Our financial system is crumbling this week.

[heyzeus]

The markets aren't dumb. The likelihood of an Obama win was priced in weeks ago. The traders (and automated trading computers) could read Intrade and 538.com and knew Obama was winning.

The market dropped. European recession and possibility of the U.S. sequester going into effect are the reasons. Not Obama's muslim kenyan terrorist ass.

[greenback44]

It's great when arrogant insurance companies get screwed by someone smarter then them.

http://www.huffingtonpost.com/mobileweb ... 29990.html

They plead guilty today. The headline is misleading. They screwed over the insurance companies, who designed a dumb product, and merely used the terminally ill. It's sleazy what they did with the terminally ill, but there is no harm to them.

I really wish the whole 401k / IRA / variable annuity industry was shut down. The defense of the favorable tax treatment for these products is that they encourage investing, but honestly the point is to give upper income people another tax dodge and to give asset managers a fatter base for expense charges. Lots of people are putting money into investments that make no sense for them.

[Joe Shlabotnik]

I guess I'm looking at these issues as opportunities to buy into the market instead of looking at it as Armageddon.

Me too - raised cash on election day looking forward to the cliff. They are talking too nice! But we are still a long way from an agreement. If they really do get an agreement quickly, I won't mind having to buy back in a little higher.

[heyzeus]

Market's up sharp today. MUST BE OBAMA!

[pioneer98]

Task force says global shadow banking hits $67 trillion

[pioneer98]

U.S. Charges ex-SAC manager in $276 million insider scheme

U.S. prosecutors on Tuesday charged a former SAC Capital employee with insider trading in a series of transactions that hedge fund titan Steven A. Cohen had personally signed off on.

In what they called "the most lucrative" insider-trading scheme ever, prosecutors alleged that Mathew Martoma helped Cohen's firm avoid losses and reap profits totaling $276 million in the summer of 2008 by using insider tips he got from a doctor about Elan Corp and Wyeth LLC.

Martoma is the fifth person associated with SAC Capital, one of the most widely followed and influential hedge funds, to be charged with insider trading in either a criminal or civil proceeding. He had worked for a unit of SAC Capital called CR Intrinsic Investors in Stamford, Connecticut, until 2010.

CR Intrinsic, which in 2008 mostly traded with Cohen's own money, had initially taken long positions in Elan and Wyeth stocks before reversing itself over the course of one week, selling some stock and building up massive short positions that accounted for one-fifth of all trading in Elan, federal prosecutors said.

[pioneer98]

HSBC was caught laundering money for Mexican drug cartels. They got fined $1.92 billion. No criminal charges, of course. We can't risk angering the Finance Gods!

Fine in HSBC case equal to U.S. drug war aid to Mexico

The U.S. government's decision this week not to prosecute top executives at the global giant HSBC for the bank's systematic laundering of money tied to violent Mexican drug cartels or to hostile regimes has resulted in an interesting number.

The U.S. fined the bank a record $1.92 billion on Tuesday, saying HSBC is essentially too big to prosecute. With assets, subsidiaries and investments spanning the globe, pressing criminal charges against HSBC could harm the global financial network at large, the Justice Department reasoned.

The fine, coincidentally, is about equal to the amount that the U.S. government has sent to Mexico in security aid in recent years under the Merida Initiative: A little more than $1.93 billion was sent by the Bush and Obama administrations to Mexico since 2007 to help Mexico fight the drug trade.

In other words, the money the U.S. government would collect from the British-based HSBC for laundering cartel cash would match the cost of the six-year security investment that the United States has made in a neighboring country fighting a bloody internal conflict.

The Merida Initiative funds for military hardware, intelligence upgrades and training is meant to help Mexico's government fight a war against drug cartels, which has left at least 60,000 people dead or missing over six years but made no major dent in the trafficking of drugs to the United States.

HSBC operators in Mexico are accused of laundering $881 million in drug profits, primarily for the Sinaloa cartel, as well as other Mexican and Colombian traffickers. In doing so, it violated a variety of U.S. laws and bank regulations, including the Trading with the Enemy Act and Bank Secrecy Act.

"These traffickers didn't have to try very hard," U.S. Assistant Atty. Gen. Lanny Breuer said in announcing the decision against HSBC.

"They would sometimes deposit hundreds of thousands of dollars in cash in a single day in a single account," using deposit boxes "designed to fit the precise dimensions of the tellers' windows in HSBC's Mexico branches," Breuer said.

Pablo Galvan Tellez, a banking professor at Mexico's Autonomous Technological Institute, said banks are their own first line of defense against laundering activity.

"At the end of the day, banks must be glass boxes, where we can see all the tubes of where the money is coming from and where it's going," Galvan said.

Academic Edgardo Buscaglia, a world expert on money-laundering and organized crime, said the fine was a "farce," a laughable sum that amounted to "peanuts." He told a radio interviewer Friday that the fine equaled five weeks of HSBC earnings.

HSBC apologized this week for its "mistakes" and promised to set up better safeguards against laundering.

The Sinaloa cartel, meanwhile, is believed to still control trafficking routes over much of western and northern Mexico.

[docellis]

HSBC used to own my car loan. They sold it to Santander USA a few years ago. Santander could provide no documentation about my car loan. I sort of with I would have made them prove I owed them money instead of paying the car off.

[heyzeus]

http://www.usatoday.com/story/money/bus ... t/1891103/

Long overdue, but the justice dep't is pursuing fraud charges (but only civil, not criminal!) against Standard & Poor's for the bogus AAA ratings they were giving to mortgage-backed securities.

If they have any balls they'll go after Moody's too, as well as the investment banks that were paying S&P and Moody's to create the BS ratings for CDOs. They were absolutely complicit in influencing the ratings agencies to give phony grades.

[Arthur Dent]

http://www.usatoday.com/story/money/bus ... t/1891103/

Long overdue, but the justice dep't is pursuing fraud charges (but only civil, not criminal!) against Standard & Poor's for the bogus AAA ratings they were giving to mortgage-backed securities.

If they have any balls they'll go after Moody's too, as well as the investment banks that were paying S&P and Moody's to create the BS ratings for CDOs. They were absolutely complicit in influencing the ratings agencies to give phony grades.

Anybody else watch the recent Frontline report the Justice Department's investigation of Wall Street? The head of the unit had this to say:

http://www.pbs.org/wgbh/pages/frontline ... npunished/

Frontline: You gave a speech before the New York Bar Association. You talked about your use of nonprosecution and deferred prosecution agreements. And in that speech, you made a reference to “losing sleep at night over worrying about what a lawsuit might result in at a large financial institution.” Is that really the job of a prosecutor, to worry about anything other than simply pursuing justice?

Lanny Breuer: I think I am pursuing justice. And I think the whole entire responsibility of the department is to pursue justice. But in any given case, I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution A, and as a result of bringing that case there’s some huge economic effect, it affects the economy so that employees who had nothing to do with the wrongdoing of the company –

Frontline: Or shareholders.

Lanny Breuer: Well, first let’s talk about the employees. Employees may lose their jobs. Shareholders may or may not lose, and shareholders invested. But the employees perhaps did something different.

If it creates a ripple effect so that suddenly counterparties and other financial institutions or other companies that had nothing to do with this are affected badly, it’s a factor we need to know and understand.

We have, as a government and as an administration, dug out of one of the great financial crises in the world. And at the Department of Justice, we’re being aggressive, but we should in fact take into consideration what the experts tell us.

That doesn’t mean we won’t go forward, but it has to be a factor. And if you look at deferred prosecution agreements and nonprosecution agreements, they are a tool that we use in appropriate cases. And we have to continue to use those.

What a truly amazing thing to say.