The MF Global Collapse Explained (And Why It Should Be a Crime)

Corzine photoAnybody using the financial services industry puts their faith and trust in a whole lot of people they have never seen or ever will. We all rely on regulators and regulations that are instituted by state and federal governments.  In fact, almost anybody who has any savings probably has them parked in one of our financial institutions. To sharpen your focus on this, remember that about 80% of the balance of your checking account is tied up in loans that some strangers have promised to repay.

As a test of your thinking, how would you like to invest in this, as described in Wikipedia?

…2005 saw Man Financial make its largest deal with the transformative $323 million acquisition of client assets and accounts from entities of Refco, following the U.S. financial-services group’s collapse in late 2005. The Refco deal…boosted Man Financial’s scale in retail and institutional business.

In June

SEC Cracking Down on LightSquared’s Falcone?

Phil Falcone photoBillionaire Phil Falcone, whose cozy relationship with the Obama Administration was first exposed by NLPC, may face civil fraud charges by the Securities and Exchange Commission (SEC). According to a filing yesterday by Harbinger Group Inc., Falcone and two other directors have received “Wells Notices,” meaning that they are under investigation.

Falcone is the Chairman, CEO and primary investor in Harbinger Group Inc., a hedge fund. Reportedly, other Harbinger investors include Soros Fund Management. Harbinger owns LightSquared, which has received an unusual waiver from the Federal Communications Commission (FCC) to deploy a national 4G wireless network.

Media reports have alleged that Falcone prevented some investors from withdrawing their money from the hedge fund during the financial crisis, while allowing others to do so. The Wall Street Journal reports today that one favored investor was  (surprise!) Goldman Sachs. One of the Harbinger directors who received a Wells Notice is Omar Asali, …

Will Goldman Sachs Now End the Sanctimony?

Blankfein photoWith the SEC now charging Goldman Sachs with a billion dollar fraud, I hope CEO Lloyd Blankfein and his colleagues will end the sanctimony and indignation that has characterized their response to recent criticism of the firm, some of it coming from these quarters. The SEC charges come a day after reports surfaced that Goldman director Rajat Guptatold is under investigation for his possible role in the separate Galleon insider trading case.

We do not subscribe to the wilder conspiracy theories about Goldman, but we do have serious concerns in two areas:

1) Goldman Sachs exercizes undue influence on the government through a network of former Goldman executives who have rotated in and out of powerful government posts.

2) Goldman Sachs is one of the most profitable firms in the country. Yet, its executives and the company itself bankroll and promote of host of anti-business causes.

Neither of these things …