Securities and Exchange Commission
In 1996, the world learned a Japanese firm had cornered the copper market. The company, Sumitomo, was fined $125 million for squeezing copper supplies and artificially inflating prices--at that point the largest penalty ever levied by a U.S. government agency. The Commodities Futures Trading Commission called the scheme “one of the most serious worldwide manipulations” of a commodity in decades. Last Monday, the Securities and Exchange Commission posted a decision that could effectively lead to a repeat of the Sumitomo corner, with one key difference: hoarding copper will now be legal.
Steve Jobs By Walter Isaacson (Simon & Schuster, 627 pp., $35) I. In 2010, Der Spiegel published a glowing profile of Steve Jobs, then at the helm of Apple. Jobs’s products are venerated in Germany, especially by young bohemian types. Recently, the Museum of Arts and Crafts in Hamburg presented an exhibition of Apple’s products, with the grandiloquent subtitle “On Electro-Design that Makes History”—a good indication of the country’s infatuation with the company.
In the wake of the economic chaos brought on by the 2008 financial crisis, there have been widespread demands for accountability. And just last month, the Securities and Exchange Commission (SEC) declared that it had taken a bold step to hold certain individuals involved in the meltdown responsible for their actions. On Friday, December 16, the SEC charged six former executives of Fannie Mae and Freddie Mac with securities fraud, accusing them of misleading investors by understating the extent of their exposure to risky subprime mortgage loans.
The Dodd-Frank law requires that credit rating agencies--Moody's, Standard & Poor's, Fitch, etc.--report to the Securities and Exchange Commission whenever an analyst takes a job from a company that he or she helped rate. The revolving door between rating agencies and rated companies has been cited as one reason why the rating agencies were so reluctant to downgrade banks overly dependent on shaky subprime mortgages and exotic derivatives before the house of cards came down in 2008. But until now it was hard to know exactly how many people passed through that revolving door. Now we know.
For six weeks, I was a sightseer in a foreign city in downtown Manhattan, a land with its own laws and institutions, bankers and janitors, leaders and followers, heroes and fools. When Mayor Michael Bloomberg was asked why he chose to invade Zuccotti Park in the dead of night and sweep it all away, his answer was a familiar one: “Health and safety.” Occupy Wall Street had turned chaotic, he argued. It had to be excised from lower Manhattan like a malignant tumor, with the area sanitized of all press and onlookers.
Psst, Occupy Wall Streeters. I've got a new slogan for you: "Feed The Watchdog!" The Dodd-Frank financial-reform law gave the Securities and Exchange Commission lots of new regulatory responsibilities that House Republicans don't want it to have. Since they lack the votes to repeal Dodd-Frank, they're de-funding it instead. The SEC will have to make do with the same funding level it had in 2011. The same goes for the Commodity Futures Trading Commission. Under Dodd-Frank the CFTC is supposed to regulate derivatives. Remember derivatives? They helped sink the economy in 2008.
When I wrote about Bill Clinton's new book, "Back to Work," and its veiled critiques of the sitting Democratic president earlier today, I relied on published reports of the tome. I now have it in hand, having fought to the front of a line of white working class voters that was queuing up in Washington, desperate for the fresh wisdom of their hero.
When a divided Supreme Court issued its highly controversial Citizens United decision allowing corporations free rein to use their dollars to intervene in elections, there was one seemingly shining light, an area where broad consensus existed and that was endorsed by eight of the nine justices: the value of disclosure. The Court stated in the decision, “With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters.
Republicans look to start rolling back financial reform: Republicans clearly want to strike at the heart of banking reform with legislation attacking new regulations on derivatives, credit rating agencies and private equity firms. But their piecemeal approach suggests they are trying to do so without appearing to favor Wall Street over Main Street.
It's been an almost a week since House Minority Leader John Boehner came forward with his economic plan, such that it is, but I wanted to make one observation about it. Boehner's plan would mean a fairly drastic cut in discretionary spending: According to the Center on Budget and Policy Priorities, Boehner is seeking to reduce it by 22 percent, or more than $100 billion. Of course, Boehner sees this as a virtue: The whole point is to assure voters he wants to reduce "spending." And when you put it that way, in such abstract terms, it sounds pretty appealing to most people.