Newspaper logo  
 
 

03.26 Natural gas leaks from power plants, refineries, 100 times greater than thought

03.25 THE PLANT NEXT DOOR

03.25 Colorado Youth Score Decisive Legal Victory Against Fracking Industry

03.25 Keystone XL: Trump issues permit to begin construction of pipeline ["Stupid is as stupid does." –Forrest Gump]

03.25 Rotavirus vaccine could save lives of almost 500,000 children a year

News Media Matters

03.27 PBS is the only network reporting on climate change. Trump wants to cut it

Daily: FAIR Blog
The Daily Howler

US Politics, Policy & 'Culture'

03.29 With House Vote, GOP Puts Your Personal Online Data Up for Sale [not just loss of privacy, its new data gathering that could be used to hurt you]

03.29 Soybeans could surpass corn plantings amid solvency concerns for US farmers

03.29 America has never seen a party less caring than 21st-century Republicans [an immoral, sociopathic focus]

03.29 America's deportation squads want to expel our neighbours. We are saying no

03.28 The Feuding Kleptocrats

03.28 Trump signs four bills to roll back Obama-era regulations

03.28 A white supremacist slew a man in Manhattan. Why is the president silent?

03.28 Is the US facing an epidemic of 'deaths of despair'? These researchers say yes

03.28 The Trump Administration’s War on Science

03.27 How the Disappearing Middle Class Threatens Our Democracy [Citizen's United ruling is ruining America]

03.27 How the Disappearing Middle Class Threatens Our Democracy

03.27 'Whoa, Whoa, Whoa': Sanders Says Democrats' Intransigence Is Solution, Not Problem [videos]

03.27 The DLC Lives: "Third Way" Democrats Are Trying to Push the Party Rightward

03.27 Donald Trump's dizzying Time magazine interview was 'Trumpspeak' on display

03.27 Protesters target Connecticut's uber wealthy with 'tax bills' in bid to end loophole

03.27 'People aren't spending': stores close doors in 'oversaturated' US retail market

Justice Matters

03.29 HOW THE WHITE HOUSE AND REPUBLICANS BLEW UP THE HOUSE RUSSIA INVESTIGATION [FBI's investigation continues (until AG Sessions figures out a way to stop it?)]

03.24 TRUMP’S RUSSIA PROBLEM IS FAR FROM MARGINAL

High Crimes?

03.29 Spanish court to investigate Syrian 'state terrorism' by Assad regime

03.26 Iraq suspends Mosul offensive after coalition airstrike atrocity

03.25 The US Is Bombing Syria So Much That Watchdogs Can't Keep Up

03.25 Mosul's children were shouting beneath the rubble. Nobody came

Economics, Crony Capitalism

03.29 Richard Posner: “The Real Corruption Is the Ownership of Congress by the Rich”

03.25 Wall Street First

03.23 Bank that lent $300m to Trump linked to Russian money laundering scam

International

03.29 Donald Trump, Lost in Africa

03.29 An Unholy Alliance

03.29 Millions are on the brink of starvation in east Africa. We must act fast [food delivery is very difficult]

03.29 Broken promises for the children of Bangui abused by peacekeepers

03.29 'They take us very seriously now': how co-operatives could take back Kampala [organized co-ops could raise employment wherever corporations won't invest]

03.28 Negotiations to ban nuclear weapons begin, but Australia joins US boycott

03.27 Two Years of Uncertainty: Europe Prepares for Tough Brexit Negotiations

03.27 Left Behind: Germany's Race to Catch Up in the Startup World

03.27 A Wounded Metropolis: London in the Age of Terror and Brexit

03.26 Foreign companies flock to build nuclear plants in the UK [what could go wrong?]

03.26 Congolese militia decapitates more than 40 policemen as violence grows

03.26 Africans are rising - we can hold our leaders to account and build a better kind of future

03.26 Rise of Hindu ‘extremist’ spooks Muslim minority in India’s heartland

03.26 Marine Le Pen and Emmanuel Macron face off for the soul of France

03.26 'A runaway crisis': Argentina activists aid shanty towns state has left behind

03.26 In war-scarred Gaza, water pollution behind health woes

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: