The SEC has compliance officials whose job it is to make sure investment firms comply with the rules. In turn, investment firms have rules-compliance lawyers to prove their firms are in compliance.
Eric Swanson (top left) was a top SEC compliance official who worked for the SEC when they found no problems with Bernie Madoff's books over the past few years.
Shana Madoff (top right) was a rules-compliance lawyer at Madoff's firm, and is the daughter of Bernie Madoff's brother, Peter, who was head of compliance at the firm.
So on one end you have Eric Swanson, the investigative arm of the SEC, dealing with Shana and Peter Madoff on the other end, who both work to provide proof that the firm is following the rules.
The burning question is this... why are Eric Swanson and Shana Madoff looking so friendly in the picture at the bottom? Is it photoshopped? After all, they are opposing forces in the fight against corruption on Wall Street. These two, of all people, should be at arm's length. Our trust in the backbone of our nation's financial system, free trade, depends entirely on these relationships being kept strictly at a professional level. Would you be suprised to find that Eric Swanson and Shana Madoff are actually a married couple? One can only imagine what conversation must be like at their Thanksgiving dinner. Truth is stranger than fiction.
17 comments:
Snot
Ok, the DOW closed below 7500. I'll be watching closely to see if, as you say, GS (I almost typed BS)lets the market drop a little further, then initiates a turnaround by buying after the stops are taken out. If that really happens, then I take my hat off to you. I can't see any other reason for it to behave other than as you suggest.
How about another of you slick charts on the financials? C and BAC are heading into oblivion. Here's a thought: In black hole theory, there is a boundary called the 'event horizon' beyond which there is not return. Anything that gets to that point will get sucked into the black hole. If an institution is already beyond that point, throwing money at it will be useless.
Another thing; I sense a growing, hardened cynicism among seasoned investors. This is really not good. More and more smart people are losing their faith (trust?) in this great free market system. I'm only 15% invested right now, but I feel like even that gives me the right to spit in the eye of the boobs who got us into this mess.
I tried to log onto Google/blogger but was unable, so that is why I had to resort to using the Name/URL. Anybody else have the same difficulty?
Well, damn, that time it worked. Sorry about the multiple posts.
Sb,
Although we used 7,500 as a number, the actual low was 7,449.38, but who's counting? It's fair to say that we're resting on an extremely critical support level right now, but haven't completely broken it just yet. Still, no matter how you slice it, the chart looks really really bad.
Without TARP $ and whatever other bailouts they're receiving, both C and BAC would be bankrupt by now. They passed the event horizon many moons ago. LDK passed it today. It's not coming back.
GS, do you mean Government Sachs? We'll see what they can do. The odds of us rallying strongly from here are slim. We'll either break down a few hundred points and then rally, or we'll plunge to 6,500 in a matter of days. Remember, the S&P and Naz still have strong support levels which may even help to stop the Dow's slide if things get that bad. We're with you on being anti-Wall Street at the moment. We can't imagine our feelings about Wall Street will ever change. Just knowing that theft is a widely accepted practice in our financial markets, we're unlikely to ever feel the same way about them. Trust is for the next generation. Madoff is still living in an apartment bought with stolen money. Meanwhile, his investors could be collecting interest on that money if his stolen real estate were auctioned off and split amongst his victims. Every hour that goes by without some justice for him just makes us lose more and more faith in the system. He's not getting any younger.
In all of this, the real victims are hard working guys like yourself. i.e., how's the building business in double A? Where you once found yourself building large homes, you now find yourself bidding on small additions and losing the jobs to people willing to work for half price. Then you get a job, if you're lucky, and they decide to downscale it and turn it into a trim and paint job rather than an addition. Then they are slow to pay you, and renegotiate every bill. Sound familiar?
Bank of America
There's no telling what may happen in the market or with BAC on Friday, but I have to report what happened to me so you all know how bad things have become.
I have a little checking account there used for small expenses. I pulled the account up on Tuesday to check it, saw that a draft was coming through for my monthly auto insurance, and I needed to get money in there to cover it. I transferred money into it from another checking account also at Bank of America, via the online "Immediate Transfer" option on that same day. Note this is "Immediate transfer". It says so right on the screen where you do these things.
I just looked at that same account and learned BAC didn't post this transfer until Feb 18, which threw my account into overdraft on the 17th, and caused a total of 5 overdraft charges at $35.00 each to be assessed to it. This was due to use of the check card over the holiday weekend, with all those transactions coming in. All were well covered, with money left over to spare after the transfer I physically performed on Feb. 17, which is immediate.
When I went back and checked both accounts on Feb 17 after I did this transfer, all was well, and there was PLENTY of money in the other account to cover this transfer. No foul-ups there.
As far as I can tell, Bank of America is now resorting to criminal activities within their customers' accounts in order to try and collect fees they have no legal right to collect. I've done plenty of these transfers before. Nothing like this EVER happened. I wonder what they will say to me when I go into the Bank Friday and confront them about this issue? Is this business behavior acceptable in our "New" financial world?
Agr8gem57
Kay, we had a similar problem with BAC (we call them BofA) lately. One of our HELOC's is with BofA. It is linked to a BofA checking account so that the payment on the HELOC is automatically deducted from the checking account each month. A few months ago, without informing us, they started to pay the monthly payment by borrowing against the loan, despite more than sufficient funds in our checking account. We believe they did this in order to increase our debt, and hence, their interest income. This is good debt for them, as we've never made a late payment. When we questioned them about the unexpected change, they blamed it on a change to their computer system, saying that it happened to all of their customers, not just us. Changing it back, by the way, was no simple task! We have no doubt that desperate times are calling for desperate measures on behalf of CEO's everywhere. You just have to be on high alert today.
snot: what's your current take on one of your old favorites POT? trading above both 50 & 100dma now and in a nice uptrending channel, albeit only since about Dec/08.
i bought a little today @82.70 and plan on watching it very closely if/when it drops towards its 100dma and lower trendline. given the current state of the indexes i'm fearful of the bottom falling out on pretty much everything if/when the big plunge arrives, so i'm going to keep this one on a tight leash. with any luck pot opens up tomorrow and gives me a little breathing room in the green rather than red.
rl
How's the building trade? Abysmal. Around 60% of households in Michigan are underwater. Seems incredible. Precious few people want to do any type of home improvement. My niche has been high-end additions/remodels. You're exactly right about bids, etc. Folks smell blood in the water and are very aggressive at driving the costs down. It's not much fun anymore. You can look at national homebuilders for a benchmark, but one of the ones I look at is Masco (MAS). They own 30 or 40 companies such as Merillat, Kraftmaid, Baldwin, Delta, Grohe etc. Have a look at their YTD chart.
Have you gotten over your reticence about buying any more stock? It's hard to invest in something that you really don't believe in.
Snot I have a question if 7,449.38 is broken and that will probably happen in the morning ... wheres the next support area, if there is one ??? I was studying the charts and the 7050.00 area seems feasible.
???
H
Rl,
We're still watching the ferts because they've been more resilient than so many other sectors. Don't count on a big day tomorrow. It's triple witching options expiry day, and will probably go no more than 100pts in either direction. If we get a big drop, it'll most likely be on a Tuesday or Wednesday.
If POT breaks down through the bottom of its channel and its 50dma, we'd get out for the time being. If the market does drop hard, POT is one place where you could look to buy. The chart looks pretty strong considering what's going on. Relative strength is very important.
Sb,
Wow, that chart of MAS is horrible, and even worse, it shows no signs of stopping. If a company's share price really reflected its value as a company, you would think they would have a floor. Let's face it, when the building business picks up, Baldwin, Delta and Grohe will go along for the ride. If we had any guts, we'd be buyers of names like those and just hold on for better times. Problem is, the chart suggests lower prices are ahead.
Looking at a handful of charts (C, BAC, GE, GM, MAS) and nothing else, it is easy to believe some of the more outlier predictions about the impending depression. It's simply amazing what's happening today. Truly scary, actually.
Hal, if the Dow breaks 7,449.38, it is in virgin territory on the downside. There is no technical support level. All that's left in the way of support are the following:
1.) The lows on the S&P and Nasdaq. If/when they reach their November lows, the market *should* pause.
2.) 50% from highs (+/- Dow 7100)
3.) Psychological support levels such as 7000, 6500 and 6000.
.....
These supports are not nearly as significant as the support of a recent low. Any lows that were made below 7449 happened so many years ago that they no longer matter.
Good to see you're still lurking, hope you're faring well.
snot: thanks for the input on pot. honestly i forgot tomorrow is OE, let alone a triple witching day. had i realized that, i would have probably held off dipping my toes into pot today.
oh well, let's see how it plays out...
rl
My targets are as follows:
IYR: $23
XLF: $6
BKX: $16
MAS: $4
I dont have a read on XLE.
I'm seeing a lot of convergences in the first week of march, which leads me to believe that this could be a long slow slide down. The targets above are capitulation targets. If the market falls to those targets quickly, it should create an opportunity for a tradeable bounce. If we slowly inch toward my targets, then I will disregard them.
Have any of the Madoffs other than Bernard been charged criminally yet? Has Swanson? There is no way in hell he could pull offf a scam of this magnitude without a number of other people taking part.
anon, are you saying this is a ... conspiracy???
Ha ha ha...!
my pot trade ended up working out ok for the time being, although below 80 this morning would have been a better entry point (i actually had 80 as the bottom of the channel for pot but pulled the trigger a day too early).
i really thought with OE today pot was going to close right on $80, but i was pleasantly surprised.
rl
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