Newspaper logo  
 
 
Local Stories, Events

Ref. : Civic Events

Ref. : Arts & Education Events

Ref. : Public Service Notices

Books, Films, Arts & Education
Letters

Ref. : Letters to the editor

Health Care & Environment

11.22 Hinkley Point C subsidy has dealt consumers 'a bad hand', say MPs [even ignoring the possibly huge costs of nuclear calamities in the future...]

11.22 Renewables will drive 'steep decline' in wholesale electricity price in Australia – report [with a steep decline in air pollution too!]

11.22 Too right it's Black Friday: our relentless consumption is trashing the planet

11.22 Poor sperm quality linked to air pollution

11.21 Jet fuel from sugarcane? It’s not a flight of fancy

11.21 World’s Cheapest Solar Power in Mexico a Coal-Killer [Trump's obsession to help the coal industry and power plants is obviously stupid in many ways]

11.20 Replacing Liddell coal plant with clean energy $1.3bn cheaper – analysis

11.20 Battered by extreme weather, Americans are more worried about climate change [graphs]

11.20 Luxury Socialized Medicine

11.20 Keystone XL pipeline decision: what's at stake and what comes next? [the public's water is at risk]

11.20 A civil rights 'emergency': justice, clean water and air in the age of Trump

11.19 27-Year Study Finds the Amount of Insects Flying in the Air Has Declined 75 Percent

11.19 'My eyes are burning': Delhi holds half marathon despite pollution warning [“Stupid is as stupid does.” –Forrest Gump]

News Media Matters

11.22 RIP net neutrality: FCC chair releases plan to deregulate ISPs [like the end of The Fairness Doctrine for the news media under Reagan, we expect content and practices to tilt further to favor monoplies and 'conservatives']

11.18 The Paradise Papers: How Ridiculously Easy It Is For The Rich To Avoid Taxes [birds of a feather flock together]

Daily: FAIR Blog
The Daily Howler

US Politics, Policy & 'Culture'

11.22 Christian Theocracy, Authoritarianism, And The Blind Support Of Roy Moore

11.22 Can Republicans Stem the Tide of Women Abandoning Their Party?

11.21 Why is Donald Trump launching a withering attack on nonprofits?

11.21 Lies, Incoherence and Rage on Tax Cuts

11.21 Inequality Out of Control: The Average 1% Household Is Over $2.5 Million Richer in the Past Year

11.15 GOP Tax Bill Would Trigger $25 Billion in Cuts to Medicare, Warns CBO

Justice Matters
High Crimes?

11.18 US, European Nations Slammed for 'Complicity' as Humanitarian Groups Demand Aid for Yemen

Economics, Crony Capitalism

11.20 Monaco builds into the Med to house new throng of super-rich [Can we ever have laws to fully prosecute $Billionaire tax dodgers if the courts and government are bribed? If not, can we have a civilized anarchy instead?]

11.19 The Design Flaw at the Core of Humanity's Malaise

11.18 'All Out Class War': GOP Bill Cuts Taxes for Private Jet Owners, Hikes Taxes on Students

International & Futurism

11.22 The long read: After the liberation of Mosul, an orgy of killing

11.22 Coup in Zimbabwe: A win-win for China – for now

11.22 Vladimir Putin briefs Donald Trump on plan to end Syrian civil war [in the forthcoming agreement, we predict that all of the oil and gas profits (from pipeline decisions, etc.) will go to the oligarchs du jour, with only nice words for the people of the region who have suffered so much...]

11.21 The Saudi System And Why Its Change May Fail

11.21 Saudi Billionaires Look for Ways to Protect Assets From Any Government Purge

11.20 Zimbabwe is not the banana republic of western fancy. After Mugabe, it can thrive [let's all pretend like he really did resign...] [when it's safe, create and grow a government sovereign wealth fund with national mineral wealth mining profits—like Norway did—to facilitate becoming a stronger society, improve public services and build a world-class economy]

11.20 EU to push for 40% quota for women on company boards

We are a non-profit Internet-only newspaper publication founded in 1973. Your donation is essential to our survival.

You can also mail a check to:
Baltimore News Network, Inc.
P.O. Box 42581
Baltimore, MD 21284-2581
Google
This site Web
  Paul Kanjorski and the $550 Billion that "Disappeared" on September 15
Newspaper logo

MEDIA CRITICISM:

Paul Kanjorski and the $550 Billion that "Disappeared" on September 15

by Alice Cherbonnier
Wednesday, 11 February 2009
I'm glad to report that our media aren't brain-dead about how the markets got into trouble. But they are all too often blind or indifferent to incompetence and corruption in the halls of power.
This video clip from C-Span's "Washington Journal" (Feb. 6, 2009) was captured and posted on YouTube. In it, Rep. Paul Kanjorski (D-Pa.)—Capital Markets Subcommittee Chair of the U.S. Congress, as well as Chair of the Financial and Banking Services Sub-committee—makes the astonishing claim that the current financial crisis was triggered by a $550 billion "electronic run on the banks" on September 15, 2008.

Such a claim bears investigation and reporting, and yet I could find no mention of this "run" among the media stories available via Nexis, and a web search produced no legitimate press reportage of it.

Sure, there was plenty of speculation on the discussion sites—the idea was floated that the "run" was a terrorist plot, or a maneuver by the "Saudis" to force the Bush administration to do something to shore up the U.S. dollar. But none of this rang true—these were just more unfortunate "conspiracy theories" of the ilk that proliferates when the public is not promptly and properly informed by the media.

We circulated the above C-Span link to the savvy readers on our newslist, and one reader with a financial and investment background, Bob Gilbert, responded with the following explanation for what happened.

I think the answer to your question is fairly straightforward. However, there are many other questions that are much more troubling.

The answer is that there was a run on the money markets, generally, when a large Money Market (MM) mutual fund (Reserve Primary Fund) "broke the buck." That is, this fund closed out the day with a less (by a few pennies) than $1-per-share net asset value for the fund. Therefore, people panicked and began withdrawing from many MM funds, just as they do from failing banks. This run was made by individuals and institutions. There is some $2.5 trillion estimated to be invested in these funds. Thus I don't think that there are entities "responsible for this "electronic run," other than the individuals and institutions trying to protect their assets by behaving in a perfectly rational manner, given the circumstances. It is also noteworthy that there all all kinds of MM funds in terms of assets held, rate of return, and costs. Examples are treasury bills and bonds, other government debt, corporate debt, and, in some cases, the evil CDOs (collateralized debt obligations). Therefore, each MM fund has its own specific risk profile.

A more important question, I think, is about the behavior of Rep. Paul Kanjorski and his fellow members of the House Capital Markets Subcommittee. It was before this committee that Harry Markopolos appeared last week to testify about his warnings about Bernie Madoff.

Markopolos and the subcommittee members devoted much time to laying out the multitudinous and egregious failures of the SEC with respect to Madoff. During the questioning, Markopolos was asked his opinion of another regulatory entity that is supposed to be overseeing and policing the activities of a segment of the financial services industry—broker/dealers. This one is called the Financial Industry Regulatory Authority (FINRA). It is a non-governmental organization run by the broker/dealers (think: fox watching the henhouse), empowered by the U.S. Congress to do so. Its powers include arbitrating disputes between customers and their broker-dealer members, since aggrieved customers are not usually permitted access to the courts. Supposedly, the U.S. Congress oversees FINRA activities.

Now, Markopolos was asked to compare the SEC and FINRA. His answer was short and pithy: the SEC is incompetent; FINRA is corrupt. (This was particularly interesting to me since I have been the victim of FINRA misbehavior.)

I was aware that President Obama had appointed one Mary Shaprio to be the new head of the SEC, replacing the clueless Christopher Cox. I also knew that Mary Shapiro's previous job was head of FINRA, where she was paid approximately $3 million per year, plus another $5-$25 million reward for her FINRA exit. So, we have here the chief of a corrupt regulatory body, being appointed to clean house at an incompetent regulatory body. She was unanimously confirmed by the U.S. Senate.

Now, neither Rep. Paul Kanjorski nor anyone else on his subcommittee, including the person who asked about FINRA, said one thing about the idiocy of shipping Mary Shapiro from FINRA (corrupt) to the SEC (incompetent). And, have you read any expression of outrage from any member of Congress about the appointment of Shapiro?

I was also struck by Rep. Kanjorski's idiodic statement during the interview that "somebody" threw us into the (financial) ocean, and now he is trying to find the shore. He says this as if it is ineffable who is the "somebody." And, of course, when the going gets a little rough, he takes one leg off of his high horse and says, "I'm not an expert on these matters, I'm just a little ole representative of the people." That is, his office is set up and staffed to send flags and arrange tours for his consituents, and little else.

Thanks to Gilbert's lead, we tracked down good news stories that substantiate his account; check out what U.S. News & World Report, New York Times, The Wall Street Journal, and Bloomberg, among other news sources, for thorough coverage of the Money Market Fund that "broke the buck." Based on the facts of the case, it appears that Kanjorski, as Gilbert suggests, is engaging in self-serving revisionist simplification of how we got into this economic mess.

My error in trying to find the relevant information was that I stupidly included "Kanjorski" in my search string.

I'm glad to report that our media aren't brain-dead about how the markets got into trouble; my error in trying to find the relevant information was that I stupidly included "Kanjorski" in my search string, looking to see what media picked up the story about what he alleged. Kanjorski in this case is just another sorry political bit player who's trying to deflect blame from himself and his cohorts on the impotent congressional financial oversight committees.

If C-Span's moderators don't challenge their interviewees, we can all be easily duped into believing we were being informed. I apologize to those on our news list to whom I sent the Kanjorski C-Span link.

The real story about potential corruption and incompetence has not been covered properly by our media, and that is the revolving door between FINRA and the SEC.

But the real story—the one that Gilbert so eloquently describes—most definitely has not been covered properly by our media, and that is the revolving door between FINRA and the SEC. This story about potential corruption and incompetence is too important to relegate to the inside pages of the business section—if it's covered at all.


To join Baltimore News Network's Newslist, email editor@baltimorechronicle.com, with SUBSCRIBE in the subject line.

Gilbert suggests that Baltimore Chronicle readers ask their U.S. Senators why they voted "aye" for Mary Shapiro's appointment as SEC chief. "I did," says Gilbert of the two Senators in his state. "I was not disappointed at their lack of response," he says, "because my Senators are empty suits by the name of Lindsey—personal valet for McCain and Lieberman's best bud—Graham and Jim 'the cosmos was created 1000 years after the Sumerians invented glue and beer, and you'll burn in hell if you don't agree' DeMint."



Copyright © 2009 The Baltimore News Network. All rights reserved.

Republication or redistribution of Baltimore Chronicle content is expressly prohibited without their prior written consent.

Baltimore News Network, Inc., sponsor of this web site, is a nonprofit organization and does not make political endorsements. The opinions expressed in stories posted on this web site are the authors' own.

This story was published on February 11, 2009.
 

Public Service Ads: