Monday, October 7, 2013

Buffett's Crisis-Lending Haul Reaches $10 Billion

Buffett's Crisis-Lending Haul Reaches $10 Billion

Billionaire Warren Buffett tossed lifelines to a handful of blue-chip companies during the financial crisis. Five years later the payoff on those deals is becoming clear: $10 billion and counting.
Mr. Buffett approached that figure after he collected another hefty payment last week, bringing to nearly 40% the pretax income on his crisis-era investments, according to a Wall Street Journal analysis.
The bounty is a vivid illustration of one of Mr. Buffett's favorite investing maxims: "Be fearful when others are greedy, and be greedy when others are fearful."




Link: http://www.valueinvestingworld.com/2013/10/buffetts-crisis-lending-haul-reaches-10.html 


 

Graham and Doddsville Newsletter


Monday, October 7, 2013

Graham and Doddsville Newsletter – Fall 2013

Found via ValueWalk.
 
 
 
 
 
 

Thursday, July 18, 2013

One Life-Changing Class You Never Took: Alexa von Tobel at TEDxWallStreet


Published on Apr 12, 2012


Link: https://www.learnvest.com/






Alexa von Tobel is the founder and CEO of LearnVest.com
which she has been developing and growing since 2006. 

LearnVest is the leading personal finance and lifestyle website that brings financial literacy to women. Since launching LearnVest, Alexa has been widely quoted as a personal finance expert and entrepreneur in top tier business and consumer publications including: New York Times, The Wall Street Journal, New York Post, BusinessWeek, Shape, Fast Company, Marie Claire, ForbesWoman, InStyle, People StyleWatch, Time Out New York, The Huffington Post, among many others. Alexa has been included on Vanity Fair's 2011 Next Establishment list, featured on Business Insider's 2010 and 2011 Silicon Alley 100 lists, named "One of the Coolest Young Entrepreneurs" in Inc. Magazine's 30 Under 30 feature, titled a "Woman to Watch" by Forbes and included on the publication's 30 Under 30 list, highlighted on BusinessWeek's annual list of "Best Young Tech Entrepreneurs," among others. LearnVest has been named one of "25 Women-Run Startups to Watch" by Fast Company, included on Forbes' list of the "Top 100 Websites for Women" for the second year in a row, featured on Business Insider's Digital 100 list and included on Time Magazine's annual list of "50 Best Websites."
More information at http://www.TEDxWallStreet.com

About TEDx, x = independently organized event:

In the spirit of ideas worth spreading, TEDx is a program of local, self-organized events that bring people together to share a TED-like experience. At a TEDx event, TEDTalks video and live speakers combine to spark deep discussion and connection in a small group. These local, self-organized events are branded TEDx, where x = independently organized TED event. The TED Conference provides general guidance for the TEDx program, but individual TEDx events are self-organized.*

(*Subject to certain rules and regulations)


Category


Education

License


Standard YouTube License

















































































































































Link: http://youtu.be/8jkri0AeZWQ









Friday, July 12, 2013

Investment Advice From Warren Buffett



9 Nuggets of Investment Advice From the Best Investor, Warren Buffett


By Selena Maranjian | More Articles
June 29, 2013 


Berkshire Hathaway (NYSE: BRK-A ) (NYSE: BRK-B ) company's per-share book value has grown by an annual average of 19.7% between 1965 and 2012. 

That's a total gain of more than 586,000%. (Compounding at its finest)

The company's stock has grown by about one million percent since 1965, enough to turn a $10,000 investment into roughly $100 million. 


Be optimistic

"Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts, the Depression, a dozen or so recessions and financial panics, oil shocks, a flu epidemic, and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497."

This bit of investment advice offers useful perspective, reminding us that the market's overall trend has been to rise, despite some big and small hiccups.


Geniuses need not apply

It can be easy to assume that you need to be brilliant like Buffett to make money in stocks. He would disagree, though:

"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ."

That point is supported by plenty of examples of the bumbling of brilliant folks, such as the 1994 implosion of the massive Long Term Capital Management hedge fund company, which boasted two Nobel laureates and lost billions anyway.

Investing is simple ... sort of

So what specific investment advice does Buffett offer? Here it is, in a nutshell:

"All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies."

That sure makes it sound easy. Note, though, that his investment advice isn't to simply buy and hold forever. 

You should hang on only as long as a company remains promising. Here's a little more detail:
"Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily understandable business whose earnings are virtually certain to be materially higher five, 10, and 20 years from now. Over time, you will find only a few companies that meet these standards – so when you see one that qualifies, you should buy a meaningful amount of stock. You must also resist the temptation to stray from your guidelines: If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio's market value."

That investment advice contains some key concepts -- for instance, making sure to buy at attractive prices, and focusing on companies that are easy for you to understand.


It's not all simple, though:


"When managers want to get across the facts of the business to you, it can be done within the rules of accounting. Unfortunately, when they want to play games, at least in some industries, it can also be done within the rules of accounting. If you can't recognize the differences, you shouldn't be in the [stock]-picking business."

The main message here is that it's important to keep reading and learning, so you can become a better investor.
(If you don't have the time or interest for that, Buffett has recommended simple index funds, as we at the Fool have also recommended for many years, too.)

Be patient

Another key bit of investment advice from Buffett is to maintain a long-term view:

"When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever."

Indeed, Buffett has held shares in some companies for decades. This quotation is from his 1988 letter to shareholders, and in that letter he lists stock in Coca-Cola and Washington Post as major holdings, and he still has his shares.

The investment advice to be patient and calm has been reiterated many times. 

For example:

"You could be somewhere where the mail was delayed three weeks and do just fine investing."


Don't get emotional

Another vital piece of investment advice is to avoid being influenced by dangerous emotions:


"Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful."


This makes a lot of sense if you think about it: Others tend to be greedy when the market has been soaring, so they often end up buying at inflated prices. Folks get fearful and often sell after big market drops, but by doing so they lose money (or reap smaller gains) and miss out on some great buying opportunities.

Be careful whom you listen to

Finally, an often overlooked bit of investment advice is to be careful where you gather your investment advice:

"Never ask the barber if you need a haircut."

If you're getting stock-investing guidance from a broker, he or she may have some conflicts of interest and not have your best interests at heart.

There's much more to learn from Buffett. You might start with his many annual letters to shareholders, which are quite accessible -- and often even entertaining.






Thursday, July 11, 2013

Seven Ways To Conquer Indecision


Ever feel that gnawing pain in your stomach because you…just…can’t…decide?

Don’t feel bad: Even the greatest leaders suffer from indecision. What distinguishes the best from the rest is the ability to get at the fundamental cause of their mental roadblock—and then set dynamite to it.

Take my former client, whom I’ll call JC. This guy built a $400-million enterprise in less than a decade. Along the way, he never suffered indecision. He was not rash or foolhardy, and on most days, he knew his mind and had the confidence to act on it.

That changed radically, however, after his company was profitable for seven consecutive quarters and his big backers urged him to kick growth into high gear. Although JC anticipated this directive, given how well his company was performing, it caused him to start second-guessing himself, and eventually brought on serious distress.

Plenty of executives I have coached had the same reaction JC did. It is so prevalent that I gave it a name so I could more readily help folks except it as non-career-threatening: I call it “Executive Yips,” like the kind a golfer suffers when sweating over a three-foot, straight-uphill put.

When golfers get the yips, they experience shaky hands, an inability to focus, or unsteady posture. 

Executives Yips grip business leaders with dread. After setting a course of action and narrowing the strategy to a few choices, they simply freeze up. Typically, in this dilemma, they’ll turn to various advisors and ask, “What should I do?” This never works since Executive Yips are never about making the correct choice but, rather, about being blocked from action.

To help JC, I had him consider what he would have to do before he could expand his business. The harsh reality: He had to replace his founding executive team—which included a bunch of JC’s college fraternity brothers, a group that was not up to the task. After JC finally dealt with the pain of telling those he truly loved that he would have to let them go, his Executive Yips vanished as suddenly as they appeared.

JC (and I) got lucky on that one. In most cases, folks who struggle with indecision have it bad. Because indecision is ultimately an action issue (rather than a cognitive one), the person gripped by it can look contemplative when, in fact, he is immobilized by fear.

Before I began working with JC, none of his colleagues knew that he was suffering Executive Yips; he always looked before he leaped, so they assumed he was just being judicious in setting a grander course for the business. No one guessed that he was paralyzed by concern for his fraternity brothers. Because indecision has no overt symptoms that reliably distinguish it from deep thought, JC could have languished in that state until his stakeholders roused him with an annoyed, “What’s up?”

Chronic indecisiveness can be one of the toughest psychological demons to banish. Here are seven ways to help you pull the trigger when a big part of you would rather do anything but.


Forget About Always Appearing Smart


Plenty of talented people, even those who have made a killing, go to exhaustive lengths not to appear dumb. (For proof, read Paul Allen’s recent autobiography: The man has billions but still craves respect.)

Actually, the smarter you are, the more likely your indecision is born of this anxiety. A kid building a startup can be wrong, fail, and feel no shame: “I’m a kid… what do you expect?” Not so for someone with an established reputation to protect. This fear of shame is pernicious, mainly because it’s useless. Let it go.


Trust Your Gut (It’s Savvier Than You Think)


As Malcolm Gladwell hammers home in Blink, mistrusting emotion-driven decisions can be dangerous. What you refer to as “your gut” is actually a wealth of knowledge marbled with empirically validated facts that you aren’t in touch with at critical crossroads.

Better yet, recall the breezy mantra: “If you don’t make the right decision, you can make the decision right.” If that sounds like cold comfort, set up a straw man—your gut—to absorb criticism if you end up making a poor choice. By making your gut the scapegoat, you protect your analytic self (your cortex) from blame, and prime it for triage, if necessary.


Beware The Paradox Of Choice


Really smart folks often fare poorly on multiple-choice tests if they view all the possible answers to a question rather than answer the question and then see if their answer is one of the choices. That’s because the better the test, the more similar “wrong” choices are to the correct one.

Similarly, getting outside perspective is wise only to a point. Shopping for advice does only one thing: It lengthens your list of possibilities, and that can grind you to a halt—or even make the choice you eventually do make less satisfying.


Prioritize Your Demands (And Fears)


People suffering indecision often get hamstrung by blurred boundaries. That’s precisely what happened to JC: He knew what to do—as CEO—to boost sales, but the need to protect his friends got in the way. Once he realized he had to be a CEO first and friend second, he pulled the trigger.


Channel Winston Churchill 

Sociopaths aside (and after 30 years in psychiatry I’ve met a few), people generally know what the “right” choice is. Yet they allow themselves, if only for a second, to ponder a lesser, lower path—and that slope gets slick and steep in a hurry.

If you want to snuff indecision in its tracks, repeat after General Churchill: “The only guide to man is his conscience; the only shield to his memory is the rectitude and sincerity of his actions. It is very imprudent to walk through life without this shield, because we are so often mocked by the failure of our hopes and the upsetting of our calculations; but with this shield, however the fates may play, we march always in the ranks of honor.”


Accept The Limits Of Analysis


The road to hell, we’re told, is paved with good intentions, judicious decisions and exhaustively analyzed strategies. Wars have been lost owing to unexpected weather conditions; data-wielding sports scouts draft college players who fail in the pros.

Bottom line: Avoid paralysis by analysis. Act, examine your results, make adjustments, and move on. (This approach, by the way, is gaining serious traction in the world of technology startups. )



Flip A Coin


“When you have to make a choice and don’t make it, that is in itself a choice.” The eminent psychologist/philosopher William James said this, and he was dead-on. If you feel like a hung jury that’s taken 18 successive votes and is still deadlocked, use a coin to break your psychic logjam.


Remember: Indecision is all about avoiding 1) the choice between two negative alternatives, one of which has to be adopted, or 2) the choice between two fairly equal courses of action. In both cases, the solution may well be heads or tails.


I am an executive coach and management consultant who, for over 25 years, was on the faculty of Harvard Medical School’s Department of Psychiatry. During that time I maintained a private psychotherapy practice in Boston where I used techniques of behavioral and psychodynamic psychiatry to treat patients who were professionally successful yet self-defeating. I use the same skill sets today to design interventions that foster the success of entrepreneurs and C-level executives, particularly those at risk for career burnout or engaging in self-defeating behaviors. My interest in entrepreneurs dates back to 1986 when I realized that their spirit is the only naturally occurring inoculation against the disorders that cause successful people to self-destruct. I began writing about entrepreneurs in Inc. Magazine, and have taught courses on The Psychology of the Entrepreneurial Spirit at USC’s Marshall School of Business and UCLA’s Anderson School of Management. I welcome questions and suggestions.





The author is a Forbes contributor. The opinions expressed are those of the writer.

Steven Berglas, Contributor

I wrangle with the psychological challenges of life and business.



Steven Berglas’ Popular Posts
Ten Signs You're Depressed But Don't Know It
Ten Horrible Reasons To Get Rich
The Top 10 Reasons Lying Will Corrode Your Self-Esteem.
How To Tell Someone They're Wrong (And Make Them Feel Good About It)
How To Boost Your Confidence At Work



Seven Ways To Conquer Indecision - Forbes

Source: http://www.forbes.com/fdc/welcome_mjx.shtml

Compound Growth



This is the Secret to Warren Buffett's Success ... he understood the Magic of Compound Return on his Assets






Link: http://www.youtube.com/watch?v=umFnrvcS6AQ&feature=share&list=TLRLwy8nshQbs




Charlie Rose - An Hour with Warren Buffett










http://youtu.be/xVOn371TCPo





The Psychology of Human Misjudgement - Charlie Munger Full Speech



ublished on Jan 13, 2013
BuffettMungerWisdom: http://buffettmungerwisdom.wordpress.com
"Influence: The Psychology of Persuasion by Rober Cialdini"http://amzn.to/WgcAuo
"Poor Charlie's Almanack Expanded Third Edition"http://amzn.to/13szxgn


Audio of the often referred to speech by Charlie Munger on the psychology
of human misjudgement given to an audience at Harvard University circa Jun 1995.
Mr. Munger speaks about the framework for decision making and the
factors contributing to misjudgements. c. Jun 1, 1995

FULL TEXT:
http://buffettmungerwisdom.wordpress....
  • Category

  • License

    Standard YouTube License























Link: http://youtu.be/pqzcCfUglws




A Conversation with Charlie Munger (U Michigan)- 2010

Sunday, February 3, 2013

Security Analysis

Warren Buffett might disagree....


Graham and Dodd

From Security Analysis, 1940 edition:
“These intricacies of corporate accounting and financial policies undoubtedly provide a broad field for the activities of the securities analyst. There are unbounded opportunities for shrewd detective work, for critical comparisons, for discovering and pointing out a state of affairs quite different from that indicated by the publicized “per-share earnings.” That this work may be of exceeding value cannot be denied. In a number of cases it will lead to a convincing conclusion that the market price is far out of line with intrinsic or comparative worth and hence to profitable action based upon this sound foundation. But it is necessary to caution the analyst against overconfidence in the practical utility of his findings. It is always good to know the truth, but it may not always be wise to act upon it, particularly in Wall Street. And it must always be remembered that the truth that the analyst uncovers is first of all not the whole truth and, secondly, not the immutable truth. The result of his study is only a more nearly correct version of the past. His information may have lost its relevance by the time he acquires it, or in any event by the time the market place is finally ready to respond to it.”



Wednesday, January 23, 2013

Secret Ingredients for Success

Excuse making is not the answer to moving your business forward and making a success of your efforts  -  working harder is not the answer; you need to change a losing game. 

Work differently like the successful people in this article did:
they subjected themselves to fairly merciless self-examination that prompted reinvention of their goals and the methods by which they endeavored to achieve them.

They looked inward and subjected themselves to brutal self-assessment. 

In interviews with high achievers for a book, the authors expected to hear that talent, persistence, dedication and luck played crucial roles in their success. 

Surprisingly, however, self-awareness played an equally strong role.


The authors learned that challenging our assumptions, objectives, at times even our goals, may sometimes push us further than we thought possible. 


This is  the cognitive approach that Professor Argyris called double-loop learning wherein we are advised  to  question every aspect of our approach, including our methodology, biases and deeply held assumptions. 

..........



Secret Ingredient for Success

By CAMILLE SWEENEY and JOSH GOSFIELD


WHAT does self-awareness have to do with a restaurant empire? A tennis championship? Or a rock star’s dream?

David Chang’s experience is instructive.

Mr. Chang is an internationally renowned, award-winning Korean-American chef, restaurateur and owner of the Momofuku restaurant group with eight restaurants from Toronto to Sydney, and other thriving enterprises, including bakeries and bars, a PBS TV show, guest spots on HBO’s “Treme” and a foodie magazine, Lucky Peach.  

He says he worked himself to the bone to realize his dream — to own a humble noodle bar.

He spent years cooking in some of New York City’s best restaurants, apprenticed in different noodle shops in Japan and then, finally, worked 18-hour days in his tiny restaurant,
Momofuku Noodle Bar.

Mr. Chang could barely pay himself a salary. He had trouble keeping staff. And he was miserably stressed.


He recalls a low moment when he went with his staff on a night off to eat burgers at a restaurant that was everything his wasn’t — packed, critically acclaimed and financially successful.

He could cook better than they did, he thought, so why was his restaurant failing? “I couldn’t figure out what the hell we were doing wrong,” he told us.

Mr. Chang could have blamed someone else for his troubles, or worked harder (though available evidence suggests that might not have been possible) or he could have made minor tweaks to the menu. 

Instead he looked inward and subjected himself to brutal self-assessment.

Was the humble noodle bar of his dreams economically viable? 

Sure, a traditional noodle dish had its charm but wouldn’t work as the mainstay of a restaurant if he hoped to pay his bills.

Mr. Chang changed course. 


Rather than worry about what a noodle bar should serve, he and his cooks stalked the produce at the greenmarket for inspiration. 

Then they went back to the kitchen and cooked as if it was their last meal, crowding the menu with wild combinations of dishes they’d want to eat — tripe and sweetbreads, headcheese and flavor-packed culinary mashups like a Korean-style burrito. 

What happened next Mr. Chang still considers “kind of ridiculous” — the crowds came, rave reviews piled up, awards followed and unimaginable opportunities presented themselves.

During the 1970s, Chris Argyris, a business theorist at Harvard Business School (and now, at 89, a professor emeritus) began to research what happens to organizations and people, like Mr. Chang, when they find obstacles in their paths.

Professor Argyris called the most common response single loop learning — an insular mental process in which we consider possible external or technical reasons for obstacles.


LESS common but vastly more effective is the cognitive approach that Professor Argyris called double-loop learning. 

In this mode we — like Mr. Chang — question every aspect of our approach, including our methodology, biases and deeply held assumptions. 

This more psychologically nuanced self-examination requires that we honestly challenge our beliefs and summon the courage to act on that information, which may lead to fresh ways of thinking about our lives and our goals.

In interviews we did with high achievers for a book, we expected to hear that talent, persistence, dedication and luck played crucial roles in their success. 

Surprisingly, however, self-awareness played an equally strong role.

The successful people we spoke with — in business, entertainment, sports and the arts — all had similar responses when faced with obstacles: they subjected themselves to fairly merciless self-examination that prompted reinvention of their goals and the methods by which they endeavored to achieve them.
The tennis champion Martina Navratilova, for example, told us that after a galling loss to Chris Evert in 1981, she questioned her assumption that she could get by on talent and instinct alone. 

She began a long exploration of every aspect of her game. 

She adopted a rigorous cross-training practice (common today but essentially unheard of at the time), revamped her diet and her mental and tactical game and ultimately transformed herself into the most successful women’s tennis player of her era.

The indie rock band OK Go described how it once operated under the business model of the 20th-century rock band. 

But when industry record sales collapsed and the band members found themselves creatively hamstrung by their recording company, they questioned their tactics. 

Rather than depend on their label, they made wildly unconventional music videos, which went viral, and collaborative art projects with companies like Google, State Farm and Range Rover, which financed future creative endeavors. The band now releases albums on its own label.
No one’s idea of a good time is to take a brutal assessment of their animating assumptions and to acknowledge that those may have contributed to their failure. 

It’s easy to find pat ways to explain why the world has not adequately rewarded our efforts. 


But what we learned from conversation with high achievers is that:


 challenging our assumptions, objectives, at times even our goals, may sometimes push us further than we thought possible. 












Camille Sweeney and Josh Gosfield are the authors of the forthcoming book “The Art of Doing:  How Superachievers Do What They Do and How They Do It So Well.”


Source:

Secret Ingredient for Success - NYTimes.com



http://www.nytimes.com/2013/01/20/opinion/sunday/secret-ingredient-for-success.html?_r=0





Wednesday, January 9, 2013

Why Wall Street Wins Everytime

 The great mystery story in American politics these days is why, over the course of two presidential administrations (one from each party), there’s been no serious federal criminal investigation of Wall Street during a period of what appears to be epic corruption.


One of those rare inside accounts about Why the Government Won't Fight Wall Street:

 "The Payoff: Why Wall Street Always Wins", a new book by Jeff Connaughton, the former aide to Senators Ted Kaufman and Joe Biden.

 He shared this quality with his boss Kaufman, the Delaware Senator who took over Biden's seat and instantly became an irritating (to Wall Street) political force by announcing he wasn’t going to run for re-election. 

"I later learned from reporters that Wall Street was frustrated that they couldn’t find a way to harness Ted or pull in his reins," Jeff writes. "There was no obvious way to pressure Ted because he wasn’t running for re-election."

Kaufman for some time was a go-to guy in the Senate for reform activists and reporters who wanted to find out what was really going on with corruption issues.

He was a leader in a number of areas, attempting to push through (often simple) fixes to issues like high-frequency trading (his advocacy here looked prescient after the "flash crash" of 2010), naked short-selling, and, perhaps most importantly, the Too-Big-To-Fail issue. 

What’s fascinating about Connaughton’s book is that we now get to hear a behind-the-scenes account of who exactly was knocking down simple reform ideas, how they were knocked down, and in some cases we even find out why good ideas were rejected, although some element of mystery certainly remains here.

There are some damning revelations in this book, and overall it’s not a flattering portrait of key Obama administration officials like SEC enforcement chief Robert Khuzami, Department of Justice honchos Eric Holder (who once worked at the same law firm, Covington and Burling, as Connaughton) and Lanny Breuer, and Treasury Secretary Tim Geithner.

Most damningly, Connaughton writes about something he calls "The Blob," a kind of catchall term describing an oozy pile of Hill insiders who are all incestuously interconnected, sometimes by financial or political ties, sometimes by marriage, sometimes by all three.

And what Connaughton and Kaufman found is that taking on Wall Street even with the aim of imposing simple, logical fixes often inspired immediate hostile responses from The Blob; you’d never know where it was coming from.

In one amazing example described in the book, Kaufman decided he wanted to try to re-instate the so-called "uptick rule," which had existed for seventy years before being rescinded by the SEC in 2007. 

The rule prevents investors from shorting a stock until the stock had ticked up in price. "Forcing short sellers to wait for the price to tick up before they sell more shares gives a breather to a stock in decline and helps prevent bear raids," Connaughton writes.

The uptick rule is controversial on Wall Street – I’ve had some people literally scream at me that it doesn’t do anything, while others have told me that it does help prevent bear attacks of the sort that appeared to help finally topple already-mortally-wounded companies like Bear Stearns and Lehman Brothers – but what’s inarguable is that Wall Street hates the rule.

Hedge fund types or employees of really any company that engages in short-selling will tend to be most venomous in their opinions of the uptick rule.

Anyway, Connaughton and Kaufman were under the impression that new SEC chief Mary Schapiro would re-instate the uptick rule after taking office. 

When she didn’t, Kaufman wrote her a letter, asking her to take action. When that didn't do the trick, he co-sponsored (with Republican Johnny Isakson) a bill that would have required the SEC to take action.

Nothing happened, and months later, Kaufman gave a grumbling interview to Politico about the issue. One June 30, the paper’s headline read: "Ted Kaufman to SEC; Do Your Job."

The next day, the Blob bit back. Connaughton was in the basement of the Russell building when a Senate staffer whose wife worked for Shapiro shouted at him. From the book:
"Hey, Jeff, you’re in the doghouse." He meant: with his wife's boss  -SEC chief Mary Schapiro.
"Why?" I asked.
"That Politico piece by your boss."
I was taken aback but tried to downplay the matter.
"We just want the SEC to get its work done."
"Remember," he said. "We all wear blue jerseys and play for the Blue Team. I just don’t think that helps."
When Connaughton told Kaufman over the phone what the staffer said, Kaufman exploded. "You call him back right now and tell him I said to go fuck himself in his ear," Kaufman said.

Similarly, when Kaufman tried to advocate for rules that would have prevented naked short-selling, Connaughton was warned by a lobbyist that it would be "bad for my career" if he went after the issue and that "Ted and I looked like deranged conspiracy theorists" for asking if naked short-selling had played a role in the final collapse of Lehman Brothers.

Naked short-selling is another controversial practice. Essentially, when you short a stock, you're supposed to locate shares of that stock before you go out and sell it short.

But what hedge funds and banks have discovered is that the rules provide "leeway" – you can go out and sell shares in a stock without actually having it, provided you have a "reasonable belief" that you can locate the shares.

This leads to the obvious possibility of companies creating false supply in a stock by selling shares they don't have.

Without getting too much into the weeds here, there is an obvious solution to the problem, which essentially would be forcing companies to actually locate shares before selling them.

In their attempt to change the system,Kaufman and Connaughton discovered that the Depository Trust Clearing Corporation, the massive quasi-private organization that clears most all stock trades in America, had come up with just such a fix on their own.

Kaufman recruited some other senators to endorse the idea, and as late as 2009, Connaughton and Kaufman were convinced they were going to get the form.

But before the change could be made, Goldman, Sachs issued "data" showing that there was "no correlation" between naked short selling and price movements.

When Connaughton asked an Isakson staffer what the data said, the staffer, intimidated by Goldman, replied, "The data proves we're full of _it."
 Connaughton looked at the data and realized instantly that---

it was a bunch of irrelevant gobbledygook, 

even firing off an angry letter to Goldman telling them the tactic was beneath even them.

But Goldman’s tactic worked. 

A roundtable to discuss the idea was scheduled by the SEC on September 24, 2009.
Of the nine invited participants, "all but one" were for the status quo.

Connaughton expected the DTCC representatives to unveil their reform idea, but they didn’t:
Afterwards, I went over to [the DTCC representatives] and asked,
"What happened?"
Sheepishly, and to their credit, they admitted:
"We got pulled back." They meant: by their board, by the
Wall Street powers-that-be.

Essentially the same thing happened in Kaufman’s biggest reform attempt, the amendment to the Dodd-Frank bill he co-sponsored with Ohio’s Sherrod Brown, which would have broken up the Too-Big-To-Fail banks.

But the Brown-Kaufman amendment, which was really the meatiest thing in the original Dodd-Frank bill, the one reform that really would have made a difference if it had passed, just died in the suffocating mass of the Blob. 

The key Democrats one after another failed to line up behind it, and in the end it was defeated soundly, with Dick Durbin, the number two man in the Democratic leadership, giving it this epitaph: "a bridge too far."

Again, those interested in understanding the mindset of the people who should be leading the anti-corruption charge ought to read this book. 

It's the weird lack of concern that shines through, like Khuzami’s comment that he’s "not losing sleep" over judges reprimanding his soft-touch settlements with banks, or then Southern District of New York U.S. Attorney Ray Lohier’s comment that the thing that most concerned him was "cyber crime."

this is the period of 2008-2009,in the middle of an 
 historic crime-wave on Wall Street.



On the outside we can only deduce the mindset from actions and non-actions...



Read more: http://www.rollingstone.com/politics/blogs/taibblog/a-rare-look-at-why-the-government-wont-fight-wall-street-20120918#ixzz27YfQPUZa

Source:
A Rare Look at Why the Government Won't Fight Wall Street | Matt Taibbi | Rolling Stone

 http://www.rollingstone.com/politics/blogs/taibblog/a-rare-look-at-why-the-government-wont-fight-wall-street-20120918#ixzz27YfQPUZa