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ADL Colin · 04-07-2008, 07:23 AM

September, 13 1991 testimony of STEPHEN P. PIZZO
Hearing: Subcommittee on Telecommunications and Finance

A bill to Amend the Federal Securities Laws to Equalize the Regulatory Treatment of Participants in the Securities Industry

"As for re-admitting banks into the securities marketplace, bankers will of course readily agree to to firewalls that will prohibit them from using their money to fund or prop up their securities trading affiliate or its customers. But of course, on the street, these firewalls will pose no real barrier at all.

As we autopsied dead savings and loans, we were absolutely amazed by the number of ways thrift rogues were able to circumvent, neuter, and defeat firewalls designed to safeguard the system against self-dealing and abuse. One of the favorite methods was to link up like-minded thrifts in the daisy chains through which they could circulate inflated assets and hide their rotten loans to each other and to each other's customers from regulators.

Banks that need to get money to a trouble securities affiliate will do exactly the same thing. By linking up three or more banks, each with its own securities subsidiary, a daisy chain will facilitate a round robin of reciprocal loans in times of need. Then, the next time we have a Black Monday on Wall Street, this daisy chain will swing into action as a handful of mega-banks try to prop one another's securities subsidiaries and their customers as the market plummets.

In such a scenario, billions of federally insured dollars will disappear in the twinkle of a few program trades.

That will happen, not might happen but will happen, and when it does these too-big-to-fail banks will have to be propped up with Federal money. In the smoking aftermath, Congress can stand around and wring its hands and give speeches about how awful it is that these bankers violated the spirit of the law, but once again, the money will be gone, the bill will have come due, and taxpayers will again be required to cough it up. "

04-07-2008, 07:23 AM
ADL Colin Too lazy to set a custom title Join Date: Feb 2001 Location: Tube Titans, USA Posts: 11,929	September, 13 1991 testimony of STEPHEN P. PIZZO Hearing: Subcommittee on Telecommunications and Finance A bill to Amend the Federal Securities Laws to Equalize the Regulatory Treatment of Participants in the Securities Industry "As for re-admitting banks into the securities marketplace, bankers will of course readily agree to to firewalls that will prohibit them from using their money to fund or prop up their securities trading affiliate or its customers. But of course, on the street, these firewalls will pose no real barrier at all. As we autopsied dead savings and loans, we were absolutely amazed by the number of ways thrift rogues were able to circumvent, neuter, and defeat firewalls designed to safeguard the system against self-dealing and abuse. One of the favorite methods was to link up like-minded thrifts in the daisy chains through which they could circulate inflated assets and hide their rotten loans to each other and to each other's customers from regulators. Banks that need to get money to a trouble securities affiliate will do exactly the same thing. By linking up three or more banks, each with its own securities subsidiary, a daisy chain will facilitate a round robin of reciprocal loans in times of need. Then, the next time we have a Black Monday on Wall Street, this daisy chain will swing into action as a handful of mega-banks try to prop one another's securities subsidiaries and their customers as the market plummets. In such a scenario, billions of federally insured dollars will disappear in the twinkle of a few program trades. That will happen, not might happen but will happen, and when it does these too-big-to-fail banks will have to be propped up with Federal money. In the smoking aftermath, Congress can stand around and wring its hands and give speeches about how awful it is that these bankers violated the spirit of the law, but once again, the money will be gone, the bill will have come due, and taxpayers will again be required to cough it up. " __________________ Adult Date Link - $50 PPS starting NOW! -- good and JUICY! skype = "adultdatelink"