Newspaper logo  
 
 
Local News & Opinion

Ref. : Civic Events

Ref. : Arts & Education Events

Ref. : Public Service Notices

Travel
Books, Films, Arts & Education

09.30 30 Years of Coens: Inside Llewyn Davis

09.29 Naomi Klein: Fossil Fuels Threaten Our Ability to Have Healthy Children

Letters
Open Letters:

Ref. : Letters to the editor

Health Care & Environment

09.30 Yes, the Health Care Industry Is Conspiring to Steal Your Money

09.30 Beyond GMOs: The Rise of Synthetic Biology

09.30 The Berlin Patient and the Mysterious Cure for HIV

09.30 Can Narendra Modi bring the solar power revolution to India?

09.30 Earth lost 50% of its wildlife in the past 40 years, says WWF [related photos]

09.29 MIT's new cement recipe could cut carbon emissions by more than half

09.28 Germany’s Grass-Roots Energy Revolution [6:00 video]

09.28 Interview with Ebola Discoverer Peter Piot: 'It Is What People Call a Perfect Storm'

09.28 We Can Transition to 100% Renewable Energy Starting Today

09.28 Study predicts California will use only renewable energy by 2050

09.27 Obama Presses Chinese on Global Warming

09.27 Obama Urges Global Effort to Help Prevent Epidemics

News Media

09.29 Political TV Ads Will Soon Reach Facebook-Level Creepiness

09.29 ANATOMY OF A NON-DENIAL DENIAL

Daily FAIR Blog
The Daily Howler

Justice Matters

09.30 States Take the Lead on Sexual-Assault Reform

09.28 Iceland: Bankers Convicted, Unemployment Down

09.26 For Oil and Gas Companies, Rigging Seems to Involve Wages, Too

US Politics, Policy & Culture

09.29 GWU students tackling income inequality in their own backyard

09.29 Failing the Midterms

09.29 “Not the true Republican Party”: How the party of Lincoln ended up with Ted Cruz

09.27 ALEC Exodus!

09.26 How the 0.00003 Percent Lives

09.26 A GOP Senate's First Target: Elizabeth Warren’s Consumer Protection Agency

09.26 Real Time with Bill Maher: Overtime - Episode #329 (HBO) [9:23 video]

09.26 LA workers win $15 minimum wage

High Crimes?
Economics, Crony Capitalism

09.29 Grossly Distorted Procedures: Mish Proposal to Raise GDP Calculation

09.28 German Central Bank Head Weidmann: 'The Euro Crisis Is Not Yet Behind Us'

09.27 Inside the New York Fed: Secret Recordings and a Culture Clash

09.27 Taliban Storm Afghanistan, Beheadings Galore

09.27 Europe’s Austerity Zombies

09.26 G.O.P. Error Reveals Donors and the Price of Access

International

09.30 One of America's Most Famous Slow-Food Chefs Says Farm-to-Table 'Doesn't Really Work'

09.30 "When We Felt Threatened, We Opened Umbrellas and Raised Our Hands"

09.30 Gitmo hunger strikes are a cry for help. Why is the US fighting back with secret torture?

09.29 Obama’s Syria Strategy: Hit And Hope

09.29 Meet the Controversial Muslim Leader Who Has Advised the White House

09.29 Hong Kong Demonstrators Unveil 'Umbrella Revolution' [photos]

09.29 Hong Kong protests 'must go on' [3:00 drone video]

09.29 US-led air strikes pound Isis bases in Syria

09.28 Full Show: America’s New War in the Middle East [25:20 video]

09.28 The Syrian Front: Waiting to Die in Aleppo

09.27 How Israel Silences Dissent

09.26 Air strikes 'hit Islamic State bases and oilfields in Syria'

09.26 ISIS Revenue Sources Remain Crucial Target, U.S. Says

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: