Nation, Credit, Federal Reserve, Real Estate, Really, really bad calls

Understanding Context: The Housing Boom & Bust

Over at Economix, Harvard economics professor Ed Glaeser looks at the ultra-low interest rates of the aughts, and does not find them to be much to blame for the US Housing boom and bust: “The most common explanation for the great surge in prices is the availability of easy credit, which took the form of…Read More

Category: Bailout Nation, Credit, Real Estate, Really, really bad calls, Regulation

Hank Paulson: Blame Crisis on FHA/GSEs

Hank Paulson, the criminally inept Treasury Secretary who shoveled trillions of taxpayer dollars to insolvent banks, facilitated the grand theft of some near $20 billion dollars from AIG by Goldman Sachs (where he was previously CEO), is attempting to change the narrative of the credit crisis and collapse. In today’s Washington Post piece, Paulson ignores…Read More

Category: Bailout Nation, Bailouts, Credit, Derivatives

Global Housing Boom

I have been adding some additional charts to my powerpoint for this afternoon.I am choosing amongst the areas I want to discuss, when an email came in regarding my presentation. One of the conference participants made the following challenge to me: “Can you support your position, in a fast, easy way, why the US housing…Read More

Category: Bailout Nation, Real Estate, Really, really bad calls

Bailout Nation: Paperback Is Here!

Wow, I almost let this slip by unannounced: The paperback edition of Bailout Nation is here ($11.53 for the paperback, $10.38 for the kindle edition). There is a new chapter on whether the Reform legislation will fix much of anything (take a guess where I fall no this). The cover has reviews instead of blurbs,…Read More

Category: Bailout Nation

A Brief History of Bailouts

The paperback of Bailout Nation is out today! Here is the first chapter: > Brief History of Bailouts

Category: Bailout Nation, Books

Wall Street/Las Vegas Casino Banks

StereoHell/Imp Kerr, who did the fantastic illustrations for the Bailout Nation chapter titled Casino Capitalism, is showing the very same work at the Tribeca Grand. (full size versions can be seen here) The show has a website where you can purchase the artwork, including all of the bailed banks as Las Vegas Casino drawings:  …Read More

Category: Bailout Nation, Bailouts, Really, really bad calls