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From: Sam3/26/2012 2:44:56 PM
of 372514
This article was written back in November, but I just read it today. Relevant to the MF Global mess, as well as future possible messes and Wall Street legislative power.

Tiny Rule Change at Heart of MF Global Failure
By William D. Cohan Nov 15, 2011 7:00 PM ET

Laurie R. Ferber has quite a resume. She is currently the general counsel of MF Global Holdings Ltd., the New York-based futures and commodities brokerage that filed for bankruptcy on Oct. 31, listing some $40 billion in liabilities. Before joining MF Global in 2009, a year or so before Jon Corzine became its chairman and chief executive officer, Ferber was general counsel and chief regulatory officer at the International Derivatives Clearing Group LLC, which clears interest-rate swaps.

Before that, she spent more than 20 years at Goldman Sachs Group Inc. (GS), where first she was general counsel for J. Aron & Co., a commodities business that Goldman Sachs bought in 1981, and then was the co-general counsel of Goldman’s principal business, known as FICC -- for Fixed Income, Currency and Commodities -- when J. Aron was merged into the rest of Goldman’s fixed-income division. But at the moment, her greatest significance may be as a long-time advocate for revisions to a little-known and vastly underappreciated Commodities Futures Trading Commission rule called Regulation 1.25.

Before 2000, the rule permitted futures brokers to take money from their customers’ accounts and invest it in a number of approved securities limited to “obligations of the United States and obligations fully guaranteed as to principal and interest by the United States (U.S. government securities), and general obligations of any State or of any political subdivision thereof (municipal securities.)” That is, relatively safe securities with high liquidity.

Internal Repo Allowed The banks, however, pushed the CFTC to expand the investment options that would allow firms to practice “internal repo.” In this scheme, money is taken from customer accounts and invested short-term in a variety of securities, with the futures brokers reaping the not- insignificant financial rewards from their customers’ money.

And, lo and behold, such efforts were successful. In December 2000, the CFTC agreed to amend Regulation 1.25 “to permit investments in general obligations issued by any enterprise sponsored by the United States, bank certificates of deposit, commercial paper, corporate notes, general obligations of a sovereign nation, and interests in money market mutual funds” -- in other words, riskier investments that could make more money for Wall Street.

Then, in February 2004 and May 2005, Regulation 1.25 was further amended and refined to the liking of Ferber and the banks. In the end, the door was opened for firms such as MF Global to do internal repos of customers’ deposits and invest the funds in the “general obligations of a sovereign nation.”

This practice, of course, may well be the centerpiece of the MF Global disaster. We now know that Corzine -- who was CEO of Goldman Sachs from 1994 to 1999 -- bet $6.3 billion on the distressed long-term bonds of countries such as Italy and Spain, although it’s unclear if clients’ funds were used. Bart Chilton, a CFTC commissioner, told Bloomberg News on Nov. 10 the loss to customers’ accounts may have resulted from a “massive hide-and-seek ploy.”

While the CFTC’s and the Federal Bureau of Investigation’s probes into the missing money continue, it isn’t too soon to pass judgment on how the too-close relationship between Wall Street and Washington can lead to seemingly innocuous changes in the obscure rules governing the securities industry, which, in turn, can result in financial disaster.

Hands on Keyboards This danger is especially relevant now as hundreds of new regulations are being written that will govern the way Wall Street operates in post-crisis, post-Dodd-Frank world. Needless to say, Wall Street’s lobbyists are looking to place a heavy hand on the regulators’ keyboards and make sure the new rules are rewritten the way they want them to be.

This is nothing new, of course. For years, the finance industry has been influencing the regulations that govern it, often with devastating consequences. For instance, in June 2004, the Securities and Exchange Commission -- then the chief Wall Street regulator -- without much fanfare agreed to allow securities firms to vastly increase the amount of leverage they could use in their businesses.

So authorized, the financial institutions went to town, levering up their balance sheets on the order of 50- to-1 intra-quarter, and then lowering the leverage to around 35-to-1 by the end of the quarter when it came time to report their financial condition. As a result, a mere 2 percent or 3 percent decline in the value of the assets on their books could wipe out a firm’s equity.

As anyone who has closely studied what happened to Wall Street in 2008 knows, the value of many of the assets that firms such as Bear Stearns Cos., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. jammed onto their balance sheets declined significantly -- causing huge losses, wiping out their equity and causing them to be virtually or actually bankrupt. (The same thing happened to MF Global of course, which was leveraged by some 40-to-1 at the end.)

We’ll see if MF Global will claim that the changes to Regulation 1.25 during the past decade gave it cover for its actions. It now seems clear that investing customer money in the risky, distressed long-term bonds of European countries shouldn’t have been permitted. Then again, it’s more than a little amazing that the CFTC allowed futures brokers like MF Global to do internal repos with client funds under any circumstances.

Reform Went Nowhere In a nifty bit of Washington irony, about a year ago, shortly after the Dodd-Frank Bill was passed, the CFTC proposed vastly restricting the way customer money could be invested. One of the proposed changes was to eliminate the possibility of investing in the sovereign debt of other countries. “The Commission seeks to simplify Regulation 1.25 by narrowing the scope of investment choices in order to eliminate the potential use of instruments that may pose an unacceptable level of risk,” read the CFTC proposal.

Unsurprisingly, the reform effort went nowhere. Equally unsurprisingly, one the many comment letters from financial professionals to urge the CFTC to keep the status quo came from Laurie Ferber.

Now, MF Global is gone, along with thousands of jobs and billions of dollars in creditor money -- to say nothing of the still missing $593 million. “I believe we have to tighten how investor funds can be used,” Gary Gensler, the CFTC chairman and another former Goldman Sachs executive, said on Nov. 7. “They’re segregated and must be segregated at every minute of every day. And then if they are invested, they should be invested with good collateral with outside parties.” That’s the right idea; I hope this time the commission means it.

(William D. Cohan, a former investment banker and the author of “Money and Power: How Goldman Sachs Came to Rule the World,” is a Bloomberg View columnist. The opinions expressed are his own.)

To contact the writer of this article: William D. Cohan at

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To: JohnM who wrote (185866)3/26/2012 3:13:37 PM
From: Pogeu Mahone
of 372514
Anything and everything published about the CIA is BS.
The CIA is a world wide organization
Berets and Seals have carried out assassinations and
worse since their inception. You have to invited in to join.

The US Central Intelligence Agency (CIA) and paramilitary forces may have killed dozens of al-Qaeda leaders and thousands of its foot soldiers, but there is another mysterious organisation that has killed even more of America’s enemies in the decade since the 9/11 attacks.

According to the Washington Post, since the September 11, 2001 attacks, this secretive group of men (and a few women) has grown ten-fold while sustaining a level of obscurity that not even the CIA managed.

“We’re the dark matter. We’re the force that orders the universe, but can’t be seen,” a strapping Navy SEAL, speaking on the condition of anonymity, said in describing his unit.

The SEALs are just part of the US military’s Joint Special Operations Command, known by the acronym JSOC, which has grown from a rarely used hostage rescue team into America’s secret army.

When members of this elite force killed Osama bin Laden in Pakistan in May, JSOC leaders celebrated not just the success of the mission but also how few people knew their command, based in Fayetteville, North Carolina, even existed.

This article, adapted from a chapter of the newly released “Top Secret America: The Rise of the New American Security State,” by the Washington Post, chronicles JSOC’s spectacular rise, much of which has not been publicly disclosed before.

Two presidents and three secretaries of defence routinely have asked JSOC to mount intelligence-gathering missions and lethal raids, mostly in Iraq and Afghanistan, but also in countries with which the United States was not at war, including Yemen, Pakistan, Somalia, the Philippines, Nigeria and Syria.

The president has also given JSOC the rare authority to select individuals for its kill list — and then to kill, rather than capture, them.

Critics charge that this individual man-hunting mission amounts to assassination, a practice prohibited by US law.

The JSOC list is not usually coordinated with the CIA, which maintains a similar, but shorter roster of names.

Created in 1980 but reinvented in recent years, JSOC has grown from 1,800 troops prior to 9/11 to as many as 25,000, a number that fluctuates according to its mission.

It has its own intelligence division, its own drones and reconnaissance planes, even its own dedicated satellites.

It also has its own cyber warriors, who, on Sept. 11, 2008, shut down every jihadist Web site they knew.

Obscurity has been one of the unit’s hallmarks.

When JSOC officers are working in civilian government agencies or US embassies abroad, which they do often, they dispense with uniforms, unlike their other military comrades.

In combat, they wear no name or rank identifiers. They have hidden behind various nicknames: the Secret Army of Northern Virginia, Task Force Green, Task Force 11, Task Force 121. JSOC leaders almost never speak in public. They have no unclassified web site.

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To: Bread Upon The Water who wrote (185916)3/26/2012 3:19:24 PM
From: Cogito
of 372514
>>Ever since the near WH miss crash by a private air plane during the Bush/Clinton (? can't remember)) administration WH roof security underwent a change. There is probably a shoot down plane technology up there that requires human involvement.

It is my belief there are also permanent guard posts up there post 9/11 at all 4 corners. Solar panels may affect line of sight/fire aims.<<

What you say there is plausible. I'll grant you that.

One would think that firing lines would be away from the building, though, and the solar panels would not be right at the edges or overhanging them.

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To: Bread Upon The Water who wrote (185917)3/26/2012 3:27:46 PM
From: Cogito
of 372514
>>I do think he will do what he believes what will actually work to help the country if he is elected. I don't think he is an ideologue unless one can call being pro-business an ideology.<<

I don't think he's an ideologue, either. Apart from giving huge tax breaks to the people who need them the least, I don't think he has any ideas at all.

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To: Cogito who wrote (185952)3/26/2012 3:41:15 PM
From: Dale Baker
of 372514
Being a doormat for every corporate special interest in the country is certainly an ideology. That's what the 2000's were all about. Wanna drill dangerous oil wells without supervision? Go right ahead! Wanna lever up that boring balance sheet 40-50x to jack up your bonus? Go for it, that's free enterprise! Wanna sell big SUVs until the market collapses due to high oil prices (cuz we deregulated the hell out of the commodity markets too) and you go bankrupt? Go for it!

A Romney presidency will be a total redux of the Bush-Cheney crazy rollercoaster economy. Because of ideology.

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From: Dale Baker3/26/2012 3:48:52 PM
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If they actually looked at the evidence...

"In Texas, the state that has filed suit to strike down the entire preclearance procedure of the Voting Rights Act of 1965 because the Justice Department refused to preclear its new photo ID law, there have been during the last two election cycles a grand total of four allegations made to the Attorney General’s office of people ineligible to vote impersonating qualified voters. As Think Progress’ Josh Israel notes, these are pretty damning statistics:

Though [Gov. Rick] Perry has claimed Texas has endured “multiple cases” of voter fraud, even of the paltry 20 election law violation allegations the state’s attorney general handled in the 2008 and 2010 elections, most related to mail-in ballot or campaign finance violations, electioneering too close to a polling place, and a voter blocked by an election worker. It is unclear how many Texans attempt to illegally check out library books while impersonating neighbors or dead people, each year. But in a state of more than 25 million people, the odds of being even accused of voter impersonation in the Lone Star State are less than one in 6,250,000.

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To: ChinuSFO who wrote (185898)3/26/2012 3:49:20 PM
From: bentway
of 372514
Romney belongs to The Church of Jesus Christ of the Latter Day Saints. They think of themselves as Christianity 2.0, from when their first prophet, Joseph Smith, received the Golden Tablets from the angel Moroni, and translated them into the Book of Mormon, updating and supplementing the teachings of Jesus.

They believe that when you die, you will be accompanied in Heaven with your entire family, which can include many wives, even though it's too soon to do that on Earth. If you perfect yourself enough, you can be the God of your own planet, somewhere in the universe.

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To: Sam who wrote (185933)3/26/2012 4:03:22 PM
From: hdl
of 372514
nothing is relevant to racists who don't care about facts, race to judgment and want to lynch zimmerman. i guess sharpton's history isn't relevant either. or peop0le much more interested in going after a white hispanic for killing a black, than hip hop, media and apologists for black thugs killing many more blacks.

Police: Trayvon Martin Slammed Zimmerman’s Head Into Sidewalk Several Times

Posted by Jammie on Mar 26, 2012 at 1:05 pm

Call this the narrative interrupted.

With a single punch, Trayvon Martin decked the Neighborhood Watch volunteer who eventually shot and killed the unarmed 17-year-old, then Trayvon climbed on top of George Zimmerman and slammed his head into the sidewalk several times, leaving him bloody and battered, authorities have revealed to the Orlando Sentinel.

That is the account Zimmerman gave police, and much of it has been corroborated by witnesses, authorities say.

Zimmerman has not spoken publicly about what happened, but that night, Feb. 26, and in later meetings he described and re-enacted for police what he says happened.

In his version of events, he had turned around and was walking back to his SUV when Trayvon approached him from behind, the two exchanged words then Trayvon punched him in the nose, sending him to the ground, and began beating him.

Zimmerman told police he shot the teenager in self-defense.

Civil rights leaders and thousands of others have demanded Zimmerman’s arrest, calling Trayvon a victim of racial profiling and Zimmerman a vigilante.

How much would you like to wager this news account doesn’t make it onto CNN or MSNBC?

And we also know why he was suspended from school.

Trayvon was visiting his father’s fiancée, who lived there. He had been suspended from school in Miami after being found with an empty marijuana baggie. Miami schools have a zero-tolerance policy for drug possession.

If Obama had a son, would he be carrying empty marijuana baggies? Maybe we should blame his school now for such harsh zero-tolerance policies.

Update: The Martin family confirms the marijuana story. Meanwhile, here’s a bit of irony.

Professional football players Ray Lewis and Santonio Holmes are joining civil rights leaders Jesse Jackson and Al Sharpton at a rally in Sanford later Monday. Also joining the rally are comedian Sinbad and leaders from the Urban League and ACLU.

Ray Lewis must think people have short memories. Considering many think he got away with murdering young black men, he might want to dummy up.

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To: Dale Baker who wrote (185954)3/26/2012 4:32:27 PM
From: Dale Baker
of 372514
How To Run On Health Care Reform In 2012
Kyle Leighton March 26, 2012, 5:46 AM 4470 23

For decades, Americans have identified health care reform as a national priority. Two years ago, President Obama worked with Congress to pass a landmark overhaul, something numerous other Presidents had tried and failed to do.

But has a major accomplishment become a major political liability for 2012?

Not surprisingly, the political outcomes are as complicated as the issue and the law itself — it depends on what information is presented to voters, who’s presenting it, and who those voters are. And with the recent embrace of the word “Obamacare” by the Obama campaign directly, it looks like the messaging is shifting — not to mention the fact that the Supreme Court can disrupt everything by declaring part or all of the law is unconstitutional. But as of now, here’s where the politics stand.

First of all, the issue cuts much harder for Republicans in a political sense. Pollsters TPM spoke with defined it as a issue that fuses the GOP together, just when the party needs to coalesce. After a fractious presidential primary process, which has seen the intramural battles rage between the establishment-moderate-electable choice in former Massachusetts Gov. Mitt Romney and a chorus of other Republican candidates that fought for the mantle as the “true conservative” in the race, it’s the issue that combines both moderate and right wing Republicans.

“This is base unifying issue for Republicans,” said Bruce Haynes, a founding partner of Purple Strategies and a veteran of GOP campaigns. “Inside heath care reform is every good dog whistle issue for the Republican Party. It’s deficits, taxes, spending, even religious freedom. Every issue you could find inside a Republican Party platform is contained inside health care reform.”

That’s good for Republicans in two ways. Yes, it helps to put the party back together. But further in 2012, it can help motivate the GOP base in an election that may hinge on both sides getting their people to the polls, unlike 2008, which was a change election. If the contest comes down to the traditional battle between two massive presidential campaigns and a billion dollars in negative ads funded by super PACs, some pollers argue voters in the middle may tune out, at which point it’s a race to see who can turn out their base. And if Republicans aren’t excited about their nominee then the anti-health care reform message becomes even more important.

Beyond the right side of the political equation, the heath care reform law doesn’t enjoy much popularity. Whether they are asked if they support the law itself or whether it should be repealed, most Americans aren’t a fan, and if given only the option to repeal the whole thing, they say scrap it.

“The problem for Obama is that he was at cross purposes with the electorate, proposing an unpopular solution to an issue that was unimportant to the voters,” said Haynes. “It’s an issue that people have been interested in time of peace and economic health. But when we were in the throes of the economic crisis we were in, most people say, ‘Health care reform — I understand, it’s important matter, but jobs and the economy are more important to me right now. I don’t understand that the leadership of the country is focused on HC when I don’t have a job.’”

Which is why Democrats say President Obama and his team won’t speak about the law as an overarching policy. It’ll be about specifics.

“The first rule of messaging is to talk about things people already believe,” said Doug Usher, a managing parner at Purple Strategies and the former pollster for Sen. John Kerry’s (D-MA) run for the White House. “He’ll say, ‘Is the law perfect? No. But the other side wants to get rid of the most basic things that we feel are important.’”

Stopping insurance companies from canceling or denying coverage because of a pre-existing condition. Allowing younger Americans to stay on their parents health care plan until they turn 26. Eliminating the “donut hole” in Medicare part D, the government prescription drug plan. Expect all those messages to be delivered sooner rather than later.

“I think a good offense is a good defense on this one, I think the President’s team is going to point to a lack of counter-proposals,” Dr. Lee Miringoff, director of the Marist Institute for Public Opinion told TPM. “The White House is not trying to sell this is broad strokes. It’s individual people coming forward to tout what its done for them personally. Then the Obama campaign will point those those people and ask the Republicans what they will replace the reforms with.”

But to do that, Miringoff said they really have to execute two strategies. First, they have to re-sell heath care reform to a public that was wary of it the first time around, and then make the comparison of specific reforms to the blank slate that Republicans are offering on the subject. That looks like it’s already started.

On Friday, the Obama team look their first step in rebranding the law, strongly embracing the term ‘Obamacare’ through an email to supporters from Obama’s chief campaign strategist David Axelrod with the subject line, “Hell yeah, I like Obamacare.”

“President Obama never lost sight of the fact that this reform is about people. People like his own mother, who spent the last years of her life fighting cancer — and fighting with insurance companies, too,” the email read. “That shouldn’t happen. And because of Obamacare, it can’t. So next time you hear someone railing against Obamacare, remember what they’re actually saying they want to take away.”

The email also hits on another aspect of the message strategy — utilizing President Obama himself. The President is trying to make this thing personal, said Miringoff, because that’s one of his best attributes. Obama, despite longstanding difficulties with his job approval rating through the prolonged recession and squabbles with Congress, has always remained personally popular and favorable to Americans at large. And while it can be specifically used on the health care reform issue, it provides a more general contrast to likely GOP challenger Romney who has struggled to connect with Americans personally according to his favorability ratings.

Combine the specifics of health care, and the personal popularity of the President, and you’ve got a strategy, Miringoff told TPM.

“If you look at the Republican campaign so far, it’s been mostly abstract. Save for 999 [businessman Herman Cain’s tax plan], there hasn’t been much specific discussion,” he said. “I think the White House sees an opening to make it seem more personal. That politics are more about people.”

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To: Bread Upon The Water who wrote (185919)3/26/2012 5:02:54 PM
From: Cogito
of 372514
>>Agree with you about John Bolton.<<

I'm really glad to hear that. I think the man is dangerous, and shouldn't be allowed anywhere near the levers of power.

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