Posted on 09/28/2008 4:05:10 PM PDT by Shermy
The Securities and Exchange Commission failed in its oversight of investment bank Bear Stearns, ignoring that the company took excessive risks with mortgage-related securities before its demise, according to a report released yesterday by the agency's inspector general.
In a review of the agency's supervision of investment banks, inspector general David Kotz said that the SEC had identified "numerous, potential red flags prior to Bear Stearns' collapse . . . but did not take action to limit these risk factors." J.P. Morgan Chase bought Bear Stearns last March after initial emergency funding to keep it operating failed.
SEC Chairman Christopher Cox has said Bear Stearns was "well-capitalized and apparently fully liquid" but "experienced a crisis of confidence" that led to its collapse. ...
The report pointed to Bear Stearns's large concentration of mortgage securities, its poor management of mortgage-related securities and its high leverage -- the practice of taking heavy debt compared to capital to make big investment bets. When the housing market began to collapse and mortgages went into default, the market for mortgage-related securities froze up and the banks were saddled with crippling loads of worthless assets.
"These reports are another indictment of failed leadership," ranking Senate Banking Committee member Charles E. Grassley (R-Iowa) said in a statement. "We had it at Fannie Mae and Freddie Mac, it was throughout Wall Street, and these reports document the failure of regulators at the Securities and Exchange Commission to either make its oversight program work or seek authority from Congress so that it could work."
... Republican presidential candidate John McCain said last week that Cox should be fired because he "betrayed the public's trust."
(Excerpt) Read more at washingtonpost.com ...
It seems to me the "core" of what is being protected by Paulson and the Democrats, has something to do with Bear Stearns, less to do with the long known troubles of Fannie Mae.
Ideas?
Bear Stearns ping.
McCain was right to say that Cox should be fired.
Troubled mortgage-backed assets are defined as those issued on of before March 14, 2008 in the bill. Isn’t this prejudiced to banks suffering distressed assets after March 14? Is this bill quickly run through because Paulson isn’t acting for the market, but for his friends at Bear Stearns?
Bear Stearns...and maybe Goldman Sachs?
I’m convinced Fannie/Freddie is at the CORE of the problems- any of these problems at the big boy firms started because of the way these mortgages were bundled and sold as securities etc. Wonder how much Bear was into CDS/derivatives...
I’m seeing that in a new light. It was so suspicious why the March 14 date was chosen. Why not January 1, or June 1 or day of the bill signing?
The bill is crafted for Paulson to help Bear Stearns to the exclusion of others. What else could it be, did they pull the date “March 14” out of a hat?
we need to send sec and congress to jail
McCain was right about firing Cox, but it looks too late to gain from that thought. Meanwhile, BHO’s pr team, the MSM, has been beating him over the head with it.
Scary, right.
This blame game is so boring and unproductive.
Bear Stearns is to blame for its collapse. BS went bankrupt, yet life goes on. This is not unusual in a capitalist economy.
Somebody needs to ping George Will.
Guess McCain didn’t “jump the gun a little” as the Dems accused him....he was right, Cox should be fired.
It’s not simply about blame- it’s a matter of trying to unravel what the hell is going on and why.
It’s a mystery- it’s asking to be solved.
Let’s hear once again from the conservative columnists who excoriated John McCain for saying Chris Cox should be fired.
Is it really the SEC's job to monitor how much risk a private company takes? So if I start a business, a government agency has to assess how much risk I take? Should the government regulate if I can but stock deemed risky? What about options -- can I but them or should the government act as my risk manager? Where does this end? Let the free market work.
Sure, that’s exactly what he mainstream media wants to find out? Yeah, right. MSM will push for more agencies, more regulation, more bureaucracy, more people on government payroll and ultimately higher taxes. Sure, that’s the solution. / sarcasm
Should a business be “free” to invent money as it pleases and create dollar denominated products on a whim?
Yes, McCain was correct to say that, and it pains me to type that as Cox was a bigtime NRA member, but if you are bad at your job, you are bad at your job..
Yes. It you find a willing buyer in a free market economy, you can certainly invent any kind of exotic financial instrument. If you think otherwise, you should explore moving to Venezuela.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.