Posted on 09/18/2008 10:44:10 AM PDT by Fred
Republican presidential candidate John McCain, in remarks prepared for delivery Thursday, said he thought Christopher Cox, chairman of the Securities and Exchange Commission, should be dismissed.
"The chairman of the SEC serves at the appointment of the president and has betrayed the public's trust," he was planning to say in Iowa, according to a text released in advance of the speech by his campaign. "If I were President today, I would fire him."
In a speech in Cedar Rapids, Iowa, Sen. McCain said the SEC allowed abusive short-selling, or bearish bets on a company's stock, to turn "our markets into a casino."
Short-sellers have been blamed for piling into commercial and investment bank stocks and driving stock prices lower. Investment banks have been suffering from heavy write-offs from subprime mortgage debt and their falling stock prices have made it harder for them to raise money.
Sen. McCain also criticized Mr. Cox for eliminating a trading rule that acted as a speed bump to prevent short-seller from pounding a stock. The rule, known as the uptick, said traders could only place short-sales following a higher bid in a stock price. The SEC eliminated the rule in July 2007, and market participants have been urging the SEC to reinstate the rule ever since. Mr. Cox has said the rule is ineffective today since markets have changed since it went into effect around the Great Depression.
(Excerpt) Read more at online.wsj.com ...
If Mr Cox really said this, he does deserve to be put out to pasture. 'Markets have changed' - and maybe that's because we put in the uptick rule and passed Glass-Steagal, both recently pulled or repealed so maybe he missed the move where the markets changed back.
Human behavior hasn't changed, and markets are primarily driven by human behavior (as speeded up by computers these days) so I doubt markets have changed that much.
But, McCain really should be going after Congress and Freddie and Fanny oversight and the community re-investment act. Without that multi-trillion dollar boondoggle, the finance companies wouldn't be in such trouble as to draw the short-sellers attention. McCain, in his usual shoot-the-Republicans manner, skips over the big Dem offenders like Gorelick who ended up with millions, and goes after the merely incompetent Reps on peripheral issues.
“Chris Cox does not deserve this bashing. He was a fine legislator and a good head of the SEC. I am sure there was careful study before changing the short selling rule.”
You’re just as wrong as you can possibly be on this issue.
Chris Cox (current SEC Chairman) might have been a decent legislator, but he has been an ABSOLUTE DISASTER as the head of the SEC and needs to be fired immediately.
The SEC (Securities & Exchange Commission) is unquestionably partially responsible for the recent volatility and drop in the stock markets. They have done a terrible job protecting American investors and need to be reprimanded loud and clear by the Senate Banking Committee.
Here are some of the most glaring problems with the SEC that need to be addressed immediately:
1) On, July 6, 2007 the SEC got rid of the Uptick Rule regulating short sellers which had been in place since 1938 because of short selling bear raids during the Great Depression. SINCE THE UPTICK RULE WAS TAKEN OUT, THE VOLATILITY ON THE STOCK MARKET HAS INCREASED BY 70% AS MEASURED BY THE VIX INDEX.
2) On November 2, 2007 the SEC allowed the NYSE to get rid of the Program Trading Curbs that had been in place since the 1987 stock market crash. The NYSE formerly implemented a curb on program trading whenever the NYSE Composite Index moved 190 points or more from its previous close, and permitted program sales to be executed only on upticks and program buys on downticks.
3) The SEC (effective today) has FINALLY passed a ruling to stop the abusive and criminal practice of Naked Short Selling, which is simply counterfeiting the shares of publically traded stock. WHY DID THIS TAKE UNTOLD YEARS AND A FINANCIAL CRISIS TO FINALLY BE DONE?
These are major problems that NEED TO BE FIXED IMMEDIATELY BY THE SEC. These problems have resulted in a massive amount of increased volatility and instability in the equity markets, reducing the net worth of American investors, driving companies out of business, substantially raising the cost of capital, and costing American taxpayers billions in government funded bailouts.
Because the SEC is regulated by the Senate Banking Committee, I urge FReepers to please email and write members of the Senate Banking Committee demanding that the SEC reinstate the Uptick Rule and Program Trading Curbs, and make sure that the criminal practice of Naked Short Selling is truly stopped once and for all.
In addition, a full investigation needs to be made and some heads definitely need to roll at the SEC (including Chris Cox’s) for their gross incompetence.
>> What nonsense.
You may not *like* the fact that short selling makes a market work better, but that doesn’t make it “nonsense”.
The hell you say-- we had short sellers back in the 1600's when the whole idea of corporations first got invented. Buying and holding is called "going long" and selling is called "going short". OK, we got computers now but they don't do anything a clerk didn't do in the old days; it just took longer so there was much less trading getting done.
McCain's got no business bashing rich people any more than the Dims do. Next thing you know we'll be hearing from McCain's preacher screaming about "rich white people".
You need to provide evidence for such strong statements. Just because there is volatility does not mean that these policies are wrong. On each of these policy decisions, there are arguments on both sides. Do you have any evidence that there was not careful study before changing each rule?
The primary reason for market volatility is bad economic news. There are many policies in the lending area that have contributed to the bad economic news. Even if the SEC policies were not changed, there would still be a major downturn in the markets.
Blaming the SEC for market downturns is not much different than blaming speculators for the oil market explosion. The fundamental problem with the oil market is increased demand and stagnant supply for a vital commodity. It feels comforting to blame the speculators. I do not believe that tightening oil market rules will impact the long term price trends. Tightening market rules can impact liquidity and market functioning so it is a delicate balancing act.
The ONLY thing that could keep this from happening again (and by this I mean quasi-government financed organizations from screwing up) is to divest Fannie and Freddie (and their ilk) from the government. Markets have gone up and down over time and will continue to do so whether John McCain is in the White House or Hussein Obama is.
We sure as hell did have short sellers in the 1950s. And long before that. http://stockforlife.blogspot.com/2007/02/history-of-short-selling-from.html
From your lips to John’s ears. ;>)
GWB doesn't seem to have the "The Buck Stops Here" sign on his desk. Bush isn't looking very good right now and hasn't for some time. The guy could have a shot at rivaling Carter for being one of the worst.
“You need to provide evidence for such strong statements. Just because there is volatility does not mean that these policies are wrong.”
As a matter of fact I do. I’m a 17 year veteran of the financial services industry, and if you check out a 2 year chart of the VIX Index you will see that immediately after the Uptick Rule was taken out by the SEC on July 6, 2007 - the exact same month the stock market volatility increased by approximately 70% and has not gone down since. This is not a mere coincidence.
The Uptick Rule was put in place in 1938 to help prevent any further “bear raids” like investors experienced during the Great Depression and guess what - we’ve been seeing the same things happening now. You don’t suppose that’s why the SEC finally acted today with Naked Short Selling rules, or why the London Exchange has banned all short selling until January 16, 2009?
I’ll tell you another reason why Chris Cox is incompetent - he announced yesterday early afternoon that the new Naked Short Selling rules were going into effect as of today. At the time of his announcement the Dow was down about 170 points. Instead of announcing such a move after the market close, he foolishly allowed the naked shorts to get in one more afternoon of criminality - and the DJIA ended down 450 points - an incredibly stupid move by an incompetent head of the SEC.
I’d like to see an investigation as to how the bean counters at the SEC came about taking out the Uptick Rule and the Program Trading Curbs a few months later. Were they possibly lobbied by some hedge funds? It would be interesting to find out.
By the way, after London Exchange announced there will be no more shorting stocks until January 16, 2009, the Dow rallied 200 points in 30 minutes.
Make no mistake, the SEC is partially responsible (I’d say at least 50%) for the recent selloff in the stock market.
investors are smart enough protect themselves and not depend on the nanny state
That would be swell, except for cases where the "risks" involve losses greater than the ready assets of the financial institution involved.
Your agenda is showing.... As is your ignorance.
McCain was warning about this stuff back in 2005, and probably before that.
Here's a Helpful Hint for the ideologically blind (that's you): there are more issues than just yours.
I really hope you forgot your sarcasm tag.
Given the amounts involved, "investors" (of the individual sort, about whom you seem to be talking) are like mice among the dancing elephants who contol multi-billion dollar portfolios.
A kid with a bucket has about as much chance of re-routing the Mississippi River, as an normal individal has of escaping the consequences of the big boys' market actions.
You know what, then financial institutions shouldn’t do the deal, huh? That’s one reason why I don’t use a margin account. I’m in the market in 7 figures to the right of the decimal point not including commas, OK? And I have an MBA and still I don’t play puts and calls (or commodities in a big way). I like to sleep at night.
No smart person would ever depend on the “nanny state” but the fact is its vital to have orderly markets for investing and raising capital in a free market society - and if that totally breaks down, than the entire system can break down.
And just in case that happens, its always a good idea to keep a good supply of guns, ammo, and food on hand.
Then I guess that makes you a very moral fellow. Good for you.
Would you say that others in your line of work are as moral as you are?
If the answer is "No, they're not all as moral as RKV," then your comments about the "nanny state" begin to look a bit silly.
And considering the huge amounts being lost from the transactions you avoid -- lots more your 7 figures to the LEFT of the decimal point -- I'd say you're a rarity.
Perhaps a bit of police presence would be appropriate to deal with those whose standards of conduct are not as high as yours are. OK?
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