Monday, December 12, 2011

Gangsters and Banksters - A Serial Tale Part III

On the surface, the failure of MF Global, a firm ran by Jon S. Corzine, seems to be another incident of gangsters and banksters losing other people's money.  However, as you read more about MF Global's failure and other seemingly unrelated financial news stories a different pattern seems to develop.

The first of two stories to be discussed in this post is the DealBook article, "A Romance With Risk That Brought On a Panic"; which provides an interesting look at what may have led to the failure of MF Global.

As you read the article, and this information is deep in the article, you find out about the effects of the rating agencies and the regulator FINRA - a non-governmental organization.  You learn that their late-to-the-game actions appear to be the driving forces behind the run on MF Global.  

More importantly, we need to understand why this run on MF Global occurred and what should have been done to prevent it. The run on MF Global appears to have been intentionally induced by a party or parties wishing to bring financial harm to MF Global, and possibly for political reasons.

Political reasons may underlay the cause of the run on MF Global and the concomitant possible misuse of customer funds.

A contemporary, apparently unrelated story about the Federal Reserve lending money to other central banks -- something that is not uncommon among central banks -- is being reported by Bloomberg.  The story, via a bit of dissemblance of wrongdoing, leads you to believe that the Federal Reserve does not know to whom it is loaning money - not true.  They are loaning dollars to other central banks to help stave off a possible catastrophic situation in Europe, and in the world.

These two unrelated stories seemingly point to other powerful political- and moneyed-operatives acting to influence banking regulations and possibly to tarnish certain politicians and former politicians.  Legitimate, unbiased investigative reporters have much work to do to sort out the details of these new financial machinations.

The real story that needs telling is the reason there was a run on MF Global -- think the run on Lehman Brothers -- and the motive for the Bloomberg hit piece on Chairman Ben Bernanke and the Federal Reserve.

Ahmed, Azam, Ben Protess and Susanne Craig. "A Romance With Risk That Brought On a Panic." The New York Times DealBook 11 December, 2011: online edition.

Lanman, Scott and Bradley Keoun. "No One Telling Who Took $586B in Fed Swaps." Bloomberg 11 December, 2011: online edition. 

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