The Dirtiest Scoundrels in the Business
- Details
- Published on Monday, 06 February 2012 08:00
- Written by Sara Nunnally, Editor, Inside Investing Daily
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The crooks in the Senate passed a bill with an overwhelming majority. If it gets to the president, insider trading will finally be illegal on Capitol Hill. It's too bad it will never be enforced.
Nowadays, if something passes the U.S. Senate on a vote of 96-3, you've a right to be suspicious... Is it just some fluff law reaffirming the eagle as top bird? Because this do-nothing Congress won't agree on anything of substance.
Wait, what? You say the Senate passed an insider trading ban? Really...
Apparently, last Thursday the Senate approved a bill that would ban Congress, its staff and most employees of the executive branch from trading stocks, commodities or futures based on non-public information they are privy to.
These folks will also have to report trades of $1,000 or more within a month of making them.
It's a fairly bright spot in today's politics... but can we trust it?
From the mouth of the horse, Mass. Republican Scott Brown: "We can send the message to the American people that we're trying to re-establish the trust that seems to have been lost with them. And who knows, maybe we'll be in double figures in terms of the approval rating pretty soon."
But I have more concerns, other than Congress just doing this to spruce up its image... such as who's going to be enforcing this ban.
That enforcement will most likely come from the watchful eye of the SEC, the Securities and Exchange Commission.
The same commission that's been granting exemptions of certain laws and regulations to "Big Banks" like JPMorganChase, Goldman Sachs and Bank of America. From The New York Times:
An analysis by The New York Times of S.E.C. investigations over the last decade found nearly 350 instances where the agency has given big Wall Street institutions and other financial companies a pass on those or other sanctions. Those instances also include waivers permitting firms to underwrite certain stock and bond sales and manage mutual fund portfolios.
JPMorganChase, for example, has settled six fraud cases in the last 13 years, including one with a $228 million settlement last summer, but it has obtained at least 22 waivers, in part by arguing that it has "a strong record of compliance with securities laws." Bank of America and Merrill Lynch, which merged in 2009, have settled 15 fraud cases and received at least 39 waivers.
In fact, Citigroup is the only major Wall Street bank to be forced to comply with the law after major transgressions, like issuing misleading information about its business.
I feel like I'm in a weird tragicomedy here... No wonder the Senate passed this bill overwhelmingly. Not only will it make them look good but they can rely on the SEC to not enforce it!
Such faith in the government commission that effectively takes bribes to keep the lines of money flowing into these banks...
Let me explain.
These big banks need access to quick money. They need to be able to raise money publicly without getting the government's and the SEC's approval. They also break a lot of rules.
When a company breaks SEC rules it can be banned from getting access to that money, or from other lucrative actions, like managing a mutual fund.
But here's where the bribe comes in. The company settles its fraud charges, or whatever infraction, with the SEC by paying a fine. Remember Goldman Sachs $550 million fine for defrauding investors of subprime mortgage bundles by failing to mention it was betting against those same investments?
Yeah, that would be the bribe.
Because after a business settles with the SEC, it can then receive waivers of other rules and regulations, specifically for the process of getting access to public money. This cuts weeks of time off the true process of raising funds, and gives these special banks an edge in the game.
Now that I think about it, depending on where you are in the process, those settlements could also be considered kickbacks.
And these are the folks we might be trusting to keep Congress -- some of the dirtiest scoundrels in the business -- on the up-and-up.
Like you, I don't have a lot of faith that this bill will do much about the privilege and access Congress has to insider information.
In fact, the only thing this should tell you is that your money isn't worth anything to them. They don't care about your well-being or your prosperity. The simple truth is you can't trust anyone in Washington. I wouldn't even trust them to hold my purse while I tied my shoe.
And now they're trying to win back our trust with a flimsy mosquito net against the flood of insider investment profits they've been making this whole time.
You deserve better.
And you're not going to get it from Washington or the Big Banks. But in three months' time, you'll get the chance to take control of your financial destiny.
Join us this April at our Natural Resources Summit to learn how to invest in real wealth, not Washington's shell game. You'll hear from trading experts and geologists, asset managers, and global experts in precious metals and energy.
Big names, like Eric Sprott and Rick Rule, with even bigger track records that show they really know what they're talking about.
Learn how you can reserve your seat and get real-time access to these great real-wealth experts right here.
P.S. Special Video Presentation: On Feb. 9, 2012, we will air a special video presentation from Aaron on how you can make money from natural gas. But I'll warn you right now. It's not the way you think. In fact, Aaron says, "Most investors have it all wrong." In his special video presentation he'll explain why U.S. companies aren't the first place you should put your money. The video is free to watch. Just make sure you are at your computer on Feb. 9, 2012, at 7 p.m.
Chart of the Day
By Adam English, Associate Editor, Inside Investing Daily
Ben Bernanke had good news for all of the gold bulls last month. Granted, he didn't say a word about gold, but he almost single-handedly drove gold back above $1,700 per ounce.
During the post-meeting press conference, the Fed boss announced large-scale bond purchases are still on the table -- but he dropped another little nugget of information...
He expects interest rates to stay exceptionally low through 2014.
Albert Einstein once said, "Insanity is doing the same thing and expecting different results." For the sake of everyone else's sanity, I won't bother getting into the folly of more quantitative easing this early on a Monday morning.
However, the interest rate information and its effect on gold is worthy of a Chart of the Day...
Here we have a complex way of measuring "real" interest rates and comparing them to the price of gold. By "real" I mean subtracting the 12-month moving average of the year-to-year of the U.S. Consumer Price Index from the 12-month moving average of the three-month Treasury bill. The underlying math is obscene but it is a great way to show the trend through a chart.
With all of the pressures from investors and central banks on gold supplies, gold looks strong for years to come.
If the Fed goes on another bond shopping spree, gold will have nowhere to go but up.
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