Christmas Break Camp.
is open all boys and girls ages Kindergarten-8th
register for Christmas Break Camp is $20/day for
Y-Members and $30 for Non-Members. Or parents may
register children for all six days at a reduced
Break Camp will run December 21-23 and December
28-30. Parents may drop their children off at the
Y as early as 7:00 a.m. and pick them up by 6:00
will include games, swimming, crafts, sports, and
much more. YMCA will provide a snack and parents
are asked to make sure their child(ren) bring a
sack lunch. Also, children will need to bring a
swimming suit and towel each day.
staff from the Ys Summer Day Camp and After
School programs will make sure kids are safe and
have lots of fun.
information call the Y at 358-1070 or stop by the
Y at 2600 S. Grand in Carthage.
Hall reports that Debbra Carter has filed for 3rd
Ward Council position.
SEC Just Now
Seeking Key Information On Meltdown
by Jake Bernstein and Jesse
Almost three years since banks
started taking losses that led to the worst
financial crisis since the Great Depression, the
Securities and Exchange Commission is still
asking basic questions about what happened.
The SEC is conducting an
information-gathering sweep of the key players in
the market for collateralized debt obligations,
the bundles of mortgage securities whose sudden
collapse in price was at the center of the
meltdown of the global banking system.
In a letter dated Oct. 22, the
SEC sent what amounts to a questionnaire to a
number of collateral managers, the middlemen
between the investment banks that created the
complex financial products and the investors who
Collateralized debt obligations
are made up of dozens if not hundreds of
securities, which in turn are backed by
underlying loans, such as mortgages. Investment
banks underwrite the structures and recruit their
investors. Collateral managers, brought in by the
investment banks but paid by fees from the
assets, select the securities and manage the
structures on behalf of the investors. CDO
managers have a fiduciary duty to manage the
investments fairly for investors.
Since 2005, $1.3 trillion worth
of CDOs have been issued, with a record $521
billion in 2006, according to the securities
industry lobbying group SIFMA. The collapse in
value of mortgage CDOs triggered the 2008
ProPublica and NPR have
confirmed that the SEC letter was sent to several
managers, although the distribution list was
likely industrywide. At the height of the boom in
2006, only 28 managers controlled about half of
all CDOs, according to Standard and Poors.
Banks began disclosing the
first big losses on CDOs in early 2007. The
infamous Bear Stearns hedge funds ran into
problems beginning that summer. By that August,
the credit markets began seizing up. Merrill
Lynch and Citigroup were among the hardest hit by
losses on bad investments in mortgage-based
securities and CDOs.
The SECs letter focuses
on information regarding "trading,
allocation and valuations and advisers
disclosure," though it also asks for other
details on how the managers ran their businesses.
The letter requests information on CDOs issued
since Jan. 1, 2006.
The letter asks collateral
managers for information about what investments
they made on their own behalf and how they valued
these investments. Securities experts say the
letter indicates that the agency is still
gathering basic information about the CDO market,
despite its centrality to the banking crisis.
"One wonders why this
letter, especially given the general nature of
it, is just now being sent. And why wasnt
it sent several years ago, as the CDO market was
exploding?" says Lynn Turner, who was the
SECs chief accountant in the late 1990s.
"It makes it look like the SEC is several
years behind the markets."
Even Wall Street executives and
securities lawyers who were involved in the CDO
business at its height have privately expressed
surprise that the SEC was only now contacting
them for such rudimentary information.
The SEC declined to comment on
the letter. As a policy, a spokesman said, the
agency doesnt comment on its regulatory
actions. The SEC has jurisdiction over CDO
managers,and enforces rules against securities
manipulation, among other violations. The letter
does not use the words "inquiry" or
Interviews with market
participants and former regulators point to
several areas that the SEC might be
investigating. Some managers had their own
in-house investment funds and may have taken
positions that were in conflict with those of the
investors in the structures that they managed. In
some cases, their hedge funds may have bet
against the very slices of the securities they
were managing on behalf of the investors in the
Underwriting investment banks
often had influence over the investment choices
some CDO managers made, giving rise to another
possible conflict of interest. The agency may be
looking at whether that influence was proper or
"The possibility for
conflicts and self-dealing is huge," says
Turner, the former SEC chief accountant.
To date, the agency has little
to show for its probes into the causes of the
crisis that engulfed global financial markets
just over a year ago. In June 2007, Christopher
Cox, then the SEC chairman, testified before
Congress that the agency had "about 12
investigations" under way concerning CDOs
and collateralized loan obligations and similar
products. A little more than a year later, Cox
told Congress that the number of investigations
into the financial industry, including the
subprime mortgage origination business, had
ballooned to over 50 separate inquiries.
There could be multiple reasons
why investigations are proceeding slowly. Such
cases are complex and require enormous resources
and expertise. Regulators also face the hurdle of
proving intent to defraud.
Under Coxs stewardship,
the SEC fell into disarray, and it was harshly
criticized by Congress and its own inspector
general, particularly for its failure to catch
the Ponzi scheme of Bernie Madoff. The turnover
of the new administration, which ushered in new
leadership at the much-criticized agency, has
also likely slowed efforts. In recent months,
under new Chairman Mary Schapiro, the SEC has
made insider-trading inquiries a high priority.
So far, there have been few
indictments or civil complaints. In a sign of how
long these cases can take, the mortgage company
New Century Financial Corporation disclosed in
March 2007 that it was the subject of an SEC
investigation into possible insider stock sales
and accounting irregularities. It wasnt
until last week -- Dec. 7 -- that the SEC filed a
formal complaint against former executives of the
company. The governments highest-profile
prosecution involving the financial collapse
the case against two managers of the Bear
Stearns hedge fund for alleged securities and
wire fraud failed to gain a conviction
when a jury decided that the men were simply bad
businessmen rather than criminals.