Tuesday, the Senate Banking Committee is going to get together to chitty chat about hedge funds. This is being driven by the recent rejection of the SEC's feeble rule attempting to create some sort of registration for US hedge funds.
Now, don't get me started about how idiotic it is that the SEC, which is composed almost entirely of attorneys, can't write a simple rule that will withstand a cursory legal challenge. That lack of competence is self-explanatory given the events of the last few weeks.
No, what I question is the regulation in the first place. What did it accomplish? Nothing. Anyone with a brain that wanted to circumvent it, could, with marginal effort. Thus, the only ones likely to register would have been those that weren't the 5% of the industry that are the big problem.
This is very much like Reg SHO, which purports to want to address naked short selling abuse, but which contains exactly no penalties of note that I can find for naked short selling. It also has no requirement for buy-ins, or for forced delivery for those participants who REFUSE to deliver that which they sold.
In other words, it is a bunch of hand waving and bureaucratic make-work that fails on the most basic levels.
Ditto for the hedge fund registration requirement.
Now, consider that these magnificent examples of Beltway buffoonery took place on Shelby's watch. Then consider that Shelby killed SBC hearings on naked short selling. Then further consider that a former Shelby lieutenant just became an SEC commissioner.
Given this legacy, I expect a big fat bag of nothing from the SBC.
Part of me watched Shelby's performance on CNBC a few weeks ago, and wondered if that wasn't him hanging out his "open for business" sign for interested Wall Street parties who want to buy the most compliant government they can afford. I suspect we will get a lot of acrimonious grandstanding from him, but nothing of any worth - unless one considers a decidedly pro-Wall Street, pro-SEC filibuster filled with laconic Southern aphorisms and aw-shucksy folk wisdom to be worth more than the air it takes to vibrate vocal cords.
Do I seem harsh? I don't want to sound harsh. God knows that the idea that elected officials are supposed to be servants of their electorate is horribly old fashioned - as is the notion that Government in general is supposed to work FOR the people, rather than demand obedience and tithing from from its subjects, while dancing the jig of the moment for the benefit of powerful special interests...
It's interesting, in terms of the latest on Gary Aguirre (WRT the re-opening of an inquiry into his suspicious termination). I was talking to some friends, and one of them pointed out that it was sort of an unspoken wisdom on Wall Street that when a staffer at the SEC had leadership quality, and was clearly superior in terms of drive, that Wall Street recruit them into one of the brokerages or law firms that composes the establishment. That ensures that nobody is at the SEC for long who could actually drive dangerous action against Wall Street.
My hunch is that Gary is of an age where he isn't buy-able, thus his drive and desire for justice was dangerous. Hence his firing. I would further bet that the hastily cobbled together questioning of Mack is designed to deliver the foregone conclusion that Mack/the SEC powers that be are good - as is the investigation into Gary's firing, which is likely designed to arrive at the conclusion that he is bad.
Is anyone fooled by this?
Unless we have a special prosecutor going through the allegations, we will get a polished, canned outcome decided in the back rooms of Wall Street. That's my hunch. I would love to be proved wrong on this.
Don't hold your breath.
Or, as Shelby says, when discussing hedge funds controlling trillions of anonymous dollars, and of Wall Street refusing to deliver shares they sold to unsuspecting buyers..."If it ain't broke, don't fix it."
In other words, do nothing, as doing something could anger the powers you're beholden to.
Questions?