Newspaper logo  
 
 
Local Gov’t Stories, Events

08.15 RIDE FOR THE OVERRIDE

Ref. : Civic Events

Ref. : Arts & Education Events

Ref. : Public Service Notices

Travel
Books, Films, Arts & Education

09.28 Life is richer when we talk to strangers

Letters

Ref. : Letters to the editor

Health Care & Environment

09.30 Child Care Is Finally Getting Some Much-Needed Regulation, But It’s Still Expensive As Hell

09.30 Point of No Return: Earth Reaches 400ppm Threshold Permanently

09.30 The Streetcar Can't Save Your City

09.30 Flint Wins Funding in the Latest Congressional Budget Standoff [thanks, Democrats!]

09.30 Peak salt: is the desalination dream over for the Gulf states? [so pour the brine in the desert where it won't contaminate aquifers...]

09.30 World Bank to name and shame countries that fail their stunted children

09.29 Paris mayor heralds ‘reconquest of Seine’ as riverbank traffic banned

09.29 Mini-nuclear reactors could be operating in the UK by 2030 - report

09.28 Earth 'Locked Into' Hitting Temperatures Not Seen in 2 Million Years: Study

09.28 South Australia storms: entire state left without power after wild weather – live

09.28 New York City accelerates emissions efforts in face of daunting sea level rise

09.28 Lots to lose: how cities around the world are eliminating car parks

09.28 No fracking, drilling or digging: it’s the only way to save life on Earth

09.28 Greenland's receding icecap to expose top-secret US nuclear project

09.27 Germany Has the World's First Hydrogen-Powered Passenger Train [could aviation use hydrogen too?]

09.27 China tops WHO list for deadly outdoor air pollution

09.27 Can the aviation industry finally clean up its emissions?

09.27 US emissions set to miss 2025 target in Paris climate change deal, research finds

News Media Matters

09.28 Lester Holt Asks Zero Questions About Poverty, Abortion, Climate Change

Daily: FAIR Blog
The Daily Howler

US Politics, Policy & 'Culture'

09.30 Nation Ready to Finally End 'Detrimental and Deeply Unjust' Hyde Amendment

09.30 Undermining Democracy, Corporations Pouring Millions into Local Ballot Fights

09.29 Baltimore vs. Marilyn Mosby

09.29 Bye bye, Cable Guy: New FCC rules will make it easier to toss the cable box and cut the cord

09.29 'Trump's promises are empty': energy experts lay waste to proposals

09.29 The silence of the lambs: Why sheepish GOP leaders have been conspicuously quiet since Donald Trump’s debate debacle

09.29 Congress Avoids a Pre-Election Shutdown [another kick of the ugly can down the road]

Justice Matters

09.30 Should Prison Really Be the American Way?

09.29 California treasurer imposes year-long ban on working with Wells Fargo

09.29 Wells Fargo Announces $60 Million Clawbacks, But No 'Real Accountability'

09.28 Wells Fargo executives forfeit millions, CEO to forgo salary amid investigation

High Crimes?

09.30 Rodrigo Duterte vows to kill 3 million drug addicts and likens himself to Hitler [0:40video]

09.29 MH17: Buk missile finding sets Russia and west at loggerheads [videos]

09.29 Vladimir Putin’s Outlaw State

09.29 Children bear brunt of alleged chemical weapon attacks in Sudan, says Amnesty

09.29 Two Aleppo hospitals bombed out of service in 'catastrophic' airstrikes

09.28 Amnesty calls off launch of Thai torture report after police warning [something sick is brewing here]

Economics, Crony Capitalism
International

09.28 Killing People, Breaking Things, and America's Winless Wars [war profiteers rake in huge profits, but countries never “win” wars]

09.28 Syrian troops launch ground offensive against Aleppo rebels [video of devastation; will there be profit from fossil fuel we cannot use?]

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: