Juggling Dynamite

Brazen nepotism and self-serving policies are the norm in the revolving door world of finance and its regulators–because they have gotten away with it so handsomely to date.   You can read “In Bed with Wall Street” for many sordid details.  Here’s just one:

Finra (Financial Industry Regulatory Authority) is the Wall Street funded regulator charged with overseeing investment brokers (approx. 630K of them) and their firms (approx. 4,250).  A 22-person board roughly balanced between public and industry members is charged with ‘protecting investors by making sure the United States securities industry operates fairly and honestly’.  Sounds good right?

Today Finra reports its board mix as 10 industry members and 12 ‘public’ representatives.  Well that’s the PR anyway.  See Finance Execs fill ‘public’ board seats at FINRA:

“…if you’re wondering why things don’t always turn out so well for Mom and Pop when they entrust money to a broker, you might ponder the balance of power on Finra’s board…

Among the 12 purportedly “public” representatives on its board, Finra has a guy described by Bloomberg as “a leader in financial services technology,” another who spent 35 years at J.P. Morgan, an insurance executive who once worked at Citigroup and Salomon Brothers, and a fellow who founded a private investment firm.”

These are considered the non-industry, neutral members representing the public’s best interest!!  Honestly, if you haven’t looked into the finance mosh pit, you can’t imagine how bad it is.  Take your worst-case guesses and triple them.

Cleaning this cesspool up has to be job number 1.  Our collective future depends on it.

Canadian banks are attempting to whistle past the graveyard of rising loan defaults even as they lower loan loss reserves to boast near term earnings.  Safalow summarizes facts well in this clip.  Here is a link to the investigative reporting piece done on Home Capital (that Safalow refers to). Worthwhile read.

Bradley Safalow, Founder and CEO at PAA Research joins BNN for a look at why he’s bearish on Home cCpital Group.Here is a direct video link.

And this chart of Canadian bank shares (TSX far right) year to date change relative to the banking industry in other major economies is worthy of reflection.  Are Canadian banks miracle workers or just lagging in the credit bubble correction cycle? Hmmmm.

I like wine and appreciate the labor that goes into making it. But years ago, I participated in a blind taste test that confirmed I could not discern a $12 bottle from a $1000 bottle. That revelation was a gift. The characters and behaviors highlighted in this CBC segment are the same in the world of wine as in other areas. Fools and their money are soon parted. Here is a direct audio link.