Posts filed under “Regulation”

When Smart People Do Dumb Things

Joe Nocera had a brutal — and brutally honest — column today. He essentially states that the Madoff victims were willing accomplishes through their own naivete and bad judgment.

“And yet, just about anybody who actually took the time to kick the tires of Mr. Madoff’s operation tended to run in the other direction. James R. Hedges IV, who runs an advisory firm called LJH Global Investments, says that in 1997 he spent two hours asking Mr. Madoff basic questions about his operation. “The explanation of his strategy, the consistency of his returns, the way he withheld information — it was a very clear set of warning signs,” said Mr. Hedges. When you look at the list of Madoff victims, it contains a lot of high-profile names — but almost no serious institutional investors or endowments. They insist on knowing the kind of information Mr. Madoff refused to supply. . .

“These were people with a fair amount of money, and most of them sought no professional advice,” said Bruce C. Greenwald, who teaches value investing at the Graduate School of Business at Columbia University. “It’s like trying to do your own dentistry.” Mr. Hedges said, “It is a real lesson that people cannot abdicate personal responsibility when it comes to their personal finances.”

And that’s the point. People did abdicate responsibility — and now, rather than face that fact, many of them are blaming the government for not, in effect, saving them from themselves. Indeed, what you discover when you talk to victims is that they harbor an anger toward the S.E.C. that is as deep or deeper than the anger they feel toward Mr. Madoff. There is a powerful sense that because the agency was asleep at the switch, they have been doubly victimized. And they want the government to do something about it.”

While there can be no doubt that the SEC was asleep at the switch, so too were these investors. Not only did they ignore all of the Madoff red flags, many of them put all of their monies with one single manager. That is a huge mistake.

Nocera adds that some investors who had been in a previous billion-dollar Ponzi scheme — where investors managed to recover ~60 cents on the dollar — then turned around and gave their money to Madoff.

Astonishing . . .

>

Source:
Madoff Had Accomplices: His Victims
JOE NOCERA
NYT, March 13, 2009

http://www.nytimes.com/2009/03/14/business/14nocera.html

Category: Legal, Regulation

Interactive Bank Failure Map

Nice interactive map, via TheStreet.com: > > Source: Interactive Bank Failure Map Philip van Doorn TheStreet.com 02/17/09 – 11:20 AM EST http://www.thestreet.com/story/10464237/1/new-interactive-bank-failure-map.html

Category: Corporate Management, Credit, Legal, Regulation

Interview with Jim Chanos

NBR’s Darren Gersh talked with Jim Chanos, President of Kynikos Associates. He asked the legendary short seller for his take on investment opportunities in this market. A portion of the interview aired in tonight’s program. You can watch the extended version here. Just click the image below. (You need Flash installed to watch.)

click for video


11:44
Thursday, February 12, 2009

via Nightly Business Report

Category: Markets, Regulation, Short Selling, Video

Did the Credit Ratings System Lead to Economic Crisis?

Avinash Persaud, founder and Chairman of Intelligence Capital, discusses regulatory solutions that would avoid this happening next time: Lending to a Credit Rating

The credit rating section begins at ~22 minute

Gresham College, Running time 51 min 45 sec

One of the puzzles of the 2007/8 credit crunch is how a relatively small loss of capital in a tiny market segment was transformed into a global financial crisis costing close to $1 trillion and sending the world economy into slowdown.

Key players in this tragedy are a set of legal and accounting principles that are well-meaning, but turn financial hiccups into liquidity black holes.

Category: Bailouts, Credit, Regulation, Video

Band-Aids for the Ailing Economy

Nice interactive timeline via Portfolio: This is 1935 – 2008; The earlier version 1865-1935 is also here

Category: Bailouts, Digital Media, Legal, Regulation

NYSE Floor Rumor: SEC to Overturn Mark-to-Market

> No proof if this is true or not, but its whats goosing the markets . . .

Category: Corporate Management, Credit, Legal, Regulation

SEC’s “Investigative Ineptitude”

Interview with Rep. Bradley Sherman (D) of California (In Focus)

Bloomberg, February 04, 2009

Category: Legal, Regulation, Video

Barney Frank: ‘Proper Regulation Works’

Congressman Barney Frank speaks with Emily Rooney, host and executive editor of Greater Boston, to unravel the factors that led to Barack Obama’s victory in the historic 2008 election — and then look forward to its impact on the coming years for our nation – Ford Hall Forum

Nov 13th, 2008

Category: Bailouts, Regulation, Video

Davos: Is Capitalism, as We Know It, Dead?

As a record number of heads of state gather with business moguls in Davos, WSJ’s Andy Jordan wonders whether the World Economic Forum’s focus will be on finger-pointing or collaboration to halt the current global financial-markets slide.

1/27/2009

Category: Bailouts, Credit, Economy, Psychology, Regulation, Video

Bust, Bankruptcy, Bailouts: What Should We Do Now?

I am speaking at an AEI panel today, with Tim Bitsberger,  Joshua Rosner of Graham Fisher & Co., Walker Todd, of the American Institute for Economic Research, and R. Christopher Whalen of Institutional Risk Analytics. Summary: The credit crunch and financial panic of 2008 triggered a remarkable series of government interventions and bailouts, including huge…Read More

Category: Bailouts, Credit, Derivatives, Politics, Really, really bad calls, Regulation