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Why the SEC Won’t Hunt Big Dogs

propublica.org

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Re: Why the SEC Won’t Hunt Big Dogs

#11

Post by Anechoic »

cobrausn wrote: post #9
nobody3141 wrote: post #6

Earlier quoted context omitted.

Quick economics lesson. The money on Wall St doesn't belong to the guys in red braces - it is the pensions of ordinary Americans and the savings of little old ladies. Letting Wall St crash and burn means everybody in America's pension disappears - everybody over 65 is out on the street. Everybody who saved money has lost it. Nobody accepts cash anymore, after all if you put it in the bank it might dissapear. You are…

IANAE, but this always struck me as... odd. How would the failure of the banking system stop people who really only use it for money storage and purchasing convenience from continuing to use hard currency?

What hard currency?

Re: Why the SEC Won’t Hunt Big Dogs

#12

Post by gallamine »

cobrausn wrote: post #9
nobody3141 wrote: post #6

Earlier quoted context omitted.

Quick economics lesson. The money on Wall St doesn't belong to the guys in red braces - it is the pensions of ordinary Americans and the savings of little old ladies. Letting Wall St crash and burn means everybody in America's pension disappears - everybody over 65 is out on the street. Everybody who saved money has lost it. Nobody accepts cash anymore, after all if you put it in the bank it might dissapear. You are…

IANAE, but this always struck me as... odd. How would the failure of the banking system stop people who really only use it for money storage and purchasing convenience from continuing to use hard currency?

Someone correct me if I'm wrong, but bank consumers only perceive it as "money storage". In reality all deposits (after a certain point) are loans to the bank which then get pushed along/through/down/into the financial system. That's why runs on banks are so bad - the money isn't there.

Re: Why the SEC Won’t Hunt Big Dogs

#13

Post by nobody3141 »

cobrausn wrote: post #9
nobody3141 wrote: post #6

Earlier quoted context omitted.

Quick economics lesson. The money on Wall St doesn't belong to the guys in red braces - it is the pensions of ordinary Americans and the savings of little old ladies. Letting Wall St crash and burn means everybody in America's pension disappears - everybody over 65 is out on the street. Everybody who saved money has lost it. Nobody accepts cash anymore, after all if you put it in the bank it might dissapear. You are…

IANAE, but this always struck me as... odd. How would the failure of the banking system stop people who really only use it for money storage and purchasing convenience from continuing to use hard currency?

You don't trust your local bank to store your $10 bill - but you still trust the central bank not to print a billion of them tomorrow?

Re: Why the SEC Won’t Hunt Big Dogs

#14

Post by shareme »

njharman wrote: post #7
dasil003 wrote: post #5

I wish they had let Wall Street crash and burn when they had the chance. It's obvious that the majority of credible advisors had an inherent conflict of interest in proclaiming that systematic failure would destroy the economy irreparably. I say it would have been better to let the economy crumble and then rebuild it rather than allow this precedent to be set that investment banks can take any disk imaginable and it'…

The precedent was already set before. S&L others, it's a regular, periodic occurrence.

that gets bigger each time after a major financial deregulation law package passes..its an uncanny correlation..uncanny as most congress people and senators seem to be okay with overlooking it as long as their political war chests are filled with lobbyists dollars..

Re: Why the SEC Won’t Hunt Big Dogs

#15

Post by thaumaturgy »

For a better article: http://www.rollingstone.com/politics/news/why-isnt-wall-stre...

The short of it is that many of the people that work for the SEC and the Justice Department are themselves financial industry insiders who have no interest in pursuing their friends or ruining their professional futures.

Re: Why the SEC Won’t Hunt Big Dogs

#16

Post by cobrausn »

Anechoic wrote: post #11
cobrausn wrote: post #9

Earlier quoted context omitted.

IANAE, but this always struck me as... odd. How would the failure of the banking system stop people who really only use it for money storage and purchasing convenience from continuing to use hard currency?

What hard currency?

Cash, issued by the government, one would assume.

Re: Why the SEC Won’t Hunt Big Dogs

#17

Post by pnathan »

cobrausn wrote: post #9
nobody3141 wrote: post #6

Earlier quoted context omitted.

Quick economics lesson. The money on Wall St doesn't belong to the guys in red braces - it is the pensions of ordinary Americans and the savings of little old ladies. Letting Wall St crash and burn means everybody in America's pension disappears - everybody over 65 is out on the street. Everybody who saved money has lost it. Nobody accepts cash anymore, after all if you put it in the bank it might dissapear. You are…

IANAE, but this always struck me as... odd. How would the failure of the banking system stop people who really only use it for money storage and purchasing convenience from continuing to use hard currency?

Because most pensions are tied up in the market. So if the banking system deflates and resets, it drops the market value of pensions significantly.

The market essentially is a herd animal. Everything goes up or down together, in aggregate. Since wisdom in the financial market is to diversify, ie, hold in aggregate, a well-chosen portfolio generally does about as well as the market in the long term.

So if Grandma had 100K in her diversified portfolio of low-risk investments and the market exploded 50%, she'd have 50K, which represents a major loss of financial capabilities.

Whether it is better to drop such people in the cold while things reset or whether it is better to keep the cushion going, I leave to another media form, as such discussions tend to be too inflammatory online.

Re: Why the SEC Won’t Hunt Big Dogs

#18

Post by seanalltogether »

nobody3141 wrote: post #6
dasil003 wrote: post #5

I wish they had let Wall Street crash and burn when they had the chance. It's obvious that the majority of credible advisors had an inherent conflict of interest in proclaiming that systematic failure would destroy the economy irreparably. I say it would have been better to let the economy crumble and then rebuild it rather than allow this precedent to be set that investment banks can take any disk imaginable and it'…

Quick economics lesson. The money on Wall St doesn't belong to the guys in red braces - it is the pensions of ordinary Americans and the savings of little old ladies. Letting Wall St crash and burn means everybody in America's pension disappears - everybody over 65 is out on the street. Everybody who saved money has lost it. Nobody accepts cash anymore, after all if you put it in the bank it might dissapear. You are…

And the reason the government won't seriously prosecute wall st is because these firms are holding the investment money for all these politicians.

Re: Why the SEC Won’t Hunt Big Dogs

#19

Post by cobrausn »

nobody3141 wrote: post #13
cobrausn wrote: post #9

Earlier quoted context omitted.

IANAE, but this always struck me as... odd. How would the failure of the banking system stop people who really only use it for money storage and purchasing convenience from continuing to use hard currency?

You don't trust your local bank to store your $10 bill - but you still trust the central bank not to print a billion of them tomorrow?

Never really said I did. But the fact is a lot of people still use cash, and would continue to do so (regardless of actual value) after a banking system crash. At least, I perceive it would, unless governmental authority also broke down. Then we are back to a barter economy.

Re: Why the SEC Won’t Hunt Big Dogs

#20

Post by raganwald »

adamtmca wrote: post #10
adamtmca wrote: post #4

I think a big part of the problem is probably talent. A hot shot kid coming out of a C.S./engineering program wants to work at Google or Facebook or a startup, not the federal government. A kid coming out of an econ/math/finance program wants to work for a "big dog" at an investment bank or a PE fund, not some wimpy bureaucrat.

Case in point. Harry Markopolos is a fraud investigator who works for institutional investors "big dogs", not the SEC. He looked at Madoff's returns, the strategy they claimed they were using and took "4 hours" at home to figure out that it was fraud. Here is a choice section of Markopolos's testimony: http://www.youtube.com/watch?v=q1A7LdW0Y_s

Reading further, it may have more to do with corruption and/or apathy than inability. I doubt they couldn’t find first base in Fenway park, they simply didn’t want to go looking for trouble.

https://en.wikipedia.org/wiki/Harry_Markopolos

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