March 5, 2014

Private Equity Industry Floats Trial Balloon For “Get Out of Decades of Flagrant SEC Abuses for Free

from Naked Capitalism:


Private Equity Industry Floats Trial Balloon For “Get Out of Decades of Flagrant SEC Abuses for Free” Card
Posted on March 3, 2014 by Yves Smith


In late February, Bloomberg stated that the SEC is “considering” forgiving decades of private equity firms acting as unregistered broker-dealers and possibly legalizing the practice going forward. In case you think this is not a big deal, as we explain later in the post, the SEC is in fact vigilant about enforcing these regulations, so this would be an unprecedented waiver of liability. And remember, private equity firms engage top securities law firms, yet as we’ve discussed in past posts, they’ve been remarkably open, one might even say brazen, about their misconduct. In other words, these violations aren’t in a grey area. The firms and their legal advisors knew exactly what they were up to, but apparently figured they’d see how long they could get away with it, and indeed, it has proven to be for quite a long time.

But notice the formulation of the Bloomberg story:

The U.S. Securities and Exchange Commission is considering granting private-equity firms a reprieve after they collected billions of dollars in deal fees without being registered to do so, according to a person with knowledge of the matter.

This article is based on a single source. And it’s very easy to guess who that single source is: one of the people pushing the SEC to treat decades of running roughshod over well-established, well-known securities laws as not even worthy of notice, much the less action. A group of excessively wealthy individuals is pressing for a “get out of our costly arrogance for free” card, when they of all parties can well afford to pay.

This is a classic Washington D.C. trial balloon, where a controversial or indefensible course of action is floated out to the press by an anonymous “knowledgeable insider.” The public relations plant’s purpose is to test whether opponents can muster the strength to make a big fuss, in which case the SEC bureaucrats can climb down from their position in favor of PE without ever having stuck their necks out. .........................(more)

The complete piece is at: http://www.nakedcapitalism.com/2014/03/private-equity-industry-floats-trial-balloon-get-decades-flagrant-sec-abuses-free-card.html

March 5, 2014

Yes, Virginia, Banking Contributes a Lot Less Value Than You are Led to Believe

from Naked Capitalism:


Yes, Virginia, Banking Contributes a Lot Less Value Than You are Led to Believe
Posted on March 4, 2014 by Yves Smith


One thing we’ve discussed repeatedly is that the activities of large banks, as presently constituted, are purely extractive. The reason is that they impose large costs on society as a whole in the form of periodic crises. Andrew Haldane of the Bank of England, using a simple back-of-the-envelope analysis, concluded that there was no way for banks to even remotely pay for all the damage they produce in terms of lost output. A mere 1/20th of a reasonable levy exceeded the entire market capitalization of all the major international banks. That sort of disparity between their worth as enterprises versus the losses they create means any intervention is justified to reduce the damage, including our preferred solution, regulating them as utilities.

Nevertheless, the banks have been quite successful in perpetuating the myth that they are particularly, indeed, uniquely valuable. So it’s important to look at that claim: pray tell what to they contribute?

One oft-cited measure is their contribution to GDP. It’s worth remembering that that’s a statistical construction as opposed to directly measured. And should anyone be surprised that the official approach makes banking look bigger, and hence more valuable, than it really is? .......................(more)

The complete piece is at: http://www.nakedcapitalism.com/2014/03/yes-virginia-banking-contributes-lot-less-value-lead-believe.html

March 5, 2014

Robert Parry: America’s Staggering Hypocrisy

from Consortium News:


America’s Staggering Hypocrisy
March 4, 2014

Exclusive: Official Washington is in deep umbrage over Russia’s intervention in Ukraine after a U.S.-backed coup overthrew the democratically elected president. Some top neocons want a new Cold War, but they don’t want anyone to note their staggering hypocrisy, writes Robert Parry.

By Robert Parry


Since World War II – and extending well into the Twenty-first Century – the United States has invaded or otherwise intervened in so many countries that it would be challenging to compile a complete list. Just last decade, there were full-scale U.S. invasions of Afghanistan and Iraq, plus American bombing operations from Pakistan to Yemen to Libya.

So, what is one to make of Secretary of State John Kerry’s pronouncement that Russia’s military intervention in the Crimea section of Ukraine – at the behest of the country’s deposed president – is a violation of international law that the United States would never countenance?

Kerry decried the Russian intervention as “a Nineteenth Century act in the Twenty-first Century.” However, if memory serves, Sen. Kerry in 2002 voted along with most other members of the U.S. Congress to authorize President George W. Bush’s invasion of Iraq in 2003, which was also part of the Twenty-first Century. And, Kerry is a member of the Obama administration, which like its Bush predecessor, has been sending drones into the national territory of other nations to blow up various “enemy combatants.”

Are Kerry and pretty much everyone else in Official Washington so lacking in self-awareness that they don’t realize that they are condemning actions by Russian President Vladimir Putin that are far less egregious than what they themselves have done? .......................(more)

The complete piece is at: http://consortiumnews.com/2014/03/04/americas-staggering-hypocrisy/