I detected some not so subtle differences in these deliveries, and clearly the market did as well.

The markets were remarkably stable after the initial release as the Fed stated that its policy remains unchanged and there was no hint of tapering asset purchases as has been the concern since that term was used by the Fed a month ago.

The statement had a mildly positive spin on the economy but nothing overly exuberant as to serve as a warning sign that the Fed might begin to pull in on the reins so to speak. In fact, the rate of inflation remains well below the long term target of 2% so that should actually allow greater leeway for the Fed to stay the course with its current policy.

Then the afternoon took a decidedly different turn of events.

The FOMC statement is a compendium of all the inputs provided by Fed governors.

Bernanke put his own stamp on today’s delivery during the Q/A when he indicated preemptively that the projection for unemployment approaching the 7% rate near year end would serve not as a trigger but a threshold for the Fed to take its foot off the quantitative easing pedal somewhat, if (and this is a big IF) inflation were to be approaching the 2% target. Markets for both stocks and bonds started heading south when Big Ben made that remark and ended near session lows.

There are a whole lot of BIG IFs involved in the scenario laid out in Bernanke’s remarks.

I personally think Bernanke is concerned that risk markets in general (equities, high yield bonds) have exceeded his hopes and expectations and without describing them as overly exuberant — as a prior Fed chair had done — I think he views them as frothy or bubble-like.

More than that, though, I personally think Bernanke is looking to make a public statement that, having taken our economy down the  unconventional road known as QE, he is now looking to set a timetable when we may begin to move off that path even if only so slightly.

In so many words, Bernanke can then close the book on his career as Fed chair, declare victory in regard to his own work, and state “my work here is done.”

None of this may actually come to pass. The flights and fancies of our economy in terms of growth, inflation, and market moves far exceed the ability of even the world’s most influential central banker to control, but today strikes me as more about Bernanke projecting the closing chapter on his own tenure so he can then turn the reins over to the next Fed chair.

What do others think?

Larry Doyle

For those reading this via a syndicated outlet please visit my blog and comment on this piece of ‘sense on cents‘.

Please subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

While many arrogant bankers, regulators, and political leaders here in the USA might care to continue to believe they hold that leadership position, I think most who might read this blog know that those days have passed.

Dodd-Frank reformed our financial system? Really? Then why is it that bankers from Citigroup are virtually writing entire new legislation under the heretofore now designated Fraud-Dank umbrella?

If we care for a more honest assessment of the comparably incestuous, crony, corruptible dynamic at play within these parts, let’s redirect our focus across the pond.

The UK Parliamentary Commission on Banking Standards just released its report entitled, Changing Banking for Good. What do we learn? Let’s navigate.

The Commission was established in July 2012, in the wake of the LIBOR scandal, to conduct an inquiry into professional standards and culture in the UK banking sector and to make recommendations for legislative and other action.

COMMISSION CHAIR 
Commenting on the publication of the Final Report, the Chairman of the Parliamentary Commission on Banking Standards, Andrew Tyrie MP, said:

>Recent scandals, not least the fixing of the LIBOR rate that prompted Parliament to establish this Commission, have exposed shocking and widespread malpractice.

>Taxpayers and customers have lost out. The economy has suffered. The reputation of the financial sector has been gravely damaged. Trust in banking has fallen to a new low.

>Prudential and conduct failings have many shared causes but there is no single solution that can restore trust in the industry. The Final Report contains a package of recommendations that, together, change banking for good.

>A lack of personal responsibility has been commonplace throughout the industry. Senior figures have continued to shelter behind an accountability firewall.”

>Risks and rewards in banking have been out of kilter. Given the misalignment of incentives, it should be no surprise that deep lapses in banking standards have been commonplace.

>The health and reputation of the banking industry itself is at stake. Many junior staff who may have done nothing wrong have been impugned by the actions of their seniors. This has to end.

>Rewards for success should be better focused on generating long-term benefits for banks and their customers. Where the standards of individuals, especially those in senior roles, have fallen short, clear lines of accountability and enforceable sanctions are needed. They have both been lacking.

>It is not just bankers that need to change. The actions of regulators and Governments have contributed to the decline in standards.

A similar all encompassing indictment of our major banking leaders AND regulators AND government officials from both sides of our political aisle NAILS IT.

>Governments need to get on with the job of implementing these reforms. Regulators and supervisors need rigorously to enforce them. We need better regulation: this may mean less, not more. And we need a better functioning and more competitive banking industry.

>High standards will strengthen Britain as a global financial centre. International co-ordination, while desirable, should not be allowed to delay reform. We must get on and do what is right for the UK.

KEY POINTS 

Given the misalignment of incentives in banking, it should be no surprise that deep lapses in standards have been commonplace. The Commission’s Final Report, ‘Changing banking for good’, contains a package of recommendations to raise standards.

The recommendations cover several main areas including: making senior bankers personally responsible, reforming bank governance, creating better functioning and more diverse markets, reinforcing the powers of regulators and making sure they do their job.

KEY RECOMMENDATIONS 

>A new Senior Persons Regime, replacing the Approved Persons Regime, to ensure that the most important responsibilities within banks are assigned to specific, senior individuals so they can be held fully accountable for their decisions and the standards of their banks in these areas.

>A new licensing regime underpinned by Banking Standards Rules to ensure those who can do serious harm are subject to the full range of enforcement powers.

>A new criminal offence for Senior Persons of reckless misconduct in the management of a bank, carrying a custodial sentence.

>A new remuneration code better to align risks taken and rewards received in remuneration, with much more remuneration to be deferred and for much longer.

>A new power for the regulator to cancel all outstanding deferred remuneration, along with unvested pension rights and loss of office or change of control payments, for senior bank employees in the event of their banks needing taxpayer support, creating a major new incentive on bankers to avoid such risks.

Might Washington launch a similar commission and pull back the blanket on the activities and engagements at play between those on Wall Street and their consorts in our nation’s capital? I am certainly not holding my breath, but I look forward to the release of my book In Bed with Wall Street: The Conspiracy Crippling Our Global Economy (scheduled for release in early 2014 by Palgrave MacMillan) so we can do just that.

We need to elevate the debate and pull back the blanket here in the States in order to expose the cronyism that runs rampant between Wall Street and Washington — and subsequently throughout our nation — if we care to move our economy forward and regain our position as a world leader on these fronts.

Navigate accordingly.

Larry Doyle

For those reading this via a syndicated outlet please visit my blog and comment on this piece of ‘sense on cents‘.

Please subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

While nobody likes dealing with disasters, there is no other single appropriate word to describe this once proud burgeoning metropolis. As recently reported by The Wall Street Journal,

The city of Detroit’s manifold problems are coming to a head. Emergency manager Kevyn Orr warned the city’s 150 or so creditors and unions on Friday that Chapter 9 bankruptcy is in the offing if they don’t accept the steep cuts he’s presented.

I will allow others to opine on the multitude of reasons that has brought Detroit to its current state but lets not deny that corruption and fiscal malfeasance have played a very real role in decimating this city.

Let’s dive into this disaster so we can gain a greater appreciation for life within this city. To do so, let’s navigate and review the City of Detroit: Proposal for Creditors released last Friday. What do we learn?

> Declining Population: The City’s population has declined 63% since its postwar peak, including a 26% decline since 2000

> High Unemployment: Despite some recent improvement, the City’s unemployment rate has nearly tripled since 2000 to a rate of 18.6% at end of 2012.

> RESIDENTS AND BUSINESSES ARE LEAVING DETROIT TO ESCAPE HIGH TAXES AND INSURANCE COSTS.

> THE CITY IS INSOLVENT: Absent ongoing cash intervention (primarily in the form of payment deferrals and cost cutting), the City would have run out of cash before the end of FY 2013.

> In 2012, the City had the highest rate of violent crime of any U.S. city having a population over 200,000 (based on the FBI’s Uniform Crime Reports database). The City’s violent crime rate is five times the national average.

> Residents and business owners have been forced to take their safety into their own hands; some relatively well-off sections of the City have created private security forces.

> As of April 2013, approximately 40% of the City’s street lights were not functioning.

> In regard to the Detroit Police Department, employee accountability is limited. Individual employee performance metrics do not exist for either positive or negative police activity. Morale is extremely low. Disciplinary processes are slow and cumbersome, preventing leadership from effectively managing the department.

> There are approximately (i) 78,000 abandoned and blighted structures in the City, nearly half of which are considered “dangerous” and (ii) 66,000 blighted and vacant lots within the City limits.

> The City estimates that, as of the close of its 2013 fiscal year (i.e., June 30, 2013), the City will have liabilities reflected on its balance sheet of approximately $9.05 billion.

> Off-Balance Sheet Liabilities: unfunded liabilities increased from $4.8 billion to $5.7 billion from June 30, 2007 through June 30, 2011 (the most recent actuarial data available).

> During fiscal year 2012, more than 38% of the City’s actual revenue was consumed servicing legacy liabilities. Going forward, legacy liabilities are expected to consume increasing portions of City revenues.

> UNSUSTAINABLE RETIREE BENEFITS: Liabilities are large and unfunded consist of the Health and Life Insurance Benefit Plan and the Supplemental Death Benefit Plan; 99.6% of the City’s OPEB liabilities are unfunded.

> PENSION CONTRIBUTIONS; The City has consistently deferred year-end pension contributions by using a payment plan financing arrangement paying 8% interest.

> IN THE ABSENCE OF A COMPREHENSIVE FINANCIAL RESTRUCTURING, BUDGET DEFICITS WILL CONTINUE FOR THE FORESEEABLE FUTURE: The City Has Limited Options for Further Revenue Generation and, in the absence of a Comprehensive Financial Restructuring, Cost-Saving Measures.
– Legacy obligations continue to increase;
– Limited or no access to capital markets;
– Diminishing, if any, returns from further tax increases; and
– Minimal potential for further payroll related reductions.

> The City’s already high tax rates are widely believed to have contributed to its population loss and economic decline. For a number of reasons, higher tax rates could have a negative effect on revenue.

> The City is currently levying taxes at or near the statutory maximums.

> The City believes that lowering selected tax rates – primarily income and property tax rates – to levels that are at least competitive with surrounding jurisdictions is critical to reversing the City’s crippling population and job losses.

CONCLUSIONS BASED UPON PROJECTIONS
> The City acknowledges that it must exert reasonable efforts to maximize recoveries for all creditors.

> As demonstrated by the 10-year projections, however, the City’s expected revenues will fall significantly short of the levels required to fund the City’s operations and fully satisfy its liabilities.

> Given the City’s (i) substantial debt levels (ii) significant labor related liabilities and (iii) continuing operating expenses, shared sacrifice will be required from all stakeholders to achieve the City’s dual (and complementary) goals of maximizing returns for its stakeholder constituencies while simultaneously establishing the framework for a healthy and growing Detroit moving forward.

Detroit today . . . where tomorrow?

Navigate accordingly.

Larry Doyle

For those reading this via a syndicated outlet please visit my blog and comment on this piece of ‘sense on cents‘.

Please subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

Should we add Bank of America to the list of those entities (financial institutions, regulators, our government) that have been less than forthright in engaging those with whom it was saying one thing but doing something entirely different?

A cursory review of the testimony I highlighted this past Friday, Bank America Mortgage Racket: We Were Told to Lie, might give many who read that commentary considerable reason to pause before engaging BofA.

Very simply, relationships require that both parties engaged in a matter deal in an honest and open fashion. Can you imagine the stress involved in the pursuit of a business affair if the other party were not embracing those most basic of principles?

I have read a voluminous number of documents relating to a wide array of lawsuits, investor complaints, fraudulent transactions, and much more over the course of the last four plus years but few rise to the level of incrimination and shamelessness as that embedded in my commentary the other day.

I thank those who wrote to me directly to share their insights and perspectives on this situation. There is no doubt that so many people, BofA customers and otherwise, experienced immeasurable stress and anxiety in dealing with the less than honest mortgage modification process within the HAMP program.

I hope people might care to take a few moments to gain a little bit of a sense of this stress and anxiety by reading, reviewing, and sharing these comments I received directly over the weekend. For obvious reasons, I will protect the identity of these individuals.

I have clients who paid their mortgage while trying to refinance. Sometimes they were late or tried to negotiate while making a good attempt.  At the end of the year the $ was hardly applied to their mortgage but went to fees and fines. They decided to give up. There was no way to go forward.  Then the bank forecloses and gets the insurance plus the sale $.

Thank you so much for taking these thugs on.

An individual who worked within a state attorney’s general office writes,

This is fascinating.

In Barofsky’s book, he quoted Geithner as having stressed the importance of “foaming the runway” for the major banks. This kind of delay tactic (stringing homeowners along) enabled “extend and pretend”, allowing BofA to put off marking its assets to market as long as possible. I was working on the problem from 2006-2010 in the state AG’s office, and I recall being baffled by the weird complexity of HAMP, given that it was supposed to bring relief.

Now it makes sense.

So sad and creepy, the whole thing.

Perhaps the most chilling comment of all comes from a regular reader who has served as an adviser to many,

Oh, this is so sad….

My best bud is 91 years old and is in the state House of Representatives.  Anytime he gets any constituents  finance questions or situations, he refers them to me.

One couple contacted him about the exact problem you just described with BofA. I talked to them and could not understand why they were having problems. They put their  payments in a savings account while awaiting their modification papers. They never came.

They went into the foreclosure process. Their names appearing in the foreclosure section in a small hometown newspaper proved to be too much.  Domestic problem arose from this situation.  The young husband put a shotgun under his chin.

I will tell my bud to contact the young widow.

Thanks for keeping us informed.

Let these comments weigh heavily upon all those government officials, regulators, and banking executives involved in allowing if not promoting genuinely dishonest dealing in the charade known as HAMP.

Little wonder why there is such limited trust in our government and major banks these days.

Navigate accordingly.

Larry Doyle

For those reading this via a syndicated outlet please visit my blog and comment on this piece of ‘sense on cents‘.

Please subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

I first questioned whether the activities within the mortgage servicing enterprises on Wall Street rose to the level of racketeering in early 2011 after having becoming aware of Wall Street’s practice of robo-signing mortgage documents in order to engage in the fraudulent conveyance of countless mortgages.

Many individuals responded to my initial commentary and subsequent articles with incriminating details as to how they were being abused by the large banks supposedly charged with helping them modify their mortgages. In truth, the mortgage modification process under the guise of the Home Affordability Modification Program (HAMP) was in fact more often a charade, albeit a painful one at that.

Former Washington insiders Sheila Bair (past chair of the FDIC) and Neil Barofsky (Special Inspector General of the TARP) wrote extensively in their  respective books about the complicit nature of the US Treasury under Tim Geithner in not holding the banks accountable in this process. Let’s not be so discreet. Tim was in bed with his Wall Street cronies, but it was all too many American homeowners who were really getting screwed.

In recent testimony shared in the U.S. District Court in Massachusetts, Simone Gordon pulls back the blanket on the ongoing Wall Street – Washington incestuous, crony, corruptible engagement. I recommend you wear a pair of high boots and/or waders and bring multiple barf bags as you experience the cesspool laid out by Gordon:

Beginning in 2009, I regularly spoke to people who had received HAMP Trial Period Plans, made their trial payments, and who were calling to inquire about the status of their expected permanent loan modification.

Using the Bank of America computer systems I saw that hundreds of customers had made their required trial payments, sent the documents requested of them, but had not received permanent modifications.  I also saw records showing that BoA employees had told people that documents had not been received when, in fact, the computer system showed that BoA had received the documents.

This was consistent with the instructions my colleagues and I were given.

We were told to lie to customers and claim that BoA had not received documents it had requested, and that it had not received trial payments (when in fact it had). (LD’s highlight)

Why was it that they were told to lie?

My colleagues and I were supervised by “Team Leaders”  who were, in turn, supervised by “Site Leaders.” Site leaders regularly told us that the more we delayed the HAMP modification process, the more fees Bank of America would collect.

For added measure, in what can only be compared to a scene from a foreign sweatshop in a faraway land, Gordon lays out that:

Employees who were caught not carrying out the delay strategies that Bank of America instructed were subject to discipline including termination. Employees who were caught admitting that Bank of America had received financial documents or that the borrower was actually entitled to a permanent loan modification were disciplined and often terminated without warning.

Can you spell R-A-C-K-E-T?

For those who would like to read and review the entire 5-page testimony, I welcome sharing:

There you go, folks. Uncle Sam (aka President Obama and team) lays out a program supposedly to help homeowners modify their mortgage and stay in their homes and the Wall Street banks, in this case Bank of America, out and out lie to American citizens so as to maximize their own profit at their expense.

So I ask, where’s the justice? A token fine of a few billion dollars and pennies on the dollar to a smattering of our fellow citizens? Please.

Why isn’t Brian Moynihan summarily fired? Where are the major media outlets on this story?

The price we really pay as a nation is the continued erosion of any sense of integrity in the system along with a total decimation of trust and confidence in Wall Street and Washington at large.

I welcome comments, feedback, constructive criticisms. I would especially like to hear from people directly impacted.

I thank the reader who brought this story to my attention.

Navigate accordingly.

Larry Doyle

For those reading this via a syndicated outlet please visit my blog and comment on this piece of ‘sense on cents‘.

Please subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

————————

Many people in different businesses and within government across America do not like discussing or promoting personal savings rates but the simple fact is the path to financial security and wealth creation is navigated most effectively by embracing that key principle and a few basic tools.

These tools are not often discussed by those who would much prefer you spend, spend, spend so our economy can grow but that all too American style of living has simply led us down the ‘nonsense on cents‘ path of increased debt and often running in place if not worse than that in terms of building wealth. What are the keys for generating real wealth creation?

Many who regularly read this blog will be very familiar with these principles but I hope you might share this commentary with your younger friends and colleagues. Let’s navigate as John Hussman of the Hussman Funds lays out the Two Essential Elements of Wealth Accumulation,

Wealth is not acquired through addition. It is acquired through multiplication.

Very few fortunes have been made by adding up paychecks and overtime. Nor are they made through a huge one-time killing in the markets. Unfortunately, this is the path that many investors try to follow in achieving financial security.

According to statistical studies, two factors are most important in achieving wealth:

1. The number of years that an individual has been consistently saving and investing

2. The proportion of funds, on average, allocated to higher return investments

Simply stated, if your goal is to accumulate a significant amount of wealth during your lifetime, you must first save something, and then exercise some amount of control over one of two factors: the time horizon over which you compound your wealth and your long-term rate of return.

There are a preponderance of people willing to offer insights and wisdom on the second point highlighted by Hussman. Let’s focus on what I believe is the far more important key building block, that being the first.

The best way to increase the time horizon over which you compound wealth is simply to start saving and investing as early and consistently as possible.

Consider an investor earning a 10% long term rate of return. If the investor saves $2000 annually in a tax-deferred account (such as an IRA) for 10 years, and adds nothing for the next 20 years, the value of the portfolio at the end of 30 years will be $198,575. Although the investor committed a total of only $20,000, the account will have grown nearly tenfold.

Now consider an investor who fails to start early. Suppose that the investor saves nothing during the first 10 years, and then attempts to make up for lost time by investing $2000 annually for each of the next 20 years. At the end of 30 years, the value of this portfolio will be just $114,550.

The investor has committed a total of $40,000, twice as much as the first investor, but because the funds were not given as much time to compound, the investor retires with just over half as much wealth as the early bird. The higher the compound annual rate of return, or the greater the number of years to retirement, the more dramatic the effect that an early start will have on the ending wealth.

In regard to savings, Hussman provides equally sage advice in writing,

The key rule of saving is this. Don’t let your savings adjust to your spending needs. Let your spending adjust to your savings needs. 

It will help tremendously if you budget a certain amount of saving monthly, and make your investments first, as if you were paying a telephone bill. If you wait until all the bills are paid and all the spending is done, the result may be that you have nothing meaningful left to invest.

Make your monthly investments when you pay your other bills, and treat them as if they had a substantial late-payment penalty. The penalty for starting a savings program late really is enormous.

Financial security does not require extraordinary income or investment “home runs.” It requires, first and foremost, that you start saving and investing early, and add to your investments consistently.

These key principles and the discipline required to implement them may be increasingly challenging in light of the lack of growth in personal incomes currently but that fact makes them all that more important.

Navigate accordingly.

Larry Doyle

For those reading this via a syndicated outlet please visit my blog and comment on this piece of ‘sense on cents‘.

Isn’t  it time to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

]]> http://www.senseoncents.com/2013/06/wealth-creation-the-key-principles/feed/ 3 http://www.senseoncents.com/2013/06/forex-manipulation-add-it-to-the-list/ http://www.senseoncents.com/2013/06/forex-manipulation-add-it-to-the-list/#comments Wed, 12 Jun 2013 14:00:11 +0000 Larry Doyle http://www.senseoncents.com/?p=33998 Is it possible to manipulate the largest market in the world, that being, the foreign exchange market?

Well, if it is possible to manipulate the setting of overnight interest rates (i.e Libor et al) impacting trillions of dollars of derivative contracts and the pricing of equities (i.e. via high frequency trading), we should not be surprised that those on Wall Street are also able to manipulate prices within the foreign exchange markets . . . . and have been doing so for a long time.

In what might only be defined as another nail in the coffin of free and fair markets, Bloomberg exposes the stench of this manipulative activity.

Let’s navigate and review Traders Said To Rig Currency Rates to Profit Off Clients,

Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.

Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.

How does this happen?

In a market dominated by a mere handful of firms the oligopolistic practices of collusive price setting (i.e manipulation) and the unequal sharing of information reign supreme. These practices are elevated even further when regulators — and their political friends as well — are in bed with the industry.

Without addressing the core premise of regulatory capture as the outgrowth of the crony and corruptible relationship between Wall Street and Washington, this manipulative activity will never end but will simply find other means and markets to express itself.

Consumers, investors, and taxpayers may unknowingly continue to suffer as Uncle Sam’s rent-seeking market and economy gains a stronger foothold BUT trust and confidence in America will continue to wane.

Navigate accordingly.

Larry Doyle

Isn’t  it time or overtime to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

The benefits will far outweigh the costs, correct? Well, let’s navigate to America’s heartland and pose that question to the citizens of Ohio who will be picking up the tab. Might some — perhaps many — individuals who delivered the state for the President care to reconsider?

Recent news emanating from the Buckeye state would seem to indicate that when it comes to healthcare, the only thing that will be declining are the savings accounts of a lot of individuals.

If evidence from Ohio is indicative of what is likely to transpire throughout the nation, then the Obamacare ‘train wreck’ (the words of Senator Max Baucus, D-Mont) will be unrivaled in terms of Uncle Sam’s facilitation of many individuals getting fleeced like never before. Am I overreacting?

Are you sitting down?

Avik Roy of Forbes holds nothing back in exposing and excoriating the administration and supporters as he writes, Obamacare To Increase Individual-Market Health Premiums by 88%:

Democrats continue to try to dismiss the evidence that Obamacare will dramatically increase the cost of insurance for people who buy it on their own. But on Thursday, the Ohio Department of Insurance announced that, based on the rates submitted by insurers to date, the average individual-market health insurance premium represents an increase of 88 percent relative to 2013.

“We have warned of these increases,” said Lt. Gov. Mary Taylor in a statement. “Consumers will have fewer choices and pay much higher premiums for their health insurance starting in 2014.”

It’s called “rate shock,” . . .

Is that what it is called? I can think of a whole host of other phrases to define this “tax” being imposed upon those who purchase individual health care policies. One widely followed commentator defined it as “insurance rate rape.”

Some people have the impression that the main reason that rates are going up under Obamacare is because of the law’s requirement that insurers cover people with pre-existing conditions. But that accounts for only a fraction—around a quarter—of the rate hike.

The rest comes from all the other things that Obamacare does, such as forcing people to buy richer insurance benefits; to buy products with all sorts of add-ons they might not need; to pay Obamacare’s premium tax; and to pay a lot more, if they’re young, to subsidize older individuals.

That perpetual screeching sound you hear? Those are the brakes being applied to our national economy. When the reality of these premium increases go into effect, the brakes will be even more fully pressed to the floor. Were we lied to as Obamacare was pitched to the American public? Roy would maintain we were:

But the bottom line is this: President Obama and then-House Speaker Nancy Pelosi promised that premiums would go down for those who already have insurance. And yes, for those lower-income folks who benefit from the subsidies provided by other taxpayers, the costs they see may go down. But middle-class Ohioans will pay more in taxes to pay for those subsidies, and more in premiums.

Aside from the economy continuing to lag due to Obamacare, what else is going to get hit? Mark my words, watch charitable giving drop like a rock as many individuals determine that money that would or may have been given to a wide array of worthy causes is now directed to Obamacare.

The great law of unintended consequences knows no bounds.

Navigate accordingly.

Thank you to the regular reader who brought this story to my attention.

Larry Doyle

Isn’t  it time or overtime to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

You may not be aware whether you own stock in the managed health care company Humana via a mutual fund or not. I would imagine if you own Humana as an individual holding, you would be keenly aware that this company saw close to a 20% increase in its stock price back on April 2nd.

Did you participate in that spike or did you have a sell order in place at a certain level and get taken out well below the upward move? If you knew what some in Washington knew and shared with ‘their friends’ on Wall Street prior to that move higher, you likely would have held your stock and, who knows, might have been inclined to purchase more. In doing so, though, you would have likely been engaging in insider trading.

In what is becoming a regular occurrence, I spit up my coffee once again this morning in reading that such highly sensitive and market moving information as that which caused Humana’s stock to spike so sharply was actually shared with hundreds of federal employees.

Think that some of them might have had a little bit of appreciation as to how sensitive and valuable that information was and what it might be worth to traders and others who would be willing to act on it? You think?

The Washington Post provided not surprising but embarrassing color to this situation in writing, Hundreds In Government Had Advance Word of Medicare Action at Heart of Trading-Spike Probe:

Sen. Charles E. Grassley (R-Iowa) told The Washington Post late last week that his office reviewed the e-mail records of employees at the Department of Health and Human Services and found that 436 of them had early access to the Medicare decision as much as two weeks before it was made public.

The number of federal employees with advance knowledge is surely higher; the figures Grassley’s staff compiled did not include people at the White House’s Office of Management and Budget who also saw the information.

The discovery that sensitive information was so widely disseminated could complicate the forensic task for investigators trying to determine who may have leaked confidential information, and it brings further attention to the government’s handling of policy details valued by Wall Street traders.

“This should sound an alarm,” Grassley said. “It should result in better controls to avoid unfair access to information that the average investor could never tap.”

A former director of the Medicare program, Thomas Scully, said he was not surprised that hundreds of people had access to the decision, given the complexity of the matter. He favors more communication between the agency and Wall Street, but he said that more care needs to be taken about what is discussed.

More care? Better controls? Or is this merely another example of the “rent seeking” economy and markets I highlighted last week in which the privileged benefit from their sway with Uncle Sam and friends at the expense of the rank and file? No doubt. As further evidence that those in Washington just don’t get it, choke on this:

“There are plenty of people at CMS (The Centers for Medicare and Medicaid Services) who, wanting to be cooperative and friendly, may have given out information without realizing it could benefit one investor versus another,” Scully said.

Wanting to be cooperative and friendly? Really? Excuse me while I vomit.

We are supposed to believe that bull$*&t? Do we need even more info that our government fails to perform and protect investors, consumers, and taxpayers?

How about there are plenty of people who are willing to provide sensitive information as a means of greasing the wheels of the revolving door in the hope of cashing in and trading up professionally?

The crony, corruptible, incestuous behaviors go on and America suffers.

Navigate accordingly.

Larry Doyle

Isn’t  it time or overtime to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

In a world in which it is all too easy to look the other way, to go along to get along, and to sit down when the public needs you to stand up, hope springs eternal.

I am heartened that America still has a chance to eradicate the corrosive and corruptible elements that have thrived within our financial regulatory system when I learn that there are still people who care enough to do the right thing. Who is one of those people?

Former assistant inspector general of the SEC David Weber. Today is his day and America should feel very good about that.  

Regular readers may recall the suit Weber brought against the SEC last fall. I highlighted Weber’s case in writing, SEC Whistleblower’s Suit: Sex, Lies, Stupidity, Oh My!! Weber was not bashful in pulling back the regulatory blanket conveniently utilized to cover a host of “activities.” I wrote then:

Mr. Weber joined the SEC early this year as the Assistant Inspector General after the seemingly abrupt departure of then IG David Kotz. I have often wondered why Kotz seemed to exit the SEC in such hasty fashion. Well, Mr. Weber leaves little to the imagination in asserting that Mr. Kotz’s “intimate relationships” within the Commission (including with his immediate successor as IG) and with counsel for plaintiff in the Stanford Financial scandal was a literal phrase. Weber goes so far as to say that Kotz’s relations compromised SEC investigations in both the Stanford and Madoff affairs. Oh my!!

Weber’s titillating testimony turns its focus on other executives within the Commission, including the COO and chair Mary Schapiro. Weber’s charges of nepotism and a lack of meaningful internal controls expose the risks that the Commission presented in its daily management of operations and beyond that as well. One does not need to read very hard to understand Weber’s belief that the SEC’s COO utilized a “pay to play” practice. Additionally, in a scene fit for the classic movie Dumb and Dumber, Weber asserts that SEC representatives brought highly sensitive computer code and encryption data to monitor activity on our equity exchanges to a hacker’s conference in Las Vegas. You cannot make this stuff up, folks.

Saving some venom for Ms. Schapiro as well, Weber paints her as a “LIAR” for perjuring herself during a presentation before the House and Senate Oversight Committee regarding the SEC’s bungled attempt to move to new office quarters. Weber would not be the first to label Ms. Schapiro with the big L. Recall that Attorney Richard Greenfield did just the same in the case brought on behalf of Standard Chartered v FINRA, Mary Schapiro et al.

What did Weber receive in return for running these tales of sex, lies, and stupidity up the chain of command? A pink slip, a defamed reputation, and much more.

Today Mr. Weber is vindicated and then some. In a release put out just this morning:  SEC SETTLES WHISTLEBLOWER’S LAWSUIT, AGREES TO CLEAR DAVID P. WEBER’S RECORD, MAKES $580,000 WHISTLEBLOWER RETALIATION PAYMENT . 

OH MY!

Today, it was announced that the Securities and Exchange Commission (SEC) paid one of the highest settlements on record to a former federal employee subjected to whistleblower retaliation. In addition to making a payment of $580,000, the SEC retracted its retaliatory allegations against former employee, David P. Weber, and fully cleared his record.

On October 31, 2012, the Securities and Exchange Commission terminated Weber, its assistant inspector general for investigations, after he disclosed allegations of serious agency misconduct to his superiors and to members of Senate and House oversight committees. The termination came despite an independent report by the Inspector General for United States Postal Service clearing Weber of any wrongdoing. The Postal Service IG had been asked to investigate because the allegations involved the conduct of Weber and others within the office of the SEC IG.

The fact that Weber was terminated, despite the independent report produced, speaks volumes as to the manner in which the SEC was run under former chair Mary Schapiro and to the incestuous relationship between the SEC and those it is charged to monitor.

After clearing Weber, the USPS IG also substantiated concerns Weber raised with his superiors and legislative committees, including what the report labeled “flirtatious communications” a “personal relationship” and an “inappropriate relationship” between the former SEC IG and women he worked with on the Bernard L. Madoff and R. Allen Stanford ponzi schemes. The report found that these relationships involved conflicts of interest and violations of the applicable standards of conduct.

Will the SEC reopen the investigations of the Madoff and Stanford cases and go down the paths inhibited by these conflicts of interest? They should and Mary Jo White should issue a statement asserting as much.

The September 17, 2012 report also found that Weber did not mischaracterize evidence when he discussed a matter of potential “national security” and “possible espionage” by possible “foreign nationals” related to a case Weber was investigating that “involved unencrypted computer hard drives that contained sensitive stock exchange information.” These issues were raised by Weber in great detail immediately prior to Weber being placed on leave and, eventually, terminated.

The same goes here. Will the SEC answer to the American public on this case as well? Sounds to me as if Weber was looking deeply into the workings of our equity exchanges. Were the exchanges compromised or complicit in allowing supposed “foreign nationals” access to information?

So many questions. So few answers.

Under the settlement paid today, Weber received substantial damages, his termination has been rescinded, and he was reinstated. The SEC has agreed to fully and finally clear Mr. Weber’s record. All “negative references” in Mr. Weber’s file will be deleted.

Cary J. Hansel, Weber’s attorney, issued the following statement, “The SEC’s job is to protect Wall Street whistleblowers and investigate the misconduct they report. When Mr. Weber blew the whistle on wrongdoing in the SEC’s own ranks, the SEC engaged in a retaliatory cover up.” Mr. Hansel went on to say, “This case is a reminder that there are grave consequences for retaliation against whistleblowers. American law favors the free disclosure of government waste, fraud and abuse. Nothing cures these problems like the light of day.”

Amen.

Mr. Weber’s only comment for the media is, “Doing the right thing can be hard – just as my family and I experienced. Yet I still teach my students in fraud and forensic investigations classes that you need to raise your hand. Now that my name has been cleared, I look forward to helping others through my growing law and forensic investigations practice.”

With that statement, David Weber is inducted into the highest echelon of the Sense on Cents Hall of Fame.

As for the SEC, recall that Weber’s issues were raised in 2012. Is there any doubt that this commission remains in bed with Wall Street and subsequently a poorly run if not totally corrupted excuse for investor protection?

Navigate accordingly.

Larry Doyle

Isn’t  it time or overtime to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.