SEC To Look At Merrill Lynch's Hedge Fund Dealings

Wall Street Journal:

Merrill Lynch & Co., in a bid to slash its exposure to risky mortgage-backed securities, has engaged in deals with hedge funds that may have been designed to delay the day of reckoning on losses, people close to the situation said.

The transactions are among the issues likely to be examined by the Securities and Exchange Commission. The SEC is looking into how the Wall Street firm has been valuing, or "marking," its mortgage securities and how it has disclosed its positions to investors, a person familiar with the probe said. Regulators are scrutinizing whether Merrill knew its mortgage-related problem was bigger than what it indicated to investors throughout the summer.

Read the whole story: Wall Street Journal

Comments

[theeconomicfractalist]

US Generational Macroeconomic Saturation and the Probable Wilshire Equity Valuation Decay Fractal Sequence.

Is 2007 'the' US generational macroeconomic saturation area? Or can the Federal Reserve and the Financial Lending Industry with near zero percent Fed Funds rates/ US short term Treasuries and easing credit standards, respectively, promote one additional 3 or so year credit cycle before the boomers retire and the combination of the emptiness of lock box, the indebtedness of US wage earners, and the inadequate tax base of the lower paying US service sector jobs becomes apparent? An argument could be made that for US equities and the US dollar, March 2000 was the generational saturation area with a drop of 25-50 percent of international US dollar and US equity purchasing value since that time. The apparent generational saturation area for gold was in 1979-1980. Gold since its peak in 1979-80 has lost more than 85 percent of its purchasing power relative to US equities. Can the Federal Reserve and Financial Lending Industry manufacture one more 36 month credit cycle before the collective obligations of US debt, US entitlement programs, US military expense of securing foreign oil fields, et. al. - overcome the system's borrowing sustainability?

Using Lammert fractal analysis in the context of the 11/27/22 month Wilshire fractal dating from October 2002 and the 75/150-187.5 week Wilshire fractal dating from March 2003, several precise daily predictions including the 11 October 2007 Wilshire high and small daily breaks of 2-2.5 percent been made. These short term prognostications using the possible new science and quantum mathematical laws are verifiable. The economic saturation curve area of end growth and beginning decay now appear to be highly idealized in terms of four quantum fractal mathematical laws of this potentially new macroeconomic science: an idealized maximal Lammert fractal growth pattern, an ideal Lammert growth and decay fractal pattern, an ideal Lammert fractal decay pattern. and a Lammert 'inverse of decay' growth fractal pattern. The trading week of 5-10 November will largely confirm this expected idealized pattern.

[jjimmyboy21]

Comment by A.B. Dada - The Housing Bubble Blog
2007-11-03 12:21:41
Let’s look at the facts:

1. An unrestrained government entity creates credit and money out of thin air. This money goes to the wealthy and elite first, who use it to invest in a market that has underinflated demand. Sometimes this market is stocks, sometimes commodies, sometimes housing.

2. When the underinflated demand takes off because of a slowly growing cost increase, the middle class takes notice. Because the wealthy spent their newly created dollars fast, somewhat of a trickledown occurred, giving the middle class a tiny wage boost (even though real cost increases exceeded wage increases). The new wage boost tricked the middle class in believing they were wealthier. The new wealth gave them the desire to invest to make money. Since the newly inflated market looked safe, some of the middle class bought into the newly inflated market.

3. Government-licensed shills proclaimed the strength of the newly inflated market, based on less than 12-24 months growth. These licensed shills, which we can call CPAs, stoke brokers, real estate brokers, bankers, or anyone else that requires government regulation and oversight, received a significant commission based on the middle class’ investment in the new scheme; the commission gave the shills more reason to proclaim the solidity and safety of the newly inflated market as an investment opportunity.

4. A few middle class early investors turned around their investment for a profit. As time progresses, more of these early investors made more money as they turned the investments around, then purchased new investments in hopes of making a bigger profit. The early middle class investors became shills for the scheme, promoting it to friends and family who were withholding. Eventually enough money trickled down to even the poor in the form of wage increases, even though all living costs went up even more.

5. As the late comers started to enter the investment market, the price inflation skyrocketed, making some early investors millionaires. They used this money to buy even more properties (...)

[starrianna]

SEC agrees to "Look At" Merrill Lynch's crimes

ALSO:

George Bush agrees to "look at" Iraq
Democrats agree to "look at" GOP bullshit
Larry Craig agrees to "look at" strange cock in the bathroom

[Justinpassing]

"Hide the losses" is being played in full throttle mode across the globe and the SEC and everyone else knows it. Hell, regulators see numbers 24 to 48 hours before that news is to hit the press and during that time the Dow does a notable bump up,(always justified by some tortured, half-baked excuse), before the bad news is allowed to, then, adversly affect the markets. Most of the big financial firms are frantically buying insurance companies in Britain because the regulations left a loop-hole that will allow these US firms to then hide their losses in those newly purchased insurance firms. It's a CESSPOOL out there my honeys, and is in self-destruction mode. STOCK TIP! buy Orville Reddenbacher, and sit back and enjoy your product as you watch the meltdine(sic) of the global economy; brought to you by the snazzie guys and gals of Wall & K-Streets and the incestuous compliance of the SEC and the Federal reserve, and the incestuous ratings agencies, and bankers, and brokers, ee-i,ee-i,oh

[NicoleAnonymous]

Is this the bank that decided they were going to hold their CEO "accountable" for all the money they lost by giving him over $161 million and an office and assistant for the next three years?

I wish my company would hold us "accountable" for our mistakes by rewarding us with lots of money and an office and assistant.In fact I wonder why more CEOs of banks don't try to lose lots of money and do a bad job.Who needs the stress of working anyway.You have to deal with traffic during the commute and all those boring meetings and people keep calling you during your golf games and it's hard to concentrate.

From now on, they should be as incompetent as the CEO of this bank so they can get $161 million to go away.

[mrcontinental]

About time, and the answer is YES. They knew it was far bigger.